UTS Energy Corp.'s asset sales have earned it $200-million and a stock upgrade.
National Bank Financial analyst Peter Ogden raised his rating on the bitumen exploration company to "sector perform" from "underperform", and raised his 52-week price target to $2.50 from $1.75.
The stock was up 8 cents at $2.18 on the Toronto Stock Exchange Tuesday morning.
UTS yesterday announced the sale to Imperial Oil and Exxon Mobil of its working interest in three oil sands leases in Alberta's Firebag region, for an estimated $200-million in after-tax proceeds. Mr. Ogden said the deal trades some non-core assets for a big chunk of much-needed cash to help fund UTS's share of the big Fort Hills oil sands development, as well as other projects.
"While UTS was likely under pressure to realize some value from its undeveloped asset base, this is a positive development for the funding of Fort Hills and the valuation of Frontier ... and Equinox," he said.
"Management has done a good job monetizing a relatively ‘non-core’ asset."
The market's response to the deal has so far been muted, but Mr. Ogden suggested the market may have already been anticipating asset sales, given the stock's 38-per-cent gain over the past three months. In fact, he said, some investors might have been looking for something bigger.
"Perhaps investors hoping for a complete sale of the company or more material sale of its Teck JV [joint venture] acreage were disappointed," he suggested.
