casimir capital canada initiate on rfe...

HI,

Just got hold of this initiation report from one of Canada's bigger brokerage houses. They have initiated coverage on RFE overnight. Its a big report but here is the 1-page summary.

Note para beginning with "With several large players holding Mississippian acreage nearby..."

RED FORK ENERGY LTD. (RFE-AU, $0.73)
Recommendation: Buy; Target: $1.40
Analyst: Ryan Galloway,

Initiating Coverage: Serving Up a Large Oil Production Ramp on Mississippian

Acreage; Drilling Underway with View to 5,000+ boe/d in 3 Years
Low risk, low cost proven play becoming core
‘bread & butter’ operational focus for Red Fork
The emerging Mississippian Lime play has started to
see a horizontal renaissance in recent years, with large
operators moving hztl technology in & extracting more
oil from a play that has already produced millions of
barrels with thousands of prior vertical wells. This play,
in which Red Fork holds ~75,000 net acres and the
potential for 350 locations (3 wells/sec) gives a solid
foundation for an oily production ramp, with other
operators seeing up to 70% oil & liquids. With 1-2
horizontals planned each month, we see the potential
for Red Fork to grow to 5,000 bbls/d in 3 years and still
retain significant running room with ~25,000 bbls/d
potential at peak field production.
Active independents in the area could be
potential suitors for oily undeveloped locations
With several large players holding Mississippian
acreage nearby we see the potential for one of 5 large
independents to make a play for Red Fork, potentially
unlocking up to ~$3.45/sh in value from future fullfield
development across all 75,000 acres. With recent
transactions by SandRidge implying $4,600/acre
undeveloped, we see a floor value above $1.20/sh,
with room to grow on continued successful
development. Red Fork’s neighbors include
Chesapeake, Devon, Marathon, Range and SandRidge.
Initiating with $1.40/sh Target and Buy
Recommendation
We initiate with a buy rating and a target of $1.40
driven by blend of 6.0x EV/DACF on 2013E Cash Flows
($0.38/sh) with our Forecast 2012E NAV ($0.76/sh).
We add a partial inclusion of $3.42/sh for the value of
future development in the Mississippian due to the
large production increase it represents just shortly
beyond our 2 year forecast period.