TOL : TSX-V : C$2.68
TriOil Resources is a junior oil & gas explorer/acquirer positioned in the Cardium at Lochend and an emerging Dunvegan oil play in Kaybob. TriOil is listed on the TSX-V under the symbol “TOL”.
All amounts in C$ unless otherwise noted.
TOL’s Q2 production came in slightly ahead of expectations, as the company continues to show strong growth through the drill bit. Despite limited capital investment during the quarter, 6 Dunvegan wells came on production and contributed to an impressive production increase of 19% over Q1. In the release the company reiterated that the exclusive negotiations with another party continue, and that it expects to provide an update on the negotiations at the end of the month.
TOL’s production came in at 4,147 boe/d, which was slightly ahead of our estimate of 3,971 boe/d (Exhibit 1). CFPS of $0.21 was in line with our estimate and 2 cents better than consensus.
During the quarter the company spent just $9 million in capex, drilling one Dunvegan well at Kaybob (Exhibit 2), completing 3 wells and bringing a total of 6 (4.1 net) on production. In the back half of the year the company plans to drill an additional 9 (6.1) horizontal
Field activity has resumed following spring break-up. In addition to continued activity at Lochend and Kaybob, the company is drilling a horizontal Montney well at Pouce Coupe.
In our view, it was another strong quarter from TOL that should see a positive reaction from the market. Investors will likely continue to focus on the ongoing strategic review, however, with all eyes on the company’s upcoming announcement expected at the end of the month. TOL is rated HOLD, with a C$3.50 target price (our valuation is NAV based and implies a 2013E EV/DACF of 5.0x)
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