Raising Fair Value Estimate for MEG Energy to CAD 5.50; Stock Looks Fairly Valued
After adjusting our model to incorporate our updated price forecast for West Texas Intermediate, we are raising our fair value estimate for MEG Energy to CAD 5.50 per share from CAD 4. Our no-moat rating remains unchanged.Trading near CAD 5.50 per share, we believe that MEG’s stock price is appropriately valued. While the company has lowered its cost structure and capital spending requirements, we’d remind investors that production isn’t economic at current crude prices and needs WTI prices to...
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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