Lowering MEG Energy's Fair Value Estimate to CAD 6; Stock Looks Modestly Overvalued
After adjusting our model to incorporate MEG’s fourth-quarter results and new balance sheet structure, we are lowering our fair value estimate to CAD 6 per share from our previous estimate of CAD 6.50 per share. Our no-moat rating remains unchanged. Even though the company raised capital to fund its near-term growth projects and restructured the terms of its existing debt obligations to extend the duration, we believe that MEG will need to raise future capital to complete its intended long-term ...MEG Energy is engaged in a steam assisted gravity drainage oil sands development at its 80 section Christina Lake Regional Project. As of Dec 31 2010, Co. had total proved bitumen reserves of 605.9 gross thousand barrels (470.5 net thousand barrels).
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