Coastal Eng Share Discussion Threads

[dukedosh] 13/11/2013 19:07

* I&S are insider buyers in the open market. Hardly big time buys but buys nonetheless.

Latest 10 SEDI filings (by transaction date) for CEN within the last 6 months (excuse formatting)

FilingDate TransactionDate Insider Name OwnershipType Securities Nature of transaction # or value acquired or disposed of Price

Nov 12/13 Nov 11/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 500 $14.88
USD
Nov 12/13 Nov 11/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 500 $15.01
USD
Nov 12/13 Nov 11/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 750 $15.08
USD
Nov 12/13 Nov 11/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 2,000 $15.05
USD
Nov 11/13 Nov 8/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 2,305 $15.99
USD
Nov 11/13 Nov 8/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 2,200 $16.04
USD
Nov 11/13 Nov 8/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 1,400 $16.01
USD
Nov 11/13 Nov 8/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 600 $15.85
USD
Nov 8/13 Nov 7/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 100 $15.53
USD
Nov 8/13 Nov 7/13 Ingalls & Snyder, LLC Indirect Ownership Common Shares 10 - Acquisition in the public market 700 $15.53
USD

[dukedosh] 13/11/2013 18:04

Updated header as the broker downgrades start to flow.

Here's the latest offering from Credit Suisse, courtesy of iv.

Excuse the formatting. Tables and charts have been omitted.

Coastal Energy (CEN.TO)
DECREASE TARGET PRICE

Rating OUTPERFORM*
Price (11 Nov 13, C$) 16.10
Target price (C$) (from 28.00) 24.50¹
52-week price range 22.85 - 12.71
Market cap. (C$ m) 1,824.85
Enterprise value (C$ m) 1,892.26

Permitting Chokes Growth; Lower TP
■ Few Surprises in Q3/13: Coastal reported Q3/13 offshore production of
20,388 bbls/d, inline with our estimate of 20,300 bbls/d. Adjusted CF of
~US$106 mm was higher than our forecast, primarily due to a lower tax rate.
■ Permitting Risk Continues to Heighten: Environmental permitting risk
continues to heighten in Thailand, with the next meeting currently scheduled
for November 18, 2013. The company will not know if the 11 exploration
permits will be in hand until that time but once received, Coastal will proceed
to submit its application for the larger ~120 development permits for the Bua
Ban area. Until then, growth will likely be choked as Coastal has elected to
forgo a two-rig program, at YE 2013, until the exploration permits are in
hand.
■ Thailand Fracs Disappoint; Malaysia in Sight: The first two frac wells of
the current five-well program were disappointing as they are currently
producing primarily water. The company believes either the deeper section
of the Eocene in these wells were too thin or the open hole completions
were not optimal. In Malaysia, delays to the MOPU repairs have resulted in
first production potentially coming on stream in late November 2013 or later.
■ New Estimates: We lower our 2013E production and CF forecast by 9%
and 8%, respectively. In 2014E we reduce our production and CF estimates
by 21% and 10%, respectively. The disproportionate reduction in 2014E is
primarily a result of higher CF influx in Malaysia from first production. EPS
estimates benefitted from lower taxes due to dampened production growth.
See table below for EPS revisions.
■ Recommendation: We currently maintain our Outperform rating and lower
our target price to C$24.50 (was C$28).

Permits Challenge our Thesis
Our thesis has always included the view that the company is an attractive takeover target,
but reaching that horizon is contingent on Coastal de-risking its acreage in Thailand and
pushing its production upward. Continuing uncertainty on the timeline for receiving
environmental permits in the country has certainly challenged our thesis in the recent past,
but we believe the underlying assets remain attractive and that few peers could match the
company's growth potential once regulatory bottlenecks are removed.

Current Timeline Expectations
The next meeting with the regulatory body is currently scheduled for November 18, 2013,
but the company will not know if the 11 exploration permits will be granted until that time.
Once Coastal receives these exploration permits, the company will likely proceed to
submit the ~120 development permit application covering the Bua Ban area. Combined,
we believe these permits should underpin a multiyear 2-rig drilling program that should
lead to meaningful growth and ultimately result in a potential takeout transaction. Current
expectations have these development permits being received at the end of Q1/14.
However, the current reality sees the company relinquishing one drilling rig until the
exploration permits are in hand.

Current Reality
Once the company finishes its work at the frac wells and workover activities at Bua Ban
Main, the rig currently in Thailand will be relinquished, likely nearing the end of the year.
Although we are not surprised that the company has elected to forgo a two-rig drilling
program in the absence of clarity on receiving its permits, it is nonetheless disappointing.
While the company could take the conservative route and wait for receipt of the larger
~120 development permits, we believe that Coastal could elect to continue with a two-rig
program if they receive the 11 exploration permits alone. If Coastal were to make a new
discovery at any of these exploration drilling locations, the permits would allow follow-up
wells to be drilled in the vicinity. As such, we believe there is enough running room with
just the exploration permits to justify maintaining a two-rig program, while applying and
waiting for the development permits.

Frac Wells Disappoint
The first two pilot frac wells earlier this year provided a substantial degree of optimism that
the program could unlock a substantial amount of resources in the tighter sands within the
Songkhla basin. However, recent well results have somewhat dampened these somewhat
lofty expectations.
Of the current five well program, the first two wells have primarily tested water in the
deeper sections of the Eocene. Another two wells that were completed in the Eocene and
Lower Oligocene are currently still flowing with increasing oil cuts as the wells clean up,
but appear to be inconclusive at this time. The fifth well will be drilled horizontally into the
Eocene, as Coastal continues to experiment with different completion designs.
The company currently suspects that the disappointing frac results in the first two wells
could be either related to targeting thinner zones than the previous successful wells and/or
difference in frac control with an open-hole design, as opposed to packed and targeted
completions design in prior wells. Overall, the frac program remain in its early days with
mixed results thus far.

Q3/13 Results and Lower Estimates
Coastal reported Q3/13 offshore production of 20,388 bbls/d, inline with our estimate of
20,300 bbls/d, while total corporate production including onshore gas production was
21,832 boe/d. Quarterly cash flow was ~US$106 mm, compared to our estimate of
~US$67 mm. The difference was primarily due to greater realized pricing and a lower tax
rate than forecast, with a lesser contribution from inventory drawdown.

Conclusion
Coastal provided few surprises within Q3/13 results, but the operational update was
disappointing. Results at the new frac wells have not yielded meaningful production rates
and first production in Malaysia has been delayed due to MOPU repairs taking longer than
expected. Further, the lack of clarity on receiving its permits has led the company to likely
forgo a two-rig drilling program nearing the end of 2013 and could continue to choke
growth.
Although disappointing, we continue to believe Coastal has attractive underlying assets
that should still position the company as an attractive takeover target over time. However,
reaching that tipping point requires permits to de-risk the acreage.
We maintain our Outperform rating and lower our target price to C$24.50 (was C$28).

[dukedosh] 12/11/2013 22:07

Note from TD Securities:

INTRADAY NOTES (published November 11, 2013)

Coastal Energy Co. (CEN-T) C$15.61
BUY  (Unchanged);
Target: C$25.00  (Prior: C$26.00)

Disappointing Frac Results, But Market Reaction Looks Overdone


Event
Earlier today, Coastal Energy Co. (CEN-T) announced Q3/13 financial results
with an operations update.

Impact: SLIGHTLY NEGATIVE
Negatives:
 We assume that the main reason that Coastal's share price is down today
(down C$1.57 or 9% to C$15.61 after 3 hours of North America trading),
is that the frac results from the first two of a 5-well frac program offshore
Thailand were clearly disappointing, flowing mostly water at low rates
with slight amounts of oil.
 Q3/13 CFPS of $0.71 missed our $0.88 estimate (consensus was at
$0.92). The miss to our expectations was caused by a combination of
lower-than-expected realized pricing and sales from inventory
(production was in line with expectations), as well as higher-thanexpected
debt financing charges and G&A (Exhibit 1).
 Although Coastal believes environmental permits for its 11-well
exploration drilling program are likely to be awarded within weeks, the
company has decided to release the Vicksburg rig and continue its drilling
activities offshore Thailand and Malaysia with only one rig, until a new
Bua Ban development area permit is awarded, expected late in Q1/14.
Positives:
 The third and fourth fracced wells are still cleaning up with increasing oil
cuts. Management is also highlighting that a) previously fracced wells
continue to perform in line with expectations and b) evaluation of
fraccing potential is still in the early stages of being assessed.
 As was previously reported by Coastal's partner on September 30th, the
SPHE-1 well onshore Thailand tested over 50 mmcf/d (Coastal has a 39%
working interest).
 Development drilling operations in Malaysia appear to be progressing
roughly as expected, with first oil still expected by year-end 2013.

[dukedosh] 12/11/2013 15:01

FE note just out - header updated.

Highlights:

We maintain our Outperform recommendation on Coastal Energy with a target price slightly reduced from C$26.40/£17.70 to
C$25.00/£15.64 following the publication of the Company's 3Q13 results.
Results of fracking at Bua Ban Main have been disappointing so far, with two wells out of four watering out. Production start-up in Malaysia is
imminent with two out of three wells already drilled. The deliverability of the wells and the exact start-up date will be important in order for
the company to meet its exit rate guidance.
The price of the shares of the Company has dropped over 15% since Thursday week which appears to us to be an overreaction, particularly
given that we have reduced our Risked NAV by only 6%. The shares trade 15% below our Core NAV and our Risked NAV represents over 60%
premium to the current share price. We also note that the Company's buyback programme could start again soon. The reported potential
cash offer for Coastal of C$20-22.00 per share (30-40% above the current share price) suggests that the shares are cheap.

[royaloak] 11/11/2013 23:02

Sorry guys but I have mentioned it before, waste of time trading this in the UK with rip off quotes from MM's. Okay if you are happy to buy and hold long term perhaps, otherwise buy or sell in Canada with direct market access.

[sg31] 11/11/2013 22:29

Probably CEO, most of the trading is done in Canada (CEN). Spread is normally wide in UK and liquidity problems. I have a few held in UK and vast majority in Canada.

[davr0s] 11/11/2013 21:15

Yes bit disappointing though at least it's recovered a bit in Canada this evening - can't see it dropping much below this level. One thing I find is when the price starts to drop there is no liquidity whatsoever with self trade. So last week when we were dropping I was unable to get a sell price on 1 share all afternoon and that was repeated today. When I called I was told that if I wanted to sell I needed to do it by phone and they would charge £40 for any reasonable volume. Wasnt looking to sell but bit miffed that the option is effectively closed off unless I want to hang on a phone and pay through the nose - is this a CEO share issue or something specific to self trade

[dukedosh] 11/11/2013 20:51

So, after months of trying, the BB fracks are in question.

First oil from KBM seems to always be only a quarter away, yet again. Even when this flows, we'll only get financial numbers as they do not intend to publish flow rates (as stated in the June AGM Q&A).

EIA permits are still delayed hence no replacement rig for the Vicksburg yet.

Sinph gas news is no new news, just rejigged from the last release.

There must now be a concern with depletion rates with the lack of drilling due to take hold.

The only positive I see here is the cash flow. Everything else is again, jam tomorrow but that's an if or maybe. However, going on current form, we'll have to wait another 3 months to find out.

[nermil] 11/11/2013 17:29

I don't see much deviation from what Canaccord predicted on the 27th of October and they have a $23/share target. I'm looking out for the analysts take which hopefully should calm things down a bit. Its not great agreed. But we're down something like 15% since Weds in Toronto. The hysteria is not justified. Based on the market reaction last week, to be honest I thought today's release was a relief. I was expecting worse.

[sg31] 11/11/2013 17:22

I don't think they ever took it seriously. They would only have done so if they knew their assets had no/not much further potential.

[morti1] 11/11/2013 17:15

No disaster just not much progress made hence a drifting share price. Not sure really where the takeover bid lies in all this. No mention of it in statement either. Looks like it fizzled out and came to nothing.

[nermil] 11/11/2013 16:26

Bid not bus. Fat fingers/iPhone

[nermil] 11/11/2013 16:24

With a bit of luck this is the bottom and we can stay in the £11 range until another bus comes in next year which would still represent a discount to Nav versus it's peers. Market behaving like an MOPU just blew up. Only justification I can see for this behaviour is a loss of faith in management. On basis of fundamentals it doesn't stack up.

[briggs1209] 11/11/2013 15:08

with a bit of luck it will head back down to 8 quid and I can buy some more !

[melf] 11/11/2013 14:57

You can't help thinking they'd take the $23 offer now - I certainly would!

[cwa1] 11/11/2013 14:02

Third quarter financials:-

[dragonsteeth] 08/11/2013 22:36

Results by the 15th I believe using the TSx 45 day requirement.

[nermil] 08/11/2013 21:25

Monday results are due I think. It'll e interesting.

[davr0s] 08/11/2013 17:51

Despite our dip today it's broken back over 17 in Canada this evening......

[morti1] 08/11/2013 11:42

Really weird, So strange. No news nothing. Still waiting to account for the sudden drop.

[nermil] 07/11/2013 21:50

I don't see either as the reason behind this. A single report won't have that much weight. Its nothing new since their last report on the 27th of October. And energy stocks had a middling day in Toronto. Nothing great, slightly down, nothing big to report. Shame we have not had any word from the only people likely to know what's going on. Or maybe even they don't know but be nice to hear it from them really.

[davr0s] 07/11/2013 21:29

There also seems to be chatter there that other energy shares were sold off to a similar degree today (though haven't verified this myself)

[dragonsteeth] 07/11/2013 21:22

This from IV. In a strange way this makes me happy that it is not some leaked company failing which caused the 7.5% drop. It appears that this report is/one of the triggers.

The Energy Report Talks to Christopher Brown of Cannacard.

TER: Coastal Energy Co. (CEN:TSX.V) is entertaining the $20/share offer from a

private equity fund in Hong Kong. Is that happening now?

CB: I don't think it's going to go through. Coastal Energy's prospects-combined

with the reserve base of $20–21/share and its prospect inventory of over 500 million

barrels (500 MMbbl) of future opportunities and resources-I think that $20 is quite

a bit under what management would accept to put forward to the public for a

takeover. I think we won't hear anything more about this in the near future.

TER: What do you consider to be a reasonable offer price?

CB: We currently have a target price on Coastal of $23/share. We've accounted for

$20–21 of base value for the company and we've actually given them a couple of

dollars of credit for future risked resource opportunity upside. So, $23 would be the

minimum offer an international company should make for Coastal, at least to get its

attention to move forward and have it open a data room for more technical review. I

think if you really want to provide incentive for shareholders to hand over their

shares, any offer would likely have to be north of $23/share.

TER: What is Coastal Energy's long-term goal, sale or growth?

CB: I think ultimately it's going to be put up for sale as a long-term strategy, but in

the meantime it wants to improve the value to make sure it captures a higher

premium per share. I don't think that an international company is going to see

enough evidence to give it a premium until 2014. The reason I say that is that

Coastal has a number of near-term production growth opportunities. We're going to

see the current production go from 22,000–23,000 barrels of oil equivalent per day

(23,000 boe/d) to upwards of 30,000 boe/d. I think once Coastal has shown the

ability to grow production, it will probably be in a much better position to show other

technical groups that it's worth far more than $20/share.