Peyto Exploration & Development Corp.
Acquires Open Range For $179.5MM; Upgrading To Sector Outperformer
announced yesterday it has entered into an agreement to acquire Open
Range in an all-stock deal with a transaction value of $179.5MM.
Acquired assets include ~5,600 Boe/d (92% gas) and ~110 net sections of
land primarily in the Sundance/Ansell areas of the Deep Basin.
line, we believe this is an excellent acquisition for Peyto due to its
accretiveness, its asset overlap and the value of the acquired
facilities. On an EV per flowing barrel basis, Peyto paid just $31,910
per Boe/d for Open Range versus its current trading metric of $72,970
the acquisition, Peyto has increased 2012 spending by $50MM to $450MM
and now anticipates exiting 2012 at close to 57,000 Boe/d. Peyto has one
of the strongest growth profiles in our group, with an estimated per
share production growth of 28% in 2013 (versus 6% for the group).
? As of July 4, we are upgrading Peyto to Sector Outperformer (from Sector Performer) with an increased price target of $26.00 (from $18.50). We believe Peyto warrants a premium valuation multiple due to its superior per share production growth.