Wells Fargo Downgrades Delta Petroleum (DPTR) to Underperform; Borrowing Base Tightened--Banks Limiting Capex.
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- Wells Fargo Downgrades Delta Petroleum (DPTR) to Underperform; Borrowing Base Tightened--Banks Limiting Capex.
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Wells Fargo downgrades Delta Petroleum (Nasdaq: DPTR) to Underperform from Market Perform. Valuation range lowered from $1-2 to $0-1.
Wells analyst says, "We are downgrading shares of Delta Petroleum, as we believe liquidity issues and lack of visibility will cause shares to underperform the group. DPTR reported Q3 2009 results this morning (11/5) and we plan to have a note out later today...As part of the October 30 redetermination, the banks reduced DPTR's borrowing base to $185MM from $225MM, and added a $20MM minimum availablity clause, which effectively lower's DPTR availability. Just as important, capital expenditures will be limited to $10MM per quarter for Q4 2009, Q1 2010, and $5MM for Q2 2010. Some carryover provisions, but essentially $25MM from Q4 2009-Q2 2010. Given DTPR has already been operating in a capital-constrained environment, and that Q3 2009 prodution fell by 10%, the next nine months will be very challenging for the company, in our view. Banks now appear to be driving the bus."
"DPTR's ability to execute should be very limited over the next 9 months, as the bank group has limited its capital expenditures to $25 MM over that period. Combined with its significant debt levels and production profile which should continue to decline, we believe shares will underperform."
To see more analyst ratings on DPTR Click Here
Delta Petroleum Corporation engages in the exploration, acquisition, development, production, and sale of natural gas and crude oil in the United States.
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dptr
kristian on Nov 10, 2009 10:10 PMThere are alot of ways of drilling for oil and natrual gas deposites.Were there are sizmick activity and in the river basin , these deposites are deeper and also drilling now horizontal will prove that delta PT is on the page.These deposite are deeper then expected , and there is to beleave that they are large deposite deep into the earth crust.Drilling horzatial will also give them a edge on these depostites.I have alot of cofidence in dptr that they will come up ahead.