canaccord genuity reort

A very good indepth initial report has been put out by Canaccord.....a very detailed extensive report that should help put an end to whats been happening to our stock in recent time. Unable to post more than the first page fellows, but you should be able to find it on web site below.....well worth the read

Red Fork Energy Limited Stephen Berman, CFA 212.849.3944
[email protected]
Philipp M-O Kin +61 2 9263 2702
[email protected]
Chris Mandeville 212.849.3996
[email protected]
RFE : ASX : A$0.65
BUY ?
Target: A$0.94 ?
COMPANY STATISTICS:
52-week Range: 0.60 - 1.17
Market Cap (M): A$263.3
Shares Out (M) fd: 405.2
Ent Value (M): 228.1
Debt/Capitalization: 0%
Current NAV /shr: 1.17
Avg. Daily Vol. (M): 977.3
EARNINGS SUMMARY:
FYE Jun 2013E 2014E 2015E
Production (Mboe/d): 1.0 3.3 5.1
% Natural Gas: 39% 27% 23%
EV/EBITDA: 16.3x 3.3x 2.1x
P/CF: 17.9x 4.0x 2.5x
EPS: US$0.02 US$0.12 US$0.20
CFPS: US$0.04 US$0.16 US$0.26
EBITDA (M): US$14.0 US$68.8 US$110.5
SHARE PRICE PERFORMANCE:
Source: Big Charts
COMPANY DESCRIPTION:
Red Fork Energy is an independent oil and gas
exploration and production company focused in the midcontinent
of the United States. The company was
founded in 2004 and trades on the Australian Securities
Exchange and the OTCQX International.
All amounts in A$ unless otherwise noted.
Energy -- Oil and Gas, Exploration and Production
WHEN YOU COME TO A RED FORK IN
THE ROAD, TAKE IT; INITIATING WITH
A BUY RATING AND A$0.94 PT
Investment recommendation
Red Fork controls ~75K net Mississippi Lime (ML) acres in Northern
Oklahoma, most of it in the oil prone area east of the Nemaha Ridge.
Assumed liquids of 77% assigned in the 3P reserves report is consistent
with actual production results observed to date. With production growth
on the verge of accelerating, we initiate coverage with a BUY rating and
A$0.94 price target.
Investment highlights
? The company is highly levered to the ML play and has a lot of
running room ahead of it. Only 41 of the 248 net ML development
locations identified to date have had 3P reserves attributed to them.
While a good part of the play has a mix that is over 50% natural
gas, RFE’s wells have been coming on production at 70%+ oil.
? RFE is bringing on a fourth rig in mid 2013, which will better allow
it to both hold its existing acreage position within the lease term
and accelerate production. We are modeling ~250% production
growth in both FY13 and FY14. Additional upside potential exists
from the Woodford Shale, which lies just below the ML.
? In addition to cash of $36.8M at December 31, 2012, the company
recently announced a new $65M reserve-based lending facility with
an initial borrowing base of $20M. This is an important milestone in
our view for RFE at this stage of its evolution.
Valuation
Using a NAV-based methodology, our A$0.94 price target is based on a
20% discount to an A$1.17 NAV.