Hurricane Harvey Creates Buying Opportunity in E&P Company
Source: Streetwise Reports
September 6, 2017 (Investorideas.com Newswire) John White, an analyst with ROTH Capital Partners, explained why the market's reaction to Hurricane Harvey's impact on this energy company creates a favorable time to buy its stock.
In an Aug. 29 research report, John White reported that "the market punished Lonestar Resources Ltd. (LONE:NASDAQ), taking the stock down 7.1%" due to Hurricane Harvey's inclement weather negatively affecting the company's operations.
Those effects included Lonestar's "crude oil purchasers and terminal operators advising of suspended operations on Aug. 24, 2017, which receive LONE's crude oil via truck" and "shutdowns of refineries in the Gulf Coast region," White detailed.
Lonestar also experienced "reduced natural gas sales at its Horned Frog property due to an outage at its amine plant, shut-in of certain wells in Gonzales County due to lack of crude oil trucking availability and certain shut-ins of wells at the Marquis property due to power outages," outlined White.
The ROTH report indicated Lonestar expected the outages to be "short term" and "we concur with this assessment," wrote White. Supporting that opinion, he noted, "LONE advises trucking operations and oil sales have resumed as of today [Aug. 28] in Dimmit and LaSalle counties. LONE further advises the bulk of its operated production is not affected and continues to produce."
More generally, due to Harvey, "news of shutdowns in the Eagle Ford began being released last week by the larger operators in the play," White said.
ROTH, however, believes the market's response vis-à-vis Lonestar's stock to be "an overly harsh reaction to what appear to be short-term production disruptions" and, further, White explained, because the company "recently closed its previously announced acquisition of Eagle Ford shale assets which LONE estimates, on a pro forma basis, increases its Proven reserves by 70%."
Another reason the stock price drop was "particularly harsh" is because projections for Lonestar's Q4/17 production indicate "growth looks strong," described White, "with our Q4/17 production estimate of 9,342 barrels of oil equivalent per day (boe/day) up approximately 66% compared to the actual Q2/17 figure of 5,635 boe/day." Additionally, "the consensus estimate of 8,827 boe/day represents an increase of 57% compared to the actual Q2/17 production level."
ROTH Capital currently has a rating of Buy and a 12-month target price of $9 per share on Lonestar. Its stock is trading at around $2.88 per share.
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release on the Investorideas.com newswire http://www.investorideas.com/News-Upload/
Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.