UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Lowers PT on Penn Virginia Corporation
In a report published Monday, BMO Capital Markets reiterated its Market Perform rating on Penn Virginia Corporation (NYSE: PVA), but lowered its price target from $7.00 to $5.00.
BMO Capital noted, “We've argued PVA should be valued at after-tax PDP plus the Eagle Ford, net of G&A and the balance sheet, with $6Mcf gas needed for most of the gas optionality to be in the money. We estimate after-tax PDP of ~$775mm, which equates to the common discounting ~$4,200 per acre for the Eagle Ford. Including ~$110mm for the PV of G&A (~$47mm in 2012E), the common discounts $8,000 per acre. While A&D multiples indicate this could be cheap, enough wells have been drilled on the acreage that there is little room to surprise, and while we view returns as strong, we don't believe returns are high enough to justify material upside to this implied acreage value without higher capital efficiency.”
Penn Virginia Corporation closed on Friday at $4.69.
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