Fellow Montney producer RMP Energy Inc. (RMP) lost four cents to 72 cents on 996,300 shares, after releasing its third quarter results. It produced 4,010 barrels of oil equivalent a day in the third quarter, including 2,600 barrels a day from assets that it has since sold. Only 1,410 barrels a day came from the company's remaining asset, the early-stage Elmworth. In the third quarter, only two Elmworth wells were producing concurrently, because of gas compression capacity constraints. RMP installed additional capacity in October, so Elmworth produced 2,100 barrels a day from three wells during that month. This winter, RMP plans to drill five more wells at Elmworth. It will spud the first well this week.
Analysts' reactions to the third quarter results varied. Kurt Molnar of Raymond James downgraded his rating to "underperform" from "sector perform" and lowered his price target to 55 cents from 60 cents, saying he "cannot help but worry" about RMP's costs, which were far higher than he had predicted. Todd Kepler of Laurentian Bank Securities, on the other hand, upgraded his rating to "speculative buy" from "hold" and raised his price target to $1 from 65 cents. He sees great potential in Elmworth. Meanwhile, Cameron Bean of Scotia Capital rested somewhere in the middle, maintaining his rating of "sector perform" and his price target of 75 cents. He shares Mr. Kepler's optimism about Elmworth, but also shares some of Mr. Molnar's concerns about costs. Operating and transportation costs were both higher than analysts had predicted, and as a result, RMP's per-share cash flow in the third quarter came to negative two cents, compared with analysts' predictions of positive one cent. Also included in the third quarter costs were "executive management restructuring" costs of about $2-million. In July, the company appointed a new president, a new CEO and three new vice-presidents. It is not finished making changes yet; its latest plan is to rename itself Iron Bridge Resources Inc. by the end of the month.