Resolute Energy Upgraded At Barclays

Barclays upgraded Resolute Energy Corp REN to Equal Weight from Underweight, raising its price target to $8 from $4. In the report published Wednesday, the analysts stated the company substantially shifts its production mix to the Permian Basin (from mature assets), resulting in better cash-flow generation capacities.

"We expect REN's Permian production to increase to roughly 65 percent of total production (by 2018), up from 19 percent previously. We estimate this shift in production mix will improve the company's LOEs ~36 percent to $11.25/boe, its oil differentials 27 percent to $4.75/boe, and its production tax rate to around 10 percent from 13 percent," wrote Barclays.

The analyst increased 2016, 2017 and 2018 production estimates by 30, 25 and 15 percent, respectively, which will substantially improve the company's cash flow profile. As a result, the analysts raised their 2016, 2017 and 2018 cash flow forecasts to $86 million (from $53 million), to $74 million (from $16 million), and to $125 million (from $62 million), respectively.