RMP Energy shares boosted after Stifel Nicolaus raises price target; "among the very best", say analysts

Shares of RMP Energy gained 4 per cent in Toronto, or 18 cents, to sit at $4.67 just before noon. Its stock has climbed almost 18 per cent year-to-date.

RMP Energy's (TSE:RMP) shares got a lift on Tuesday after analysts at Stifel Nicolaus Canada reiterated their buy recommendation and boosted their price target on the company from $5.75 to $6.25, following quarterly results that topped expectations.

Late last week, the crude oil and natural gas company, which is focused on Alberta and Saskatchewan, announced what Stifel analysts Kurt B. Molnar and Patrick J. O'Rourke called a "material increase" in RMP's bank line to $140 million, while also rolling in another 22.75 gross sections of land in greater Ante Creek, in exchange for $13 million in RMP shares.

On Monday, the company kept up the trend of positive news, with quarterly results that exceeded the analyst's expectations, along with announcement to tie in the Ante Creek project to Waskahigan to try to alleviate third party infrastructure constraints that are constricting current production volumes.

Quarterly production of 6,727 barrels of oil equivalent per day topped Stifel's forecast of 6,500 boepd, despite third party facility outages, Molnar and O'Rourke wrote, while cash flow of $21.1 million also beat the brokerage firm's $19.4 million estimate.

The analysts project that RMP’s infrastructure project at Ante Creek is to cost roughly $34 million with the bulk of these expenditures to be in 2013, such that the project can hopefully be complete before the end of the first quarter of next year.

"At that point RMP would hope to have a productive capability in the order of 9,000 Boed which would be suggestive of run rate cash flow in the order of $130 million relative to exit debt level in 2013 expected to be in the order of $105 million," the analysts noted.

"Accordingly, RMP will be in a position to have a record run rate for spending in 2014 even before considering any growth in bank capacity. If all this were not impressive enough, the operational results just put up by RMP were among the very best of all our companies in 1Q13, while the prospect for sustaining this order of relative ranking looks very strong."

Shares of RMP Energy gained 4 per cent in Toronto, or 18 cents, to sit at $4.67 just before noon. Its stock has climbed almost 18 per cent year-to-date.