UTS Energy Financially Solid, But Needs Help With Fort Hills - UBS

Its cash on hand, the earn-in at Fort Hills, and the delayed and scaled back plans for the project, means UTS Energy Corp. (UEYCF.PK) is now fully funded through the first quarter of 2011, according to UBS analyst Andrew Potter. This compares to an outlook from just September suggesting the company was in need of substantial financing by the end of 2009.

Maintaining a “buy” rating with a C$3 price target on the stock, Mr. Potter told clients:

Overall we believe UTS is in solid financial shape but for investors to re-rate the stock we need to see a combination of definition around the Fort Hills project and substantially higher oil prices.

The company unveiled its 2009 capital budget on Thursday, which calls for C$540-million in spending at Fort Hills, of which UTS is responsible for C$24.5-million. During the first quarter, Petro-Canada will reassess the project scope, budget and schedule, while also negotiating a lease extension agreement with the Alberta Government.

Comments

[Steven Ward:]

UTS does not control its destiny. At best it is a warrant on higher oil prices. OPTI maybe a better such "warrant", it at least has production, but what are all these late comers costs for oil sands, maybe as high as 80 a barrel.

2008 Dec 12 10:37 AM