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Credit Suisse says: "Apache Exits; Rare Opportunity Arises; Lowering Target Price to C$9.00 (from C$10.25)."

Apache Gives Surprising Notice: "TAG announced that Apache has given notice that it will elect to not commit to phase two under their farmout agreement in the East Coast basin. Given that there is no new technical information and that Apache will still honor its capital commitments for phase one, we find this decision and its timing to be surprising. Essentially, Apache pays but does not participate in the upside, if any. We wonder if Apache's decision was driven more along the lines of concerns over a regulatory system that may not be able to support a future large scale shale program."

Flexibility and Time: "With Apache still carrying TAG for phase one, we note that phase one work would place the joint venture permits in good standing until July 2016, which gives the company both time and flexibility to evaluate its options. Furthermore, a cash heavy balance sheet and incoming production growth, we believe TAG could fund further exploration work itself."

Growth for Free: "At the current market price, we believe TAG is trading below its current reserves value of ~C$4.71 per share, based on the last reserves report and subsequent new wells drilled. We believe growth in the conventional oil and gas business, where TAG has drilled 20 consecutive successful wells, is currently not priced into the stock. Additionally, TAG also is trading at ~2.0x current year cash flow, a discount to its peer group at ~2.7x, despite operating in a relatively stable geopolitical environment."

Valuation: "We lower our TP to C$9 (was C$10.25) and reiterate our Outperform rating. We view the current share price to be a rare opportunity to acquire quality assets at a discount and advocate investors to aggressively accumulate TAG shares at these levels."

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