Market Overview

PermRock's Stock A 'Straightforward Opportunity,' Stifel Says

Share:
PermRock's Stock A 'Straightforward Opportunity,' Stifel Says

PermRock Royalty Trust (NYSE: PRT), a statutory trust that's entitled to receive 80 percent of the net profits from the sale of oil and natural gas production from certain properties owned by Boaz Energy in the Permian Basin, is a "straightforward opportunity" for investors to benefit from the Permian Basin, according to Stifel.

The Analyst

Stifel's Timothy Howard initiated coverage of PermRock Royalty with a Buy rating and $17 price target.

The Thesis

Owning PermRock Royalty's units gives investors direct exposure to the Permian Basin with a monthly distribution and a 1099 status for taxes but without the risk of dilution to unitholders, additional leverage, and acquisition of additional acreage, Howard said in a note. In fact, Boaz Energy's interests are directly aligned with unitholders through a retention of 5.9 million units and a 20 percent direct interest in net profits of the underlying properties.

The assets behind PermRock Royalty can show volatility from month to month, but over the longer term it's likely that "significant value" can be created, the analyst wrote. Management already invested $60 million in the business and another $30 million is expected to be invested over the next five years to drive production growth.

Investors should be cautioned that cash flows are directly correlated with commodity prices, which creates some uncertainty, but the unit's 12.8 percent current yield compares well to peers and should generate a 22 percent potential return over time, the analyst wrote.

Price Action

Shares of PermRock Royalty Trust closed higher by nearly 4 percent at $16.20.

Related Links:

Newfield Exploration, Parsley Energy, WPX Energy Upgraded At Seaport Global

Energy Sector Earns An Upgrade

Latest Ratings for PRT

DateFirmActionFromTo
Jul 2020Wells FargoDowngradesOverweightEqual-Weight
Jan 2019Stifel NicolausDowngradesBuyHold
Oct 2018Stifel NicolausUpgradesHoldBuy

View More Analyst Ratings for PRT
View the Latest Analyst Ratings

 

Related Articles (PRT)

View Comments and Join the Discussion!

Posted-In: Boaz Energy Permian Basin Stifel Timothy HowardAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
CAMTStifelInitiates Coverage On19.0
ELMDNorthland Capital MarketsInitiates Coverage On15.0
DKNGUBSInitiates Coverage On52.0
DIODTruist SecuritiesInitiates Coverage On84.0
TGTArgus ResearchUpgrades205.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com