Terra energy (TTR)
Posted: Friday Apr 28 9:12:06AM 2006
For me personally it was actually a little refreshing to see Terra post some cash flow numbers that they are capable of rather than the last two quarters which have been very disappointing due to a number of factors including low priced hedges, mechanical and pipeline issues, spare facility capacity, etc. Production numbers for Q4 were still well below my expectations. I am currently attempting to clean up the QIS Portfolio and have been selling off some of our non-core holdings and small positions such as Terra. I am also forced to look at Terra on a comparison basis with other core holdings such as Expedition. Terra is looking to do about $35 to $40 million for 2006 or about $0.50 per share. The stock is presently trading at 4.6 times cash flow. Expedition is projecting cash flow of about $5.3 million or $0.19 per share (trading at 3.1 times cash flow). Both companies expect to double production during 2006 and both companies are presently trading at under net asset value. If both companies succeed in doubling production this year and if natural gas prices improve heading into the heating season, they will both post significant cash flow growth in 2007 and the trading multiples should be even more attractive at that point. There are lots of other comparisons that can be done with Expedition and other companies but I wanted to pass along some thoughts. Good Luck!