Crocotta Energy Inc. (CTA:TSX) recently released 3Q11 results which indicated the oil and gas company generated cash flow per fully-diluted share of C$0.11 and production of 4,002 barrels of oil equivalent per day.

Both of these reported metrics beat the expectations of Canadian brokerage Canaccord Genuity, which had estimated that Crocotta would record cash flow per fully-diluted share of C$0.08 and produce 3,750 barrels of oil equivalent per day. Canaccord subsequently increased its target share price for the oil and gas company to C$5.00 from C$4.00 and maintained its BUY recommendation.

The above-forecast earnings were attributed to significantly reduced operating costs and royalties that were lowered by government incentives. The Canadian brokerage expects that operating costs will fall further as production activity speeds up in the Bluesky, which exists in Western Canadian Sedimentary Basin. Canaccord also predicts that royalties will stay low.

The strong production numbers exceeding 4,000 barrels of oil equivalent per day were attributed to more robust extraction of oil and liquids and Crocotta most recently estimated that its daily production is 5,500 barrels of oil equivalent per day.

Canaccord Genuity based its target share price for Crocotta Energy Inc. on a 5.5 times multiple of 2012 EV/DACF and the addition of C$0.64 of risked Montney upside. The oil and gas company's stock is currently trading at a 4.2 times multiple of the Canadian Brokerage's 2012 estimated EV/DACF and C$39,803 per barrels of oil equivalent. Crocotta Energy Inc. closed at C$3.36 on November 13 and hit a 52-week high/low of C$3.40 and C$1.60, respectively.