Cobalt Energy (CIE) Stronger as Deutsche Bank Becomes Bullish on Cameia-2; Says Sell-Off Overdone
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Rating Summary:
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Today's Overall Ratings:
Up: 10 | Down: 18 | New: 20
Rating Summary:
8 Buy, 10 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 18 | New: 20
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Cobalt International Energy (NYSE: CIE) is making a strong move on heavy volume Tuesday following comments from Deutsche Bank earlier getting behind the company, while calling Cobalt "the stock to own in 2013."
Deutsche said that the selloff following Cameia-2 was overdone, saying the near-term floor value at Cameia is likely reduced for now, but the long-term impact on Cobalt's portfolio is unquestionably positive.
In terms of how big the upper zone, or "floor?" Deutsche estimates at 650 - 1200 mmboe. On net thickness, the firm comments "The better than expected result of Cameia-1 (885 ft net pay, 75% net to gross) increased market expectations surrounding the thickness of the oil column. And while the market should not have been surprised by a much smaller thickness at a flank location like Cameia-2."
On hydrocarbon yield, Deutsche notes, "The most ambiguous (and dangerous) of the relevant variables in the equation is the hydrocarbon yield, which attempts to estimate the amount of recoverable oil per volumetric unit (ie. acre-ft)." The firm notes how Street models assume a wide range of yields, but company's rarely use "hydrocarbon yield" internally, opting more for Original Oil in Place (OOIP) and recovery factors. For their Upper Zone estimate, Deutsche said, "We estimate that a reasonable expectation for Cameia’s Upper Zone is 12%-14% porosity, 80% oil saturation, FVF = 1.5 and RF = 25%-30%, which would equate to a HC yield of 125-175 boe/acre-ft."
For Cameia-2's "middle" and "lower" zones, Deutsche thinks the lack of information from management left many on the Street scratching their heads. Deutsche said, "we believe that the Street has been too negative to date on the prospects for the zones, particularly given: 1) the strong correlation to productive zones in both the Pre-salt Santos and Campos basins, and 2) the significant implications for both Cameia and the entire Angola pre-salt basin."
Deutsche lowered its price target from $39 to $37, ask risked value for Cameia moves from $8.50 down to $6.50/share. Cobalt stock is up 13 percent on the session.
For an analyst ratings summary and ratings history on Cobalt International Energy click here. For more ratings news on Cobalt International Energy click here.
Shares of Cobalt International Energy closed at $20.78 yesterday.
Deutsche said that the selloff following Cameia-2 was overdone, saying the near-term floor value at Cameia is likely reduced for now, but the long-term impact on Cobalt's portfolio is unquestionably positive.
In terms of how big the upper zone, or "floor?" Deutsche estimates at 650 - 1200 mmboe. On net thickness, the firm comments "The better than expected result of Cameia-1 (885 ft net pay, 75% net to gross) increased market expectations surrounding the thickness of the oil column. And while the market should not have been surprised by a much smaller thickness at a flank location like Cameia-2."
On hydrocarbon yield, Deutsche notes, "The most ambiguous (and dangerous) of the relevant variables in the equation is the hydrocarbon yield, which attempts to estimate the amount of recoverable oil per volumetric unit (ie. acre-ft)." The firm notes how Street models assume a wide range of yields, but company's rarely use "hydrocarbon yield" internally, opting more for Original Oil in Place (OOIP) and recovery factors. For their Upper Zone estimate, Deutsche said, "We estimate that a reasonable expectation for Cameia’s Upper Zone is 12%-14% porosity, 80% oil saturation, FVF = 1.5 and RF = 25%-30%, which would equate to a HC yield of 125-175 boe/acre-ft."
For Cameia-2's "middle" and "lower" zones, Deutsche thinks the lack of information from management left many on the Street scratching their heads. Deutsche said, "we believe that the Street has been too negative to date on the prospects for the zones, particularly given: 1) the strong correlation to productive zones in both the Pre-salt Santos and Campos basins, and 2) the significant implications for both Cameia and the entire Angola pre-salt basin."
Deutsche lowered its price target from $39 to $37, ask risked value for Cameia moves from $8.50 down to $6.50/share. Cobalt stock is up 13 percent on the session.
For an analyst ratings summary and ratings history on Cobalt International Energy click here. For more ratings news on Cobalt International Energy click here.
Shares of Cobalt International Energy closed at $20.78 yesterday.
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