Two examples of “Safety=Diversification vs.
Wealth = Concentration” would be the following…
Whitecap Resources (WCP-tsx: $10.73, 28June2013) - Anticipating further dividend
growth in 2014; retains industry leading sustainability.
Whitecap Resources is an intermediate
exploration and production company with
a significant land base operating in the
Western Canadian Sedimentary Basin.
It was formed as the product of a reverse
takeover of Spitfire Energy in 2010.
5% dividend boost conservative, currently paying a 5.6% yield: Canaccord analyst Steve
Toth believes they have more room to move in 2014 and tells us, “WCP maintains the lowest total
payout ratio in the sector at 96% and 93% in 2013/2014E, respectively, which we believe could
support an increase by as much as 15% while maintaining a total payout ratio below 100%.”
Valuation: “Whitecap currently trades at a 0.9x multiple to CNAV estimate, 7.0x EV/DACF, and
$107,400/BOEPD based on our 2013 estimates vs. its peer group averages of 0.8x CNAV, 7.6x
EV/DACF, and $68,200/BOEPD.” (CG 27June2013)
…due to the length of the article, please call/email me if you would like it in its entirety.
Bellatrix Exploration (BXE-tsx: $6.38, 28June2013) - Closes one JV transaction, two
options to expand remain
Bellatrix Exploration is an intermediate sized exploration and production company with operations
in Western Canada primarily focused on multi-zone opportunities in west central Alberta.
Two remaining JV options provide additional ~$1/share potential value. Steve Toth tells us,
“Further acceleration of its large undeveloped well inventory (>1,000 drilling locations in its two
core target formations) is key to further revaluation of the stock. The two remaining JV options in
the deal could potentially bring in an incremental $150 million. Assuming similar accretion, this
has the potential to increase our valuation by a further ~$1.00/share.”
Valuation: “Bellatrix trades at a 0.6x
multiple to CNAV, a 4.9x EV/DACF
multiple, and $38,700 per BOEPD
based on our 2013 estimates,
compared to peer group averages of
0.8x NAV, 7.6x EV/DACF, and
$67,800/BOEPD.” (CG 27June2013)