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Analyst keeps strong buy rating on Greenfields on expected production growth; shares rally



Shares of Greenfields Petroleum Corp. (CVE:GNF) rallied over 11 per cent Wednesday, as analyst Ryan Galloway kept his strong buy rating on the company following better-than-expected results from its Gum Deniz well in the Republic of Azerbaijan.

Casimir Capital’s Galloway also maintained his $9.75 per share target price on Greenfields, noting that the Gum Deniz (GD) 715 well flowed at an initial rate of 1,047 barrels of oil per day (bbls/d), nearly four times higher than expectations from pre-drill, due to encountering a new undepleted zone in the SP horizon of the Gum Deniz oil Field 

“Based on these results, the partners have approved another rig, the PSG 3 rig, for drilling in the Gum Deniz field from platform 208 with an expected start-up date of the third quarter of 2013,” the analyst said in a research note. 

Greenfields has also approved a 3D seismic program for this summer to identify further drilling opportunities in the Gum Deniz field. Currently, there are around 90 development locations similar to the GD 715 that the company and its partners plan to drill over the next three to five years. 

“Baseline production in March ticked up slightly to 1,161barrels of oil equivalent per day (boe/d) versus 1,018 boe/d in February,” said Galloway, adding that he expects solid growth into April with a full month of production on the new well. 

“With production growth and anticipated reductions in general and administrative, we estimate that Greenfields can exit the year at around $35 million in annual run-rate cash flow and 2,850 boe/d.”

Greenfields Petroleum is a junior oil and natural gas company focused on the development and production of proven oil and gas reserves principally in the Republic of Azerbaijan.

The company plans to expand its oil and gas assets through further farm-ins, and acquisitions of production sharing agreements from foreign governments containing previously discovered but under-developed international oil and gas fields, also known as "greenfields".

Shares were up 11.39 per cent as at about 1 p.m. EDT Wednesday, trading at $4.40.


Quick facts: Greenfields Petroleum Corp

Price: 0.045 CAD

Market: TSX-V
Market Cap: $1.95 m


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