NATIONAL BANK FINANCIAL:
Blackbird is set to report significant catalysts to the market, to validate its land position to support an ultimate resource value on the order of $3.00 per share. For those investors with an appetite for high impact torque around upcoming catalysts, BBI is certainly one of the only relevant targets in this market. In conjunction with this note we are initiating coverage of BBI.
Given Blackbird is at the infancy stage of development at East Elmworth and is not expected to bring production on stream until late calendar 2015, we have chosen to exclude a comparables section. Blackbird is unique to our coverage universe given it is pre-production and pre-cash flow for much of our published estimate horizon. For perspective, Blackbird currently trades at 13.2x 2016e EV/DACF vs. the resource gas peer group at 7.7x.
We are initiating coverage of Blackbird with an Outperform rating and $0.70 target price. Our target price is predicated on an updated valuation methodology that solely reflects a cash flow multiple and is correlated to an asset value perspective (from prior base cash flow multiple plus risked upside). For Blackbird, our target price is based on a 31.3x 2016e EV/DACF cash flow multiple as the company is currently pre-production and pre-cash flow and we believe considerable value could be unlocked across the companies land base. This compares with the resource gas peer average of 8.9x. This target price compares with a 2016e P+P NAV of $0.30 per share plus an estimated resource upside at its Middle and Upper Montney projects at west Elmworth of $0.40 per share, which implies a risk factor of 13%.
Read more at www.stockhouse.com/companies/bullboard/...#W8brZA7kE3Ij3OpP.99