Painted Pony – Update/ NR

Painted Pony Petroleum (PPY-TSE)

Proving out the plan, on route to 20,500 boe/d in 2015 Investment highlights:

Painted Pony released Q1 results yesterday that were largely in line with expectations. More importantly the release contained a positive operational update that left us with three key takeaways:
1. The recent step change in Montney well rates
resulting from a switch in completion methods
is not only continuing, it appears to be getting
even better.
2. PPY appears well on pace to reach its 2015
production target of 20,500 boe/d in 2015
(annual average), in our view. This represents
an increase in production per share of ~55%
this year and another ~55% per share in 2015.
3. On our updated numbers PPY is no longer
expensive on cash flow multiples; in fact, it is
trading at a discount to its peers, despite the
growth profile, and extensive running room in
the Montney. Historically PPY has traded at
~15x EV/DACF, but on our increased
estimates it is now trading at just 6.5x 2015E
EV/DACF versus its gas weighted peers at
7.3x.
In our view, the above highlights are significant developments for Painted Pony. Despite the strength in PPY’s share price in recent months, we believe the stock is poised to move
significantly higher, as the company continues to execute on its aggressive growth plan. Painted Pony remains our  favorite pick in the natural gas space.

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