07-24-2014, 08:45 AM
These very smart guys at Macquarie have an $80 price target. NAVs are not price targets. Energy companies trade at discounts to their NAVS for various reasons including growth rates, reserve quality, management credibility, balance sheets etc. The market sets the discount. The report is excellent though as it outlines the risk adjustment you can make or choose not to make to that NAV. But be clear, their price target is $80 as in their own words EA is under appraised, FID is in '16 and exploration is not 100% all the time. They also thought Wahoo was shallower than apparently it is. They are also pretty conservative in that price target so I wouldn't take them lock, stock and barrel either. Can't cherry pick just the best stuff. Best read with a balanced look at what they're saying, which is very positive but not without uncertainties.