Orca Energy Group Inc. (ORXGF:OTCMKTS;ORC.B:TSXV) announced financial and operational data from the first quarter of this year, which met projected expectations, reported Research Capital Corp. analyst Bill Newman in a May 17 research note.
During the quarter, there was an average net natural gas sales production of 94.8 MMcf/d, which resembled the fourth quarter of last year's average of 95.5 MMcf/d. The company upheld its 2023 average production forecast of 90 to 100 MMcf/d.
Orca reported cash and cash equivalents of US99.5 million and US$68.4 million in working capital as of the end of March 2023.
Newman reported that "working capital less long-term debt was US$28.5mm versus US$21.8mm on December 31, 2022. Cash flow (before changes in non-cash working capital) was US$16.7 million (US$0.84/fd share), which was in line with our forecast of US$17.7mm ($0.89/fd share)."
Production Capacity Increased
This reported quarter, Orca finished its workover program and inlet compression project at Songo Songo Field. The total production capacity at Songo Songo was raised to between 150 MMcf/d and 155 MMcf/d. April's gross production from the field averaged 119.8 MMcf/d or 86.9 MMcf/d net to Orca.
In light of these results, Newman noted, "Orca remains in a strong financial position and continues to generate free cash flow that supports its current quarter dividend of CA$0.10 per share (annualized yield of 8.1%) and NCIB, as well as, fully funding its capital expenditures."
With this, Newman reinstated his speculative Buy rating on the company.
Structure and Predictions
In his report, Bill Newman preserved his target price on Orca Energy of CA$7.50.
Newmans's research also shared current market data on the company:
- Price: CA$4.94, with a 52-week range between CA$3.92 and CA$5.62.
- Price Target: CA$7.50
- Market Cap: CA$98 million
Newman expects a projected return of 51.8% and notes that Orca has an enterprise value of CA$59 million.
Want to be the first to know about interesting Oil & Gas - Exploration & Production investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.
- Katherine DeGilio wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures for Research Capital Corp., Orca Energy Group Inc., May 17, 2023
Analyst Certification I, Bill Newman, CFA, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at www.researchcapital.com or may be requested by contacting the analyst. Each analyst of 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.
Relevant Disclosures Applicable to Companies Under Coverage Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at www.researchcapital.ca
General Disclosures The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.
Potential Conflicts of Interest All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.
RC USA INC. Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at www.researchcapital.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA).