Canaccord Genuity Maintains BUY Recommendation and Share Price for Pinecrest Energy

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Canadian brokerage firm Canaccord Genuity recently released a report maintaining its BUY recommendation and C$6.25 target share price for oil and gas company Pinecrest Energy (PRY:TSXV). The share price is based on a six times multiple of 2012 estimated EV/DACF, along with the upside potential of the Slave Point play that exists in Red Earth in Central Alberta.

Penn West Exploration is the largest exploration and production company working in Pinecrest's Slave Point play. Penn West recently announced during its annual analyst day that it expects single-leg horizontals existing in the play to generate 300,000 to 340,000 barrels of oil equivalent. This metric is in line with previous estimates made by Canaccord Genuity predicting production of 325,000 barrels of oil per day (bbl).

Cannacord Genuity did not alter its estimated ultimate recovery (EUR) for the wells. The financial services provider noted that if it used a 325,000 bbl estimate, the net present value (NPV) per well would rise to C$9.2 million from C$5.4 million.

Pinecrest Energy Inc.'s stock opened at C$2.15 on September 26 and hit a 52-week high/low of C$3.19 and C$1.30, respectively.
 

Penn West’s Analyst Day Has No Impact on Macquarie Rating and Share Price

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Penn West (PWT:TSX) recently held its analyst day in Calgary, but research firm Macquarie Equities Research's Outperform rating and target share price for the company were unaffected by the event.

The company reaffirmed its strategy of acquiring more lands for drilling oil. Penn West announced that it recently acquired properties in Duvernay, the Alberta Bakken and Second White Specks. It also stated its priority of maintaining production at a rate of between four and six percent and continuing its monthly dividend of C$0.09 per share.

Macquarie based its target price for Penn West on an eight times multiple of EV/DACF. The research firm believes that Penn West is starting to get a better handle on its operations and that improved production will lead to better funding from investors and the company outperforming its peers. Penn West's stock opened at C$16.24 on September 23 and hit a 52-week high/low of C$28.20 and C$16.18, respectively.  

Marcellus Ruling Could Bring Legality of Thousands of Oil Leases into Question

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A recent ruling on the Marcellus shale could bring the legality of thousands of oil leases into question. Several market experts have already weighed in on the ruling, Bloomberg reports.

"With this ruling, it is now not clear who owns the rights to Marcellus gas where there has been a 'mineral' reservation," Ross Pifer, director of the Agricultural Law Resource and Reference Center at Penn State's Dickinson School of Law, told The Associated Press. "The leases will still be valid, but they may not convey rights to the Marcellus shale."

Pennsylvania is the only state that does not classify gas as a mineral in reference to land and leases, Sean Moran, an energy lawyer at Buchanan Ingersoll & Rooney PC, told the media outlet.

Legal experts state that until the issue is settled, companies looking to drill will have to cope with uncertainty about whether they have signed drilling leases with the correct people, according to Bloomberg. An attorneys told the media outlet that the matter could take two years to be resolved. 

Dundee Securities Reiterates Neutral Rating and Target Price for RMP Energy

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Financial services firm Dundee Securities recently reiterated its Neutral rating and C$2.40 target share price for oil and gas company RMP Energy (RMP:TSX). The oil and gas company announced that will raise $25 million by issuing common stock and flow through shares. Dundee based its reiteration of RMP's Neutral rating on its stock being fairly valued. RMP's target share price is based on a target value of 130 percent of P/NAV and a six times multiple of forward EV/DACF.

RMP Energy plans to issue 9.303 million common shares for C$2.15 per share, which will raise gross proceeds of $20 million. The oil and gas company will also sell 1.688 million common shares on a flow-through basis at C$2.37 for Canadian Development Expenses. RMP will issue as many as 388,000 common shares on a flow-through basis for C$2.58 for Canadian Exploration Expenses. In aggregate, these offerings should generate proceeds of C$5 million.

RMP Energy's stock opened at C$2.00 on September 22. The company's stock hit a 52-week high/low of $C2.82 and C$1.80, respectively.  

Oil Firms Disclosing More Info about Fracking Methods

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The public interest in what chemicals are used in fracking has motivated many firms to disclose what chemicals they use in the process. The chemicals used, except for those considered "trade secrets," can be viewed at http://fracfocus.org, The Calgary Herald reports. The website was launched by Halliburton in reply to the public interest that surrounds fracking.

Whether oil firms should disclose the chemicals they use has been highly contentious, and many companies have said that the chemicals they use qualify as being proprietary information, according to the media outlet. John Pinkerton, Chief Executive of Range Resources Corporation (RRC:NYSE), recently spoke out about this justification.

"That whole competitive thing is the biggest bunch of bunk I ever heard, and I think the services companies ought to be ashamed of themselves," Pinkerton told investors this month, the media outlet reports. "It has nothing to do with competitiveness."

The United States Geological Survey (USGS) has estimated that trillions of cubic feet of natural gas exist underneath the country's surface. The most recent USGS survey estimated that the Marcellus Shale contains 84 trillion cubic feet. 

Utica Shale Potentially Worth Half a Trillion Dollars

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Oil and natural gas reserves existing in Ohio's portion of the Utica shale could potentially be worth billions, an industry group said on September 20. A report providing specifics was issued during Governor John Kasich's energy summit, The Plain Dealer reports. Aubrey McClendon, Chief Executive of Chesapeake Energy Corporation, told a crowd at the summit he estimates that the play is worth around $500 billion.

An economy impact study was released during Kasich's energy conference that stated that the projected jobs would be created by drilling, exploration, royalties, leasing, production and construction that would be needed to create the infrastructure of pipes need to carry gas and petroleum from the share, according to the media outlet.

Speaking of the potential value of the play, McClendon stated, "I prefer to say half a trillion."

He added that although volatile energy prices make accurate predictions challenging, his estimate is "reasonable."

Kasich has stated that Ohio should allow for development of the Utica Shale, if for no other reason than stimulating the economy, the media outlet reports.
 

Gas Futures Fall to 11-Month Low before Rising Slightly

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Front-month natural gas futures for the U.S. fell to their lowest point in 11 months on September 22, then climbed slightly after the release of a report which showed that inventories increased slightly-less-than-expected. The U.S. Energy Information Administration (EIA) report indicated that the country's total gas inventories increased 89 billion cubic feet, slightly below the 91 billion cubic feet that a Reuters poll of analysts and traders predicted.

In morning trading, New York Mercantile Exchange (NYMEX) front-month gas NGc1 sank as low as $3.662 per million British thermal units before rising to an intraday high of $3.76 right before the EIA report was issued.

Canadian brokerage firm Canaccord Genuity provided guidance on the continued weak prices of NYMEX gas, stating that the commodity's repeated failure to rise above $4 over the last several weeks is in line with their expectations. Cannacord attributed much of this price situation to flagging demand, stating that economic growth is slowing amid the European debt problems. Gas prices are also being hampered by the weather as the low demand shoulder period begins.  

Renegade Increases Credit Line and Shakes Up Management

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Renegade Petroleum (RPL:TSXV) recently increased its credit line to C$80 million from C$65 million and shook up its management team by replacing its executive vice president of exploration.

The exploration and production company was subsequently rated Outperform by both financial services company Raymond James and equities research firm Macquarie Equities Research. Renegade received a C$5.75 target share price from Macquarie and C$5.00 target price from Raymond James.

Renegade announced its credit line increase after the market closed on September 20. The company succeeded in increasing its drilling activity after spring break-up and has maintained this momentum into the second half of the year. The expansion of available funds should help finance this drilling through the end of the year.

Raymond James, uses its 2011E SUPER NAV estimate of C$6.01 and a four times multiple of 2012 estimated cash flow per share of C$1.05 to arrive at its C$5.00 target price for Renegade. The company's stock opened at C$2.70. The stock hit a 52-week high/low of C$5.00 and C$2.55, respectively.  

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