Expecting Higher Cash Flows, Wunderlich Raises Resolute Energy From Hold To Buy
Resolute Energy Corp (NYSE: REN) issued a press release last week that mentioned a number of positive catalysts for the company, Wunderlich’s Jason A. Wangler said in a report. He upgraded the rating on the company from Hold to Buy, while raising the price target from $4 to $8.
The Delaware Digging Program
Resolute Energy announced massive wells in the Delaware region this year, with some rates higher than 3,000 boe per day.
While Resolute Energy has strong working interests and plenty of locations, even if oil prices remained at the current levels, the company would be able to continue drilling economic locations “that have just seen their EURs move up over 2 mmboe per well that should drive continued production and reserve growth,” analyst Jason Wangler mentioned.
The company reported 2Q16 production of over 15,000 boe per day, representing 70 percent q/q growth and handsomely beating estimates of about 11,000 boe per day. Implementing these higher production figures would drive estimates higher going forward, Wangler noted.
Resolute Energy sold a midstream asset in Delaware, which is expected to generate more than $35 million in cash when closed and also occasionally have payouts for the company, depending on its activity. “With no bank debt currently, REN can do many different things with this money including adding activity or looking to pay down other debt,” the analyst stated.
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Latest Ratings for REN
|Nov 2016||Northland Securities||Upgrades||Outperform||Outperform|
|Oct 2016||Rodman & Renshaw||Initiates Coverage on||Buy|
|Oct 2016||Seaport Global||Initiates Coverage on||Buy|
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