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Estrella International’s Mixed Operational Results Cause Canaccord to Lower EBITDA and Earnings Estimates

Estrella International Energy Services' (EEN:TSXV) mixed operational results caused Canadian brokerage Canaccord Genuity to reduce its 3Q11 EBITDA forecast for the firm to C$2.04 million from C$2.62 million and its 4Q11 earnings prediction to C$3.1 million from C$3.36 million. Canaccord maintained its SPECULATIVE BUY rating for the oilfield services company and reiterated its target share price of C$0.80.

Rig 1201 that exists in Chile suffered a mechanical problem on October 27 and Estrella is currently investigating this incident. Canaccord lowered its estimated EBITDA contribution from this rig as a result of its lowered utilization.

Canaccord's C$0.80 target share price for Estrella is based on a 4.9 times multiple of 2012 estimated EV/EBITDA. The Canadian brokerage is maintaining its EPS estimates of C$0.09 for 2011 and C$0.01 for 2012. Estrella International Energy Services closed at C$0.25 on November 2 and hit a 52-week high/low of C$1.02 and C$0.22, respectively.  



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