Vancouver, British Columbia--(Newsfile Corp. - September 10, 2013) - PI Financial Corp. has initiated coverage on Artek Exploration (TSX: RTK). Analyst Kuno Ryckborst gives the company a buy recommendation, with a speculative risk rating, and a12-month target of $4.50, a premium of 29% to the $3.48 price the day the report was issued.
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Artek is a domestic junior oil and gas producer focused on de-risking several prolific, liquid rich natural gas plays at its Inga/Fireweed property in Northeast British Columbia.
The company has also identified one light oil resource play, plus six other natural gas focused projects within the Peace River Arch and Deep Basin areas of Alberta and British Columbia.
The research report projects 2014 estimated production to grow significantly via the drill bit to average 5,860 barrels of oil equivalent per day, with 45% oil and liquids, versus the expected 2013 estimated exit guidance of 4,800 to 5,000 barrels of oil equivalent per day, with 40% oil and liquids.
Artek is in the early stages of firming up the Montney play with high conviction on existing Inga/Fireweed lands making Artek a compelling takeout or merger candidate. From a merger perspective, PI Financial sees Kelt Exploration (TSX: KEL) as the most likely merger candidate given its assets overlap and provide many synergies that can enhance its valuation further. Likely buyers are several key majors with large Montney capex budgets that are currently drilling in the immediate area.
The company is run by an experienced and technically proficient management and board that have a history of starting junior E & P companies and growing them to a certain production level and reserve base with a pre-determined exit strategy. Management has a proven ability to access bank and equity capital even during challenging market conditions.
Most recently, Artek successfully raised $39 million of gross equity proceeds on a bought deal basis, and increased its borrowing base credit facility from $65 to $75 million.
Analyst Kuno Ryckborst stated, "We believe Artek to be an appealing investment opportunity. Artek is trading at a 23% discount to its December 31, 2012 net asset value of $4.51 per share before considering the additional value created in 2013."
The company currently trades at $3.60, below the $4.50 target price, and with 62.5 million shares outstanding, the company is capitalized at $225 million.
For more information, please visit the company’s website www.artekexploration.com or contact Darryl Metcalfe, President & CEO at 403-532-1888 or email info@artekexploration.com.
For more information about PI Financial or to obtain a copy of their research report, contact your nearest PI Financial office. Their branches are listed on their website at www.pifinancialcorp.com.
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