? PBN reported 2012 year-end reserves, replacing 229% of 2012 production through the drill bit (121% net dispositions). 2P reserves grew 2% Y/Y to 205.7 MMBoe, with ~35.8 MMBoe of reserve additions more than replacing 16.9 MMBoe of dispositions and 15.7 MMBoe of production.
? Based on 2P finding, development, and acquisition (FD&A) costs of $16.90/Boe (excluding FDC), and our estimated 2012 cash netback for the company of ~$37.73/Boe, we calculate a strong cash recycle ratio of 2.2x.
? Reflecting higher declines from flush volumes, PBN reported average production of 49,700 Boe/d for January, down ~7% from its average in December of 53,200 Boe/d, but up 5% from its Q4/12 average of 47,192 Boe/d. PBN expects a base decline rate of 39% from Dec 2012 to Dec 2013.
? We are maintaining our Sector Performer rating with an unchanged price target of $11. PBN trades at a 2013E EV/DACF multiple of 5.1x and a P/Risked NAV of 48% (vs. the group at 8.1x and 78%) with a current cash yield of 12.5% (vs. the group at 6.4%).