Canadian brokerage firm Canaccord Genuity announced on October 6 that it was reiterating its SPECULATIVE BUY rating for junior oil and gas company Hyperion Exploration (HYX:TSXV) and increasing its target share price to C$2.25. The target price is based on a 5.5 times multiple of 2012 EV/DACF and the rating is based on the company's average quarterly production, which is below 1,000 barrels per day.
The junior oil and gas company released an update on its operations that indicated its wells drilled in the Cardium Formation in Alberta, Canada, are providing rather promising results. Hyperion has $24 million in credit it can put towards its 2011 capital expenditures and has reaffirmed its 2011 production estimate of 950 barrels of oil equivalent per day.
At the time of report, Hyperion was trading at a 1.9 times multiple of EV/DACF and a valuation of $27,650 per barrel of oil equivalent per day, based on Canaccord's revised 2012 estimates, which is lower than its peers.
Hyperion Exploration closed at closed at C$0.71 on October 6 and hit a 52-week high/low C$2.40 and C$0.47, respectively.