Opinion

Coverage Initiated on Oil E&P, Numerous Catalysts Outlined


Ian Macqueen, an analyst with Eight Capital, revealed the areas of potential upside for this energy firm.

Pump jack

In a March 27 research note, analyst Ian Macqueen reported that Eight Capital initiated coverage on Frontera Energy Corp. (FEC:TSX) with a Buy rating and CA$52.50 per share target price. In comparison, the stock is currently trading at around CA$36.11 per share.

About Frontera's overall prospects, Macqueen concluded, "Short term, we see good upside to the company share price as it executes on some of the 2018-2019 catalysts outlined. . .medium term, we believe that the company can mitigate declines in 2019 and 2020 by appraising the Guatiquia and Quifa properties."

Longer term though, the analyst added, Frontera "needs to establish new growth properties (production and reserves) that do not currently exist within the portfolio." Those could be or include the Block 192 production contract and/or a discovery in LLA-25 at Acorazado.

Macqueen outlined six possible value-adding catalysts for Frontera:

1. Upwardly revised reserves at Quifa and Guatiquia based on results from drilling in 2017. For instance, Macqueen indicated that an additional 10 million barrels of heavy oil reserves at Quifa would add a value to the stock of about CA$2.75 per share, and the same at Guatiquia would add about CA$3.50 per share. "Even reasonably small reserve additions would be immediately impactful to our model," he added. "We think that there is a good chance that Frontera will get positive revisions at year-end 2017."

2. A win in the arbitration with the Agencia Nacional de Hidrocarburos in Colombia over high-priced royalties at Corcel. A victory would mean Frontera could eliminate about $200 million in current liabilities.

3. A positive outcome from renegotiated ship-or-pay contracts regarding the Oleoducto Bicentenario de Colombia S.A.S. (OBC) pipeline. Mandatory renegotiations, anticipated in Q2/18, "could reduce or eliminate ~$100M per year in unused OBC capacity charges," Macqueen noted.

4. Favorable exploration results. In Q1/18, Frontera plans to drill on the Guatiquia Block with three rigs. In Q2/18, it will initiate drilling on the LLA-25 block, with the Acorazado-1 exploration well "testing a ~54 million barrel prospect," wrote Macqueen. "Although it is high risk, success at Acorazado could allow the company to offset declines until at least 2020."

5. Landing the 30-year contract to produce oil from Block 192 in Peru's Marañon Basin. The public bidding process for the contract is slated to start in late 2018. Frontera, which currently has a temporary service agreement to drill there, "sees significant potential on the block" and "feels that the company is well positioned to win the contract," Macqueen relayed.

6. Increased EBITDA capacity at Puerto Bahia. Following completion of proposed infrastructure, including a new dry dock and pipeline connection to the Refineria de Cartagena, Frontera could see an increase in earnings up to greater than $100 million per year in 2020 from $50 million today.



New service from OilVoice
Trip Shepherd is for companies who need to track their staff in areas of risk.
It's free to use, so we invite you to try it.

Visit source site

https://streetwisereports.com/article/2018/03/29/c...

Oile&pStreetwise ReportsFrontera EnergyTSX

More items from oilvoice


Cyber Security Experts Unite to Protect Europe’s Critical Industries

CS4CA Summit Returns to London this October Staying abreast of fast-paced industry developments is crucial for cyber security professionals. And while one can learn a lot from publications and social media, it's hard to beat the value of insights gained first-hand from peers. This is why 150+ IT ...

OilVoice Press - OilVoice


Posted 7 months agoPress > cybereurope

Africa E&P Summit

The organisers of the Africa E&P Summit are bringing together Africa's leading exploration companies and governments, just one of the many reasons why you should be attending frontier's event that they are organising and hosting in London at the IET: Savoy Place, 22-23 May. Over 200 key senior exec ...

OilVoice Press - OilVoice


Posted 11 months agoPress > Africasummitoil summit +2

Equinor Deepens in Offshore Wind in Poland

Equinor has exercised an option to acquire a 50 % interest in the offshore wind development project Bałtyk I in Poland from Polenergia. This transaction is a follow-up of the agreement between the two companies which came into force in May 2018 , by which Equinor acquired a 50 % inter ...

OilVoice Press - OilVoice


Posted 1 year agoPress > EquinorEquinor EnergyPoland +2

Nigeria has highest capex on crude and natural gas projects in sub-Saharan Africa Over Next Seven Years, says GlobalData

Nigeria accounts for more than 34% of the proposed capital expenditure (capex) on planned and announced crude and natural gas projects in the sub-Saharan Africa over the period 2018–2025, according to GlobalData , a leading data and analytics company. The company's report: ‘H2 2018 Production ...

OilVoice Press - OilVoice


Posted 1 year agoOpinion > GlobalDataNigeriaCrude +5

CNOOC Signs Strategic Cooperation Agreements with 9 International Oil Companies

HONG KONG, Dec. 18, 2018 /PRNewswire/ -- CNOOC Limited (the "Company", SEHK: 00883, NYSE: CEO, TSX: CNU) announced today that its parent company, China National Offshore Oil Corporation (CNOOC), has signed Strategic Cooperation Agreements with 9 international oil companies including: Chevron, Conoco ...

OilVoice Press - OilVoice


Posted 1 year agoPress > CNOOCChina National Offshore Oil CorporationChevron +11
All posts from oilvoice