A Fresh Angle on This Intriguing Deep Basin Playerhttp://www.fool.com/investing/general/2013/10/07/a-fresh-angle-with-this-intriguing-deep-basin-play.aspx Stephan Dube
October 7, 2013
Recently, I wrote an article on a small-cap producer involved in the Alberta's Deep Basin. I discussed Trilogy Energy (TSX: TET), a company owning properties in the Duvernay, Dunvegan and Montney, notably. In this article, I will take a look at an intriguing Calgary-based producer engaged in the Deep Basin as well.
A strategy from various angles
A shifted approach
A fresh angle on higher valued plays
Furthermore, the company reported that more than 500 Bcf of original gas in place was estimated on its 225 net sections of Mannville acreage. Angle uses a relatively new technology to recover gas called slickwater fracturing. This will be a strong catalyst for growth, raising the potential to double the recovery factor to 60% of OGIP. Finally, Angle started to focus on its emerging Duvernay play, an area of 200 net sections estimated to hold more than 2 Tcf of OGIP.
Operating netback reported in Q2 of 2013 averaged $26.84/Boe, a 44% increase over the average of $18.63/Boe realized for the same period last year. Among its peers, Peyto Exploration & Development (TSX: PEY) reported netback of $20.82/Boe, Delphi Energy (TSX: DEE), $12.11/Boe, Baytex (TSX: BTE), $25.76/Boe and Trilogy Energy, $29.81/Boe. Angle has realized stronger cash netbacks than most of the peers cited above.
To get a good idea of the company's valuation, I looked into its EV/EBITDA multiple compared to its peer group. The chart below shows that Angle trades at a discount with a multiple of 17.23x, significantly lower when compared to the peer group average of 33.99x.