Oil and Gas company Whitecap Resources (WCP:TSX) announced recently that it has increased its bank line 31 percent to $190 million. Investment bank Dundee Securities interpreted this news as evidence of the company's success in drilling and production, and reiterated its BUY rating and target share price of C$9.25 on October 13. Whitecap is involved in both the Pembina Property and Valhalla North Property in Alberta, Canada.
Dundee expressed its view that Whitecap's stock traded at a valuation that made it appealing to its peers. The investment bank uses a EV/DACF methodology to obtain the valuation for Whitecap, based on the oil and gas company's current production levels of 7,400 barrels of oil equivalent per day.
The company has utilized hedging to place 45 percent of forecasted production under contract to sell at an average WTI floor price of C$97.71 and an average AECO of C$4.13 per million cubic feet. The C$9.25 target share price is obtained using the investment bank's Roll Up Valuation
Whitecap Resources closed at C$6.62 on October 14 and hit a 52-week high/low of C$7.60 and C$4.65, respectively.