Thursday, FBR Capital Markets initiated coverage of Resolute Energy Corp. (REN) stock with an Outperform rating and a price target of $15.
Analyst Rehan Rashid said that his rating reflects management's strong track record in creating shareholder value and the fact that operationally, any incremental recovery beyond 34% of the original oil in place in Aneth could yield 50 MMboe of net potential atop 49.5 MMboe booked at year-end 2008 (at 40% recovery).
The analyst noted that Resolute, with a strong balance sheet, is positioned ideally to benefit from current industry merger and acquisition dynamics and could acquire properties in the range of $50 million to $500 million, relative to its $600 million market capitalization.
The brokerage added that Resolute can increase production by a 10% compound annual growth rate through 2014 with only $60 million capital deployed per year (within cash flow) and realize operating margins above $25/bbl based on its $65/bbl West Texas Intermediate reference price.
FBR said that 63% of 2010 oil production is fixed at $67/bbl, and 50% of 2011 production is fixed at $68/bbl. Based on the brokerage's estimates, Resolute can generate $53 million of free cash flow net of capex (2009 through 2012) and fully pay down the credit facility by year-end 2012.
Currently, REN is up $0.30 or 2.79% and trading at $11.06.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.