Rodman & Renshaw Starts Resolute Energy (REN) at Buy
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Rodman & Renshaw initiated coverage on Resolute Energy (NYSE: REN) with a Buy rating and a price target of $32. Analyst Noel Parks anticipates growth.
"5 most recent Delaware Basin wells should boost proved reserves 44% compared to EOY 2015 levels, and the company may drill 21 wells next year. The five wells brought online this year are expected to add 14.5 mmboe of net proved reserves, including proved undeveloped (PUD) locations, representing a head-turning 44% boost to last year’s 33 mmboe of proved reserves. Impressively, the best recent wells saw peak IP rates of 3,300 boe/d, far above the 1,500 boe/d of Resolute's 2014-15 results," said Parks.
"REN shares are trading at a discount (14.1x EV/CF vs. 16.2x for peers) based on 2016 CF multiples, but then swing to a wide premium on 2017 metrics (25.0x for REN vs. 14.6x). However, this is largely due to the roll-off of Resolute’s unusually strong, $80/bbl hedges at the end of 2016. For production growth, the more important metric in our view, we anticipate 70%+ in 2017, as the company expands its drilling," added the analyst.
Shares of Resolute Energy closed at $25.68 yesterday.
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