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Analyst Actions: Niko Resources Keeps Neutral, $10 Target After Q4

Credit Suisse on a "Lower FQ4/13; F2014 Dependent on Workovers; Revising Estimates"

FQ4/13 Sees Lower Production and Cash Flow: "Due to reservoir management initiatives by the operator at the D6 block in India, a number of wells have been shut-in in recent months with the remaining wells producing at restricted rates. This somewhat untimely development coincides with the still ongoing gas price negotiations in India. Bottom-line, the company has guided lower production of 126 mmcfe/d in FQ4/13 with cash flow of US$22 mm, down from 130 mmcfe/d and US$25 mm. Additionally, capital in the quarter is now expected to be higher at US$29 mm versus the prior US$25 mm. As a result, we revise our estimates lower. We are revising our FY13/14 EPS estimates to (C$3.69)/(C$0.18) from (C$0.70)/(C$0.09) respectively."

Forecast for F2014E Dependent on Workovers: "For F2014E, Niko has guided 122 mmcfe/d, which is a relatively flat profile, and roughly US$88 mm in cash flow. However, this production profile is dependent on the operator conducting workovers at the D6 block. Until these potential developments occur, we take a more conservative view in our forecast and assume production continues to decline next fiscal year. Our forecast calls for ~109 mmcfe/d and roughly US$89 mm in cash flow. On the capital front, Niko has guided US$130 mm in F2014E, which includes workovers in India. We have estimated F2014E capital to be slightly higher at US$145 mm."

Cavalry Could be Coming Soon: "Niko has indicated it has received offers for some of its non-core assets and is currently evaluating them. The company continues to expect funds to be raised by the end of March 2013. We believing restoring the company's financial flexibility could be a significant catalyst, provided the amount is meaningful."

Recommendation: "We currently maintain our Neutral rating and TP C$10."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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