Penn Virginia Price Target Slashed To $3.00 At Imperial Capital: Here's Why

In a report published Monday, Imperial Capital analyst Kim Pacarnovsky maintained an In-Line rating on

, while reducing the price target from $3.75 to $3.00. Penn Virginia reported revenues of $452.9 million, adjusted EBITDAX of $35 million and adjusted EPS of ($0.14) for the 12 months ended March 31, 2015. The company has a long-term outstanding debt of $1,237 million. The company is divesting its natural gas oriented assets in East Texas for $75 million in cash. Analyst Kim Pacarnovsky pointed that, "While the divestiture provides a slight reprieve to the firm's liquidity concerns, we believe PVA still needs to enact a much larger strategic initiative to ensure that the company possesses enough liquidity following an expected steep out in the firm's borrowing base during its Fall re-determination." Penn Virginia's restructuring efforts will allow the company to focus on its "oiler assets in the Eagle Ford" and make the company an attractive acquisition target. In the report Imperial Capital noted, "In the absence of a serious acquirer, we believe that PVA will need to make a more significant strategic initiative, including taking a second lien to reduce its dependence on its Reserve Based Lending (RBL) revolver or a commit to a major JV in the Eagle Ford." The production estimates for 2015 and 2016 have been reduced from 24,084 boe/d to 23,538 boe/d and from 21,528 boe/d to 19,904 boe/d, respectively, to reflect the loss of production from the sale of the East Texas assets.