Raising MEG Energy's FVE; Stock Still Overvalued
After incorporating MEG Energy’s improved cost structure into our model, we are raising our fair value estimate to CAD 4.50 from our previous estimate of CAD 4. Despite the increase, the stock still looks overvalued, trading near CAD 5.50 per share, which represents an 20% premium to our fair value estimate. While MEG is one step ahead of its peers in implementing solvent-assisted technology, the company will need additional capital to fund its intended long-term growth initiatives. MEG’s operat...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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