Q: Ever since it announced on Jan 30(after markets close) that Q4 production exceeds guidance and that it may drop in Q1 due to poor weather,Erf had dropped some 5.81%.Reports on Feb 22. Please comment & U opinion on the co. Buy-Add/Hold/or Sell. Txs for u usual great services & opinions
5i Research Answer:
ERF is very cheap and has a very solid balance sheet. The forecast release was not great, but it is not really an issue with the company. As noted, 4Q production also did beat production estimates. Consensus still calls for about 20% growth this year. It is hard to fight declining commodity prices, but based on its valuation and balance sheet we would consider it a HOLD and a BUY on any further weakness.