Imperial Capital Cuts Price target on Goodrich Petroleum (GDP) to Reflect Haynesville Transition Assumptions

Imperial Capital maintained an In-Line rating on Goodrich Petroleum (NYSE: GDP), and cut the price target to $0.60 (from $0.70), to reflect assumptions that GDP will transition to a haynesville program in 2016. This shift is based upon recent comments by management that if the price disparity between oil and gas persists, GDP could be shifting capex to the Haynesville.

Analyst Kim Pacanovsky commented, "We are maintaining our In-Line rating on GDP shares and lowering our one-year price target of $0.60 from $0.70, about 6% below the recent share price. We have updated the production mix in our model assuming that in 2016, GDP shifts to a Haynesville gas program from a Tuscaloosa Marine Shale oil program. This shift is based upon recent comments by management that if the price disparity between oil and gas persists, based upon peers’ excellent results to date, GDP could be shifting capex to the Haynesville. We have further decreased our price deck to reflect 2016 gas pricing of $3.10/mcf (from $3.25) and $57/bbl (from $60), updated differentials/realized prices, and fine-tuned other costs. While we do continue to believe that GDP, assuming our price deck and activity level, has liquidity until 2H17, we believe the shares will remain under pressure until it can announce a shift in capex, and/or produce initial strong Haynesville results with visibility into increasing reserves. Reductions in leverage due to debt refinancing could also be positive for shareholders. GDP can also raise cash through selling its Eagle Ford undeveloped acreage or by bringing in a partner for the Haynesville development."

For an analyst ratings summary and ratings history on Goodrich Petroleum click here. For more ratings news on Goodrich Petroleum click here.

Shares of Goodrich Petroleum closed at $0.64 yesterday.

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