I never have put much stock in Zacks, JPM et al except for the lady at Stiefel have it far north of here. The company will literally have more in earnings going forward this year that the SP is currently at. Book value $27 in change assets up the wazoo, 8 straight estimate beats they do one thing extremely well beat the numbers time and time again.
One of the problems with the company it is hard to find any relevant info on it, on fintel for example, it's not even there has some Mindray company on MR ticker, heck wasn't til a couple months ago that it wasn't the same on Ihub.
JPM did recent report on NG companies and these were their views on MR
North America Equity Research
03 October 2019
We expect NGL prices to dial-in at 27% of WTI at the low-end of the company’s guidance range of 27% to 33% of WTI in 3Q19 due to weak NGL prices in the quarter.
Expect 3Q19 production at the high end of guidance: We are modeling 3Q19 production of 614.7 MMcfe/d, 0.8% above the Street estimate of 609.6 MMcfe/d and at the high-end of the 600 to 615 MMcfe/d guidance range driven by reductions in cycle times and improved well performance.
Operations update: MR is currently running 1 rig and 1 completion crew. In 3Q19, we model 16 gross and 13.8 net TILs with 2/3rds of completion activity in the liquids rich Marcellus and Utica areas and 1/3rd of its activity concentrated in the dry gas region. We are modeling 3Q19 capex of $80 MM, 8.3% below consensus at $92 MM.
2020 production and capex expectations: We are modeling 2020 production at 600.4 MMcf/d, 0.3% below the Street production estimate of 602.4 MMcf/d. This would equate to 9.8% growth vs. 2019 production of 546.8 MMcf/d. We assume 1.5 average drilling rigs in 2020, 28 TILs, and $275 MM of capex, which is 13.3% above the Street. We expected the 2020 program to be more focused on liquids rich drilling opportunities (~65% of activity concentrated in Marcellus and Utica condensate area and 35% of activity in dry gas areas).
Long-term modeling assumptions: We are assuming flat activity, with ~1.6 average drilling rigs and 30 TILs at average capex of $288 MM per annum. This supports low-single digit production growth from 2021 through 2025. In 2021, we model 615.3 MMcf/d of production, which grows to 686.5 MMcf/d of production in 2025.
Borrowing base update: On September 23, MR announced a 25% increase in its borrowing base to $500 MM from a previous base of $400 MM and an expansion of its lending group from 13 to 15 members. As a result, MR’s pro-forma liquidity increased by $100 MM to $353 MM at the end of 2Q19.
MR is trading at a discount to our PDP Valuation: At current strip prices, we value MR’s PDP PV-10 at $959 MM, which after deducting net debt as of June
This document is being provided for the exclusive use of MXXXXXX CXXXXl at RXXXXXXE CAPITAL, L.P..
Axxx Jxxxxx
(1-212) 622-xxxx axxxxxxx@jpmchase.com
North America Equity Research
03 October 2019
2019, results in a valuation of $341 MM or $9.53 per share, which is significantly above the current trading levels. We estimate YE18 PDP reserves of 1.07 Tcfe, including 8.3 MMBo of oil, 30.7 MMBo of NGLs and 835.8 Bcfe of gas reserves.
Estimate revision: We are updating our MR model to incorporate updated company guidance, long-term modeling through 2025 and 3Q19 commodity prices. Our 2019/2020 EPS estimates move to $2.26/$1.93 from $1.76/$1.06. Our 2019/2020 CFPS estimates move to $7.07/$7.48 from $7.12/$7.55. Our model is based on 2019/2020 oil and gas prices of $57.37/$54.52 per bbl and $2.72/$2.54 per Mcf vs. our prior commodity price assumption of $56.82/$54.80 per bbl and $2.60/$2.48 per Mcf.
MR operations are focused in the Utica and Marcellus, with core acreage in the dry gas and liquids rich windows. MR shares have significant leverage to an improvement in commodity prices (i.e., natural gas), but we expect the stock to be range-bound given weak natural gas prices that will limit the potential of MR to drive significant value creation through the drillbit. As compared to its Appalachian peers, MR screens at the middle of the pack on production costs, cash margins, leverage ratios and gas break-even prices. Hence, we believe a Neutral rating is justified.
Valuation
Natural gas stocks have been one of the weakest segments of the broader market over the past five-years as runaway supply growth from shale productivity gains and associated gas growth has overwhelmed demand, resulting in severe margin compression. Equity values have also been negatively impacted by the shift from asset based measures such as NAV toward cash flow and FCF based metrics. We expect supply headwinds to persist through 2020 for gas and liquids, although we do anticipate balances to improve in 2H20 as producers as a whole begin to moderate activity levels
Using our NAV methodology, we calculate a net asset value of around $15 per share for MR. At current levels, the shares are trading at a substantial discount to NAV, but NAV based valuation metrics appear no longer appear to be the appropriate approach given the structural oversupply in the gas market. We do not have a Dec-20 price target on MR stock.
Risks to Rating
All E&P companies face the same general risks, including commodity price volatility, infrastructure constraints, oilfield service cost inflation upon accelerating activity, and unexpected geologic irregularities. Furthermore, type curves and proved reserve/resource potential remain underpinned by numerous assumptions subject to uncertainty that can materially change.
An unexpected rise in natural gas price could drive the stock above our price target given the company’s leverage to higher natural gas prices.
This document is being provided for the exclusive use of MXXXXXX CXXXXl at RXXXXXXE CAPITAL, L.P..
Axxx Jxxxxx
(1-212) 622-xxxx axxxxxxx@jpmchase.com
North America Equity Research
03 October 2019
Wider-than-expected basis differentials for MR.
If the company does not achieve the growth rates and costs that investors expect
and to which the company has guided, the stock could underperform.
Upside could come in the form of an improved commodity price outlook that drives acceleration in activity and increases NAV.
MR’s production and activity are concentrated in the Utica and Marcellus Shales in eastern Ohio, West Virginia, and NEPA. Winter weather, flooding, or issues with infrastructure could negatively impact the company’s operations and cause the stock to underperform.
These insider buys today don't hurt a bit.
$MR filed SEC form 4: Director ZORICH ROBERT L:
Bought 5311 of Common Stock at price 3.53 on 2019-10-08. sec.gov/Archives/edgar/data...
fla
Oct 10th, 5:06 pm
$MR filed SEC form 4: Director Burroughs Mark E JR:
Bought 6728 of Common Stock at price 3.53 on 2019-10-08. sec.gov/Archives/edgar/data...
fla
Oct 10th, 5:06 pm
$MR filed SEC form 4: Director PHILLIPS D MARTIN:
Bought 5311 of Common Stock at price 3.53 on 2019-10-08. sec.gov/Archives/edgar/data...
fla
Oct 10th, 5:05 pm
$MR filed SEC form 4: Director Swanson Douglas E Jr:
Bought 5311 of Common Stock at price 3.53 on 2019-10-08. sec.gov/Archives/edgar/data...
Peace out.
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