Global Hunter Securities Maintains Rating, PT On PETD

Global Hunter Securities is maintaining its Accumulate rating and its $50 price target on PDC Energy (NASDAQ: PETD) as the company does its best to deal with Rocky Mountain gas prices.

Says Global Hunter, in the report, “PDC's impressive production growth in 1Q11 was overshadowed by horrendous natural gas prices in the Rocky Mountains. While hedging helped pricing, it wasn't enough to overcome a basin differential currently at $1.19 per Mcfe. The company continues to focus a substantial portion of 2011 capex (78%) on its oil or liquids related projects in the Permian Basin, Wattenberg and Niobrara positions in Colorado. This should allow the company to exit 2011 at 32% oil/liquids, up from 24% in 2010. We have adjusted our estimates to reflect a greater differential and as such our 2011 and 2012 CFPS estimates drop from $7.38 and $10.96 to $6.41 and $10.00, respectively. Given the recent pullback in PDC's shares, we are maintaining our Accumulate rating with a $50.00 price target reflecting 5x our 2012 CFPS estimate. While the company lacks a notable near-term catalyst, at current prices the stock seems to have more upside than downside.”

PETD closed yesterday at $36.69.