Compass Petroleum Ltd.’s Recommendation and Target Price Reiterated by Canaccord Genuity


Canadian brokerage firm Canaccord Genuity announced on October 6 that it was reiterating its BUY recommendation and and target share price of C$2.75 for junior oil and gas company Compass Petroleum Ltd. (CPO:TSXV). The target price is derived from a 1.0 times multiple of CNAV.

Compass restated its planned capital expenditure of C$50.7 million in fiscal year 2012. This spending plan accounts for the drilling of 38 wells that have an expected June 30 exit rate that ranges between 1,300 and 1,400 barrels of oil equivalent per day. These predictions are in line with Canaccord's estimates. Average production during Q2 was 931 barrels of oil equivalent per day, which was slightly below the Canadian brokerage firm's expectations.

At the time of report, Compass was trading at a 0.4 times multiple of CNAV, a 3.1 times multiple of EV/DACF and $54,250 per barrel of oil equivalent per day. The junior oil and gas company closed at C$1.20 on October 9 and hit a 52-week high/low of C$2.30 and C$0.83, respectively.