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Imperial Metals Corp

English: 100 million dollar note after operati...

English: 100 million dollar note after operation Sunrise. Issued 2nd May 2008. (Photo credit: Wikipedia)

III : TSX : C$10.91
BUY 
Target: C$16.50

COMPANY DESCRIPTION:
Imperial Metals is a Canadian-based company with interests in two mature producing copper mines in British Columbia (Mount Polley [100%]; Huckleberry [50%]). More importantly, the future and value driver of the company resides in its 100% interest in the very large but undeveloped Red Chris copper-gold project in northwest BC, which is permitted and scheduled to enter production via an open-pit in late-2014.
All amounts in C$ unless otherwise noted
Q1/13 FINANCIALS IN LINE; STILL WAITING FOR RED CHRIS FINANCING
Event
Imperial Metals reported Q1/13 EPS of C$0.14, in line with both our forecast and consensus. We calculate adjusted (to include Huckleberry)
EBITDA of C$23 million vs. our forecast of C$25 million. The end-Q1 cash balance was just C$97,000 (excluding III’s C$12 million share of
the Huckleberry JV’s cash balance).
Impact
Our 2013-15E adjusted EBITDA forecasts (accounting for Huckleberry as an equity investment) are C$100 million, C$116 million, and C$330
million.
Action and valuation
We are maintaining our BUY recommendation, but decreasing our 12- month target price from C$17.00 to C$16.50, based on the average of: i)
10x our 2014E EV/EBITDA, which would imply a share price of C$10.55; and ii) our NPV10 estimate of C$22.13. Our NPV10 estimate of C$22.13 includes C$12.15 for Red Chris in-situ value.
Next potential catalyst and investment risks
Red Chris financing remains a key valuation risk, and in our view a potential catalyst for share price appreciation. Our current valuation assumptions are C$100 million of equity priced at C$10 per share, and new debt financing of $400 million at an interest rate of 10%. On this basis, we are forecasting an end-2014 cash balance of C$41 million

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by jackbassteam on May 17, 2013  •  Permalink
Posted in Base Metals
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Posted by jackbassteam on May 17, 2013

http://amp2012.com/2013/05/17/imperial-metals-corp-2/

Twin Butte Energy Ltd.

Official seal of Lloydminster

Official seal of Lloydminster (Photo credit: Wikipedia)

TBE : TSX : C$2.12
BUY 
Target: C$3.20

COMPANY DESCRIPTION:
Twin Butte Energy Ltd. is an intermediate producer focused on heavy oil development along the Lloydminster fairway of Alberta and Saskatchewan. The company adopted a yield plus modest growth strategy upon closing its acquisition of Emerge Oil & Gas in early 2012.

Investment recommendation
Twin Butte released first quarter results largely in line with its guidance and CG/consensus estimates. Despite headwinds from wide heavy oil differentials, strong condensate prices that factor in its blending costs, adverse weather, and isolated production challenges at Primate, Twin Butte maintained a payout ratio below 100% with average production down only 1.6% QoQ. We have maintained our BUY rating on the stock and target price of C$3.20, based on a 1.0x multiple to NAV and reflecting a 2013 EV/DACF multiple of 6.8 times.
Investment highlights
Q1 in line, no surprises. Production averaged 17,254 boe/d, in line with our estimate of 17,326 boe/d and consensus of 17,190 boe/d. CFPS of $0.13 was also in line with our $0.13 and consensus of $0.12.
Prudently scaled back CAPEX in January but narrowing differentials could enable re-acceleration in H2/13. Capital spending was previously scaled to $85 million (from $110 million) given isolated issues at Primate and widening heavy oil differentials. Given an improved differential outlook, we see potential for a H2/13 CAPEX increase of $5 to $10 million.
Payout ratio remains best in class; current dividend is solid. Twin Butte maintains one of the lowest total payout ratios amongst the high yield Intermediate E&P group with a total payout ratio pre/post DRIP of 100/95% on our 2013 estimates.
Valuation
Twin Butte trades at a 0.7x multiple to CNAV, a 5.2x EV/DACF multiple and $41,800 per BOEPD based on our 2013 estimates, compared to peer group averages of 0.7x CNAV, 7.8x EV/DACF and $64,400/BOEPD.

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by jackbassteam on May 16, 2013  •  Permalink
Posted in Energy, Intermediate
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Posted by jackbassteam on May 16, 2013

http://amp2012.com/2013/05/16/twin-butte-energy-ltd-2/

Crew Energy Inc.

Montney, British Columbia Location

Montney, British Columbia Location (Photo credit: Wikipedia)

CR : TSX : C$6.45
BUY 
Target: C$10.00

COMPANY DESCRIPTION:
Crew Energy is an intermediate oil and gas company with a large portfolio of exploration and development opportunities in western Canada. The company has a two-pronged approach to corporate development, supplementing organic growth with strategic acquisitions.
All amounts in C$ unless otherwise noted.

IT’S ALL ABOUT THE MONTNEY


Investment recommendation
Crew released first quarter results which met our estimates but fell slightly shy of consensus on both production and cash flow. We believe the market will look beyond the quarter given the resumption in production levels which in our view clearly positions Crew to meet its average and annual guidance targets. Most importantly, it released an independent resource assessment on its 292 net sections of Montney rights in NEBC which in our view clearly validates management’s strategic shift towards resource capture in the play. We are maintaining our BUY rating and C$10.00 target price based on an unchanged 1.0x multiple to NAV and reflecting a 2013 EV/DACF multiple of 8.5 times.
Investment highlights
Q1 in line with CG, a bit light versus consensus. Q1 production averaged 25,961 boe/d, generally in line with our 26,267 boe/d estimate but modestly below consensus of 26,765 boe/d. Operating CFPS was $0.28, also in line with our $0.28 but below consensus of $0.30. More importantly, Crew has resumed production levels with an average of 28,000 boe/d in April and is on track to meet its annual average and exit
rate guidance targets.
All about the Montney, tremendous value upside potential in both oil and gas windows of the play. Sproule Associates estimated 33.7 Tcf of gas in place and 7 billion barrels of oil in place (over four times larger than ARC Resource’s recent TPIIP estimate). Precedent strategic gas transactions suggest its 2.3 Tcf of contingent resources could be valued between $0.15 to $0.35/Mcf, implying $2.80 to $6.60 per share to Crew.
Valuation
Crew currently trades at a 0.6x multiple to CNAV, 6.2x EV/DACF multiple, and $42,400/BOEPD based on our 2013 estimates, versus peer group averages of 0.7x CNAV, 7.8x EV/DACF, and $64,100/BOEPD.

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by jackbassteam on May 15, 2013  •  Permalink
Posted in Montney, Natural Gas
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Posted by jackbassteam on May 15, 2013

http://amp2012.com/2013/05/15/crew-energy-inc/

Trinidad Drilling Ltd.

A petroleum drilling rig capable of drilling t...

A petroleum drilling rig capable of drilling thousands of feet (Photo credit: Wikipedia)

TDG : TSX : C$7.06
TDG.DB : TSX
BUY 
Target: C$8.50

COMPANY DESCRIPTION:
Trinidad Drilling Ltd. is a Canadian based drilling contractor with operations in western Canada, southern US and Mexico. Trinidad’s rig portfolio is largely comprised of deeper rigs. The company also operates coring rigs, surface hole rigs and barge rigs.
All amounts in C$ unless otherwise noted.

Investment recommendation
EPS (ex-FX gain) of 29c came in ahead of consensus of 26c. EBITDA of $85 million beat consensus of $80 million but was just shy of our $88 million forecast. The consensus beat is attributed to better than expected results from the company’s Canadian drilling division. TDG’s Canadian fleet realized 73% utilization vs the industry average of 58%, due to both high demand for the company’s relatively high performance fleet and management’s ability to crew virtually all of its rigs in a seasonally busy period. The division’s result drove overall company outperformance, as TDG’s -3% y-y decline in total company revenues and -8% y-y decline in total company EBITDA represented outperformance vs peers (other drillers active in both Canada and the US reported flat to -21% y-y declines in revenues and -10% to -27% y-y declines in EBITDA over the quarter).

However, we note that in order to satisfy high customer demand, TDG pushed the repairs and maintenance costs it typically incurs in the first quarter into the remainder of the year. Considering this near-term cost reallocation, but also our belief that TDG has a higher performance rig fleet that should continue to outperform longer term, we have revised our 2013/14E EPS from 60c/75c to 57c/80c. Rolling forward the estimates used to derive our target price from 2013 to 2014, our target price increases from C$8.10 to C$8.50. We note our revised target price reflects 4.5x 2014E EV/EBITDA and 10.6x 2014E P/E target multiples.
Divergence between higher vs lower performance fleets continues to surface:

On TDG’s 1Q13 results call, management noted that “older style equipment is being particularly impacted” during softer pockets of demand. We note not only are higher-performance rigs competing for the same work as lower-performance ones, but also that the ownership of NAM oil and gas assets is generally shifting towards larger-cap E&Ps, NOCs and supermajors who place higher value on top-tier equipment vs their small-mid cap E&P peers.

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by jackbassteam on May 13, 2013  •  Permalink
Posted in Drilling Companies
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Posted by jackbassteam on May 13, 2013

http://amp2012.com/2013/05/13/trinidad-drilling-ltd/

Paramount Resources Ltd.

Drilling companies most often lease the rights...

Drilling companies most often lease the rights to drill for and produce oil. (Photo credit: Wikipedia)

POU : TSX : C$35.44
BUY 
Target: C$44.00

COMPANY DESCRIPTION:
Paramount has a 35-year history of successful operations in Western Canada. It takes a long-term approach to exploration and development activity of both oil and natural gas, and boasts over 50% insider ownership. Near-term growth is focused in the Deep Basin of Alberta.
All amounts in C$ unless otherwise noted.

Investment recommendation


Paramount reported Q1/13 results largely in line with CG/consensus estimates. The company remains capacity constrained at Valhalla; however, third party restrictions have begun to abate at Musreau leading to potentially higher volumes near term. Construction of its Musreau deep cut gas plant remains on time and budget.

We have increased our expected NGL yield on its Resthaven Montney gas wells given increased long term confidence by the company, which plans to add a 12,000 bbl/d expansion to the condensate stabilizer system at its Musreau plant in 2014 at a cost of $35 million. We are increasing our
target price to C$44.00 (from C$40.00) based on a commensurately higher NAV estimate and an unchanged 1.0x multiple, while also increasing our rating to BUY (from Hold), given a potential return to target of 24%.
Investment highlights
Q1 a slight beat; third party constraints abating. Q1 production averaged 22,591 boe/d, largely in line with CG/consensus of 22,186/22,375 boe/d.
Operating CFPS was $0.15, also in line with CG/consensus of $0.16 and $0.17. March production averaged 23,600 boe/d, a record volume.
Step change in growth approaches; contemplating another step. Its 200 MMcf/d Musreau deep cut plant remains on schedule for commissioning
in late Q3. Additionally, it now plans to add a 12,000 bbl/d expansion to the condensate stabilizer system in 2014 to handle higher condensate
yields. Finally, Paramount is in preliminary stages of planning an additional natural gas processing plant for its Deep Basin core area.
Valuation
Paramount currently trades at a 0.8x multiple to CNAV, 33.4x EV/DACF, and $169,200/BOEPD based on our 2013 estimates, versus peer group
averages of 0.7x CNAV, 9.9x EV/DACF, and $75,600/BOEPD.

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by jackbassteam on May 9, 2013  •  Permalink
Posted in Oil
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Posted by jackbassteam on May 9, 2013

http://amp2012.com/2013/05/09/paramount-resources-ltd/

Canadian Pacific Railway Limited

English: CP Rail Loco in Thunder Bay ON

English: CP Rail Loco in Thunder Bay ON (Photo credit: Wikipedia)

Canadian Pacific Railway Limited 
CP : TSX : C$124.73
CP : NYSE: US$121.71
SELL
Target: C$111.00

COMPANY DESCRIPTION:
Canadian Pacific Railway, recognized internationally for its scheduled railway operations, is a transcontinental carrier operating in Canada and the US. Its 14,000-mile rail network serves the principal centers of Canada, from Montreal to Vancouver, and the US Northwest and Midwest regions. CPR feeds directly into America’s heartland from both coasts, and alliances with other carriers extend its market reach throughout the US and into Mexico.
All amounts in C$ unless otherwise noted.

Q1/13: SURGING RESULTS BUT FULLY VALUED
Much improved results, but not materially different than expected CP reported EPS of C$1.24 vs. the CG estimate of C$1.22 and the consensus mean of C$1.21. Q1/13 EPS was up 51% versus Q1/12.
Revenue was up 9% (1.2% better than we expected), and CP’s operating
ratio (OR) improved 4.3% to 75.8% (0.4% better than we expected).
In short, the quarter was a slightly better than we expected, but the
differences were not significant enough to materially change our forecast.
We continue to forecast strong EPS growth through 2016, assuming that
CP is successful in achieving its mid-60% OR target in that year. We
project EPS will increase from $4.34 in 2012 to $10.21 in 2016.
Good outlook
CP continues guiding to over 40% EPS growth in 2013 on good revenue
growth and further substantial margin expansion. Sales are expected to
increase in the high single-digit range, and the OR is expected to improve
to the low-70% range from 77.8% in 2012.
Management suggested that CP is ahead of schedule on improvements, so
there may be the potential for increasing the company’s EPS guidance. We
are already projecting a 45% increase in EPS for 2013.
Maintain SELL on return to target
Our target was increased mainly due to our usual one-quarter valuation
period roll forward. However, we maintained our SELL rating due to the
negative potential return to our one-year target and the limited forecast
return to CP’s OR improvement target period, 2016 (i.e., 6.1% annual
return over the next three years).
Our one-year target continues to be based on a relatively normal multiple
of 9.0x EV/NTM EBITDAR (9.0x Q1/14E EV to Q2/14E – Q1/15E
EBITDAR)

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by jackbassteam on April 26, 2013  •  Permalink
Posted in Infrastructure, Railways
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Posted by jackbassteam on April 26, 2013

http://amp2012.com/2013/04/26/canadian-pacific-railway-limited/

Tembec Inc. SALE OF SKOOKUMCHUCK NBSK PULP MILL

English: Tembec mill in Kapuskasing, Ontario, ...

English: Tembec mill in Kapuskasing, Ontario, Canada (Photo credit: Wikipedia)

TMB : TSX : C$3.35
BUY 
Target: C$4.00

COMPANY DESCRIPTION:
Tembec Inc. produces forest products, pulp, paper, paperboard, and chemicals. The company’s Forest Products division produces softwood lumber, hardwood lumber, hardwood flooring, etc. The Pulp division manufactures various types of pulps, while the Paper division produces newsprint and paperboard including coated covers, bleached paperboard for packaging, and bleached linerboard.

Investment recommendation


Tembec announced the sale of its Skookumchuck NBSK mill for $89 million, including working capital, to Paper Excellence. The transaction
is expected to close in Q2/13 and is subject to certain conditions and approvals. The Skookumchuck mill has capacity of 255,000 tonnes  of
NBSK with its pulp shipped to North American and Asian customers.
The transaction implies a price per tonne of $350/t. Tembec management disclosed on its Q1/F13 conference call in late January that it had intended to sell the NBSK mill within the next 12 months. The Skookumchuck mill is the only NBSK mill that Tembec was operating, therefore, not a core asset within its portfolio. We expect that most of the proceeds from this transaction will go toward the boiler/turbine upgrade project at Tembec’s Temiscaming facility.

As of the last conference call, Tembec indicated that the project’s schedule has been pushed back, and that it is currently re-evaluating the project’s timeline and capex requirements. Overall, we had expected this announcement in the first half of 2013 to improve the liquidity toward the funding of its green energy initiative. We view the announced transaction as moderately positive as it should improve the company’s liquidity
position and enable it to move forward on the green energy project. We are reiterating our BUY rating and raising our target price to C$4.00
from C$3.50.
Investment highlights
 We have revised our estimates assuming that the transaction closes in late Q3/F13 with proceeds of $89 million. We will revisit our estimates as necessary following the update on the Temiscaming project timing expected with the Q2/F13 results in late April.
Valuation
Our 12-month target price of C$4.00 represents an EV/EBITDA multiple of 5.4x our F2014 EBITDA estimate.

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by jackbassteam on March 28, 2013  •  Permalink
Posted in Commodities, Forestry
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Posted by jackbassteam on March 28, 2013

http://amp2012.com/2013/03/28/tembec-inc-sale-of-skookumchuck-nbsk-pulp-mill/

Twin Butte Energy Ltd. Q4

Pipes layed by a horizontal drilling machine

Pipes layed by a horizontal drilling machine (Photo credit: Wikipedia)

TBE : TSX : C$2.32
BUY 
Target: C$3.10

COMPANY DESCRIPTION:
Twin Butte Energy Ltd. is an intermediate producer focused on heavy oil E&D activity within the Lloydminster fairway of Alberta and Saskatchewan. The company adopted a yield plus modest growth strategy upon closing its acquisition of Emerge Oil & Gas in early 2012.
All amounts in C$ unless otherwise noted.

Investment recommendation


Twin Butte released its 2012 year-end financial results and provided an operational update. Production at Primate continues to be stabilized for
a second month in a row and is currently at 2,700 bbl/d, which should alleviate market concerns over production declines in the area, in our
opinion. The company has not been affected by spring break-up to date and has had a strong start on its 2013 drilling program which includes
90 net wells planned. We have maintained our BUY rating on the stock and target price of C$3.10, which is based on a 1.0x multiple to NAV and reflects a 2013 EV/DACF multiple of 6.8 times.
Investment highlights
Q4/12 results in line. Production in the quarter averaged 17,531 boe/d, in line with our estimate of 17,401 boe/d and consensus of 17,390 boe/d. CFPS of $0.16 was also in line with our forecast of $0.15 and consensus of $0.16.
Active horizontal drilling program.

The company has witnessed encouraging results from its horizontal drilling efforts in Q1/13; as such it is planning approximately one third of its 90 net well program this year to be horizontal, including at least 8 and 10 horizontal wells at Wildmere and Frog Lake, respectively, after break up. It has drilled 22 successful wells to date on its acquired lands from the Avalon and Waseca transactions and continues to pursue an active drilling program there this year as well.
Valuation
Twin Butte trades at a 0.8x multiple to CNAV, a 5.5x EV/DACF multiple and $44,500 per BOEPD based on our 2013 estimates, compared to peer
group averages of 0.9x CNAV, 10.5x EV/DACF and $75,900/BOEPD.

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by jackbassteam on March 25, 2013  •  Permalink
Posted in Energy, Oil
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Posted by jackbassteam on March 25, 2013

http://amp2012.com/2013/03/25/twin-butte-energy-ltd-q4/

SNC-Lavalin Group Inc.

SNC-Lavalin

SNC-Lavalin (Photo credit: Wikipedia)

SNC : TSX : C$43.01
BUY 
Target: C$53.00

Company Description

SNC-Lavalin is one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure, and in the provision of operations and maintenance services. SNC-Lavalin has offices across Canada and in over 35 other countries around the world, and its 24,000 employees are currently working in some 100 countries. All amounts in C$ unless otherwise noted.

Investment recommendation


Despite SNC missing Q4/12 expectations and issuing surprisingly weak guidance for 2013, we are maintaining our BUY rating as we see an
attractive reward-to-risk profile. We continue to peg downside potential at $38.00 based on trough EPS (ex. ICI), a trough 9x multiple, $23.00 for
the ICI, and $355 million in fines/penalties. Thus, potential upside to our C$53.00 target (cut from C$55.00) outstrips potential downside 2:1. We
see significant upside potential as margins should normalize in the out years.
Investment highlights
At $2.2 billion, Q4/12 revenue (ex. ICI) exceeded our estimate by 12%, with all segments less O&M higher than expected. Negative cost reforecasts
totalling $77 million left EBITDA (ex. ICI) at $51 million. Excluding this, EBITDA (ex. ICI) would have been in line with our $128 million estimate. EPS (ex. ICI) came in at $0.16 vs. our $0.50 estimate.
Management initiated 2013 guidance of 10-15% EPS growth on the $2.04 earned in 2012. At the mid-point, this implies 2013E EPS (ex. ICI) of $1.37. Previously, we expected $1.85 in EPS (ex. ICI) and have taken our estimate down to $1.45 and 2014 to $1.95 from $2.20. Power and
ICI should be strong, H&C weak, while M&M could be the swing factor. Numerous legacy contracts are underperforming, weighing on margin.
The AGM in May is shaping up to be a key potential catalyst for SNC.
Bob Card, CEO, is expected to unveil the strategic plan going forward.

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by jackbassteam on March 12, 2013  •  Permalink
Posted in Industrials, Infrastructure
Tagged , , , , , , ,

Posted by jackbassteam on March 12, 2013

http://amp2012.com/2013/03/12/snc-lavalin-group-inc/

Twin Butte Energy Ltd

A workover rig.

A workover rig. (Photo credit: Wikipedia)

TBE : TSX : C$2.05
BUY 
Target: C$3.10

COMPANY DESCRIPTION:
Twin Butte Energy Ltd. is an intermediate producer focused on heavy oil E&D activity within the Lloydminster fairway of Alberta and Saskatchewan. The company adopted a yield plus modest growth strategy upon closing its acquisition of Emerge Oil & Gas in early 2012.

Investment recommendation


Twin Butte announced its 2012 year-end reserves and an operational update. Its reserve additions and FD&A costs ($24/boe) were in line with
expectations and prior management guidance. From our perspective, the clear takeaway from the release was the workover and performance
update at Primate, where production is up month-over-month to 2,600 boe/d; this should alleviate market concerns over recent production
performance and in our opinion provide a positive tailwind for the stock.
Our NAV estimate drops modestly based on our roll-forward; therefore, we have trimmed our 12-month target price to C$3.10 (from C$3.15)
and maintain a BUY rating on the stock. Our target is based on a 1.0x multiple to NAV and reflects a 2013E EV/DACF multiple of 7.1 times.
Investment highlights
Primate update the key takeaway from the release. Its January 31 update on Primate prompted a massive pullback on the stock; however, the company has announced that production has stabilized at 2,600 bbl/d through February (up from ~2,500 boe/d) given workover efforts,
including installation of five oversized pumps on existing wells (high volume lift). Its operational capabilities are also confirmed by our review
of Frog Lake performance on pages 6 and 7 of our note. Reserve update was in line with expectations. All-in FD&A of $24/boe and a 1.0x recycle ratio were in line. It had 5.3 mmboes of positive extensions (mostly Waseca and Avalon), and it booked 1.6 mm boes at Primate, versus 1.1 mmboes last year with 1.0 mmboes of production.

Valuation
Twin Butte trades at a 0.7x multiple to CNAV, a 5.2x EV/DACF multiple, and $41,200 per BOEPD based on our 2013 estimates, compared to peer
group averages of 0.7x CNAV, 10.6x EV/DACF, and $73,500/BOEPD

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by jackbassteam on March 1, 2013  •  Permalink
Posted in Alberta, Energy
Tagged , , , , , , ,

Posted by jackbassteam on March 1, 2013

http://amp2012.com/2013/03/01/twin-butte-energy-ltd/

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