Analysts Ecstatic Over Baytex Energy

As expected, Baytex Energy Trust (BTE) chopped its monthly payout to shareholders Wednesday, down from C$0.18 a month to C$0.25, a 28% drop. It also unveiled a modest spending plan.

To paraphrase reaction from the analysts: Buy! Buy lots! Or at the very least, hold!

To properly quote reaction from the analysts:

Canaccord Adams:

Baytex remains our top pick within the energy trust space, and we continue to believe there is significant long-term development and value potential in its existing heavy oil assets and potentially from its new light oil resource plays.

Buy, with a C$26 target price.

Jeff Martin, an analyst at Peters & Co. Ltd:

We continue to be impressed with the trust’s operational results and its focus on adding additional drilling inventory, thereby positioning itself to successfully convert to a corporation in 2011. However, we believe the distribution cut announced [Wednesday] was not enough and, in the context of current commodity prices, adds too much incremental debt throughout 2009.

Sector perform, with a C$17 target price.

Kristopher Zack, an analyst at Raymond James:

We like the financial discipline demonstrated by the trust given the sharp decline in commodity prices.

Outperform, with a C$22 target price.

Grant Hofer, UBS Securities Inc:

"We view this as a prudent move." Buy, with a C$21.50 price target.

Comments

[yank:]

Does anyone understand that BTE is simply "taking back" the dividend increase from this summer? They are just going back to the same level of distribution they had in the 1st qtr of 2008. Not a big deal as far as I'm concerned.

2008 Dec 07 12:08 PM

[Steven Ward:]

BTE's biggest "value potential" is in her heavy oil with the wild discount swings heavy oil has seen the last 3 years.

Her Seal assets are like PWE's oil sands assets, management brings it out and talks about the potential and little gets done.BTE lives and maybe dies with her Frontier Refinery contract. Watch how that goes.
BTE should eliminate the dividend and get on with the E&P operations. The shareholder will be better off in the long run.

2008 Dec 08 01:43 PM

[whisperonth...:]

"...chopped its monthly payout to shareholders Wednesday, down from C$0.18 a month to C$0.25, a 28% drop." Seems like funny math, to me... since when is 25 lower than 18, except when it's a negative number?

2008 Dec 08 02:22 PM

[123:]

My problem with Baytex has always been that its enterprise value to reserves ratio is higher than most other oil cos.

Jan 25 09:45 PM