RRX : TSX : C$4.98
Raging River Exploration Inc. is a junior E&P company focused on the development of the Viking light oil resource play in Saskatchewan, and trades on the TSX under the symbol RRX. The company was created from the spin-out of assets following Crescent Point’s acquisition of Wild Stream Exploration in 2012.
All amounts in C$ unless otherwise noted
Q2 results presented no surprises given the company pre-released its estimated production for the quarter in its operational update on July 16. The principal takeaways were the third consecutive increase to its 2013 guidance and the company’s continuous step-out drilling successes to date. Raging River remains one of our top Junior stock recommendations as it provides investors with a solid strategy of strategic resource capture acutely focused in the Viking resource play in
southwest Saskatchewan, and a best in class management team with a history of value creation and development execution.
We have maintained our BUY rating and C$5.50 target price based on an unchanged 1.1x multiple to NAV and a 7.4x 2014 EV/DACF multiple.
Q2 in line. Second quarter production averaged 4,620 boe/d, in line with our estimate of 4,594 boe/d and consensus of 4,425 boe/d. Operating CFPS came in at $0.15, in line with CG/consensus of $0.15.
Third guidance increase. The company upwardly revised its guidance for a third time this year; although capital spending and production both rose, the company continues to deliver above type curve results.
Management does an enviable job consistently beating expectations. Inventory expansion a key theme. The company recently drilled and tested nine wells at Beadle, seven of which were drilled in previously untested sections. Management estimates the NPV value uplift from this type of inventory expansion to be in the range of $50 to $100 million.
Raging River currently trades at a 1.0x multiple to CNAV estimate, 7.6x EV/DACF, and $163,200/BOEPD based on our 2013 estimates vs. its peer group averages of 0.7x CNAV, 6.1x EV/DACF, and $77,700/BOEPD.
- Raging River Exploration Inc. (amp2012.com)