One company that’s been moving the right way of late is
Novus Energy. They just reported third-quarter results that
were generally neutral. Production was a bit softer than
forecast, but nevertheless was expected, given its pace of
drilling YTD. We’re told the most significant news was that
its Board has created a special committee focused on
“surfacing value”; code for the Street believes the company
is "for sale".
Novus remains one of Canaccord’s “Focus List” stock
pick for its material growth profile, pure-play Viking status,
take-out potential, and what analyst Steve Toth feels is an
attractive valuation. His target is based on 1.0x multiple to
NAV, reflecting a 4.3x 2013E EV/DACF multiple. In this market,
we would gladly take that. Currently, Novus trades at
3.0x EV/DACF and $48,750 EV/boepd on Canaccord’s 2013
estimates, an average discount of ~34% to its light oil weighted peers.