In an Aug. 9 research note, Bill Newman, an analyst with Mackie Research Capital Corp., reported that after having a "solid" Q2/19, Prairie Provident Resources Inc.'s (PPR:TSX) stock is still "incredibly cheap."
Mackie has a target price on Prairie Provident of CA$0.70 per share, which reflects a potential eight-fold gain as the company's current share price is around CA$0.08.
Newman reviewed the energy firm's highlights from Q2/19. Quarterly production was a record high, averaging 6,386 barrels of oil equivalent per day (6,386 boe/day). It also was 24% higher than Q2/18 production of 5,146 boe/day. In terms of average production for 2019, management reiterated its guidance, between 6,100 and 6,500 boe/day.
Also noteworthy, indicated Newman, was that Prairie Provident's adjusted funds flow in Q2/19 was about $6.6 million, which exceeded Mackie's estimate of $5.9 million. It also was more than double the Q2/19 capital expenditures of $3.2 million, which means the oil & gas company is "living within cash flow."
Given its current status and near-term developments, Prairie Provident should be valued higher, Newman purported. For one, it is generating free cash flow. Two, its most recently drilled well at Princess is "highly economic" and could pay out in under 10 months' time. Three, the company is likely to drill two more wells this year. Four, it could have a "cash windfall from the Quebec asset arbitration process," added the analyst.
Mackie maintains its Buy recommendation, Newman wrote, "on the company's long-term growth potential from its large inventory of development oil locations and expanding waterflood programs."[NLINSERT]
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Disclosures from Mackie Research, Prairie Provident Resources Inc., August 9, 2019
RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE
Relevant disclosures required under Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at www.mackieresearch.com.
Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
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Bill Newman: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. Within the last two years, Mackie Research Capital has managed or comanaged an offering of securities for, and received compensation for investment banking and related services from Prairie Provident Resources Inc. Bill Newman has research coverage on Prairie Provident Resources Inc.