Capital One Southcoast Maintains a 'Neutral on Atlas Energy (ATLS); Watch For Well Results and Potential JVs

November 9, 2009 10:48 AM EST

Capital One Southcoast maintains a 'Neutral on Atlas Energy (Nasdaq: ATLS), price target increased from $24 to $28.

Capital One analyst says, "We have been discussing a $24 - $30 NAV for ATLS depending on whether we use 3.5 - 4 Bcf/well for its 266K fairway acres (we assume 40% developed on 80-acre spacing, similar to our REXX and RRC assumptions). We are increasing our EUR assumption from 3.5 to 3.75 Bcf, which adds $2.50 to our NAV. We are also decreasing our well cost assumption from $4MM per well to $3.75MM heading forward. The company is drilling wells for $4MM/well currently but thinks it can get to ~$3.5MM long term."

"While we are increasing our NAV from $24 to $28, our valuation remains below ATLS's current stock price of $29.16, versus average upside of ~20+% for our coverage group. With very little well information (only 4 wells online with mixed results) we would be hesitant to add to ATLS at current levels."

To see more analyst ratings on ATLS Click Here.

Atlas Energy, Inc., formerly Atlas America, Inc., is an energy company engaged primarily in the development and production of natural gas.

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