RH Petrogas ($0.34): Credit Suisse sees balance sheet strength as opportunity for inorganic growth.
In FY14, operating cash flow doubled to US$24.2m due to reduction in trade and other receivables. As a result, cash position increased to US$36.7m at Dec ’14, giving it the option to pursue cheap M&A now that energy is in a down turn.
Of its existing assets, expectation for first oil at Fuyu-1 remains for spring 2015. Planned wells, which stands at 40 now, may increase to anywhere in the range 40-100, increasing organic capex from US$2m to US$5m.
The house increases TP from $0.38 to $0.40 and keeps watch for first oil in Fuyu-1 as the immediate catalyst.
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