Mid-Con Energy Partners (MCEP) Suspends Distribution; FBR Capital Cuts Price Target to $3

FBR Capital maintained a Market Perform rating on Mid-Con Energy Partners (NASDAQ: MCEP), and cut the price target to $3.00 (from $4.00), following the company's previously announced distribution suspension. Units of MCEP have seen substantial volatility since this decision, initially trading sharply lower before rebounding 35% on a strong earnings beat, which reinforces confidence in the strength of the company's underlying operations.

Analyst Chad Mabry commented, "We are lowering our price target on units of Mid-Con Energy Partners to $3 (from $4) to account for the partnership’s previously announced suspension of its distribution (for additional details see our note: Distribution Suspended: Focus Shifts to Debt Reduction, Negative Implications for Sector Valuations). Units of MCEP have seen substantial volatility since this decision, initially trading sharply lower before rebounding 35% on a strong earnings beat, which reinforces our confidence in the strength of its underlying operations. We believe that $3/unit represents an appropriate option value on MCEP potentially reinstating a distribution at some point in the future (i.e., when oil prices recover) and highlight two main points to our investment thesis: (1) from an NAV perspective, we value the partnership’s proved reserves at $3/unit based on our commodity price deck; and (2) leverage appears manageable. We maintain our Market Perform rating."

For an analyst ratings summary and ratings history on Mid-Con Energy Partners click here. For more ratings news on Mid-Con Energy Partners click here.

Shares of Mid-Con Energy Partners closed at $2.84 yesterday.

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