Rodman & Renshaw Raises PT on Crimson Exploration to $3.75

Rodman & Renshaw has published a research report on Crimson Exploration

and has raised the price target from $3.50 to $3.75. In the report, Rodman & Renshaw writes, "CXPO has spud its first well targeting the Woodbine play, the Mosley #1H (86% w.i.) in Madison County, TX. The well is expected to be drilled to a total measured depth of 16,900' with a 7,500' lateral and completed with 20-24 frac stages; initial production is anticipated in early March. If successful, the company expects (and has budgeted for) a 1-rig program in the play this year. Given CXPO's increased emphasis on the development of its ~15,500-net-acre position, as well as encouraging results seen by other companies in the area (a number of wells have IP'd north of 800 Boe/d), we are comfortable adding a discreet valuation for the play (albeit still heavily risked) to our NAV. We're initially risking the company's acreage by 90% and using a typecurve EUR of ~400 MBoe/well (implying IRRs of 20%-25%); this results in net risked upside potential of ~3 MMBoe, which we value at $30-$35 million, or ~$0.75/share. We note that our valuation implies a value of ~$2,000/acre, which sounds reasonable given acreage deals we've heard about in the play." Rodman & Renshaw maintains its Market Outperform rating on Crimson Exploration, which closed yesterday at $2.95.