Imperial Capital Reiterates In-Line, Lowers PT On Warren Resources On Multiple Challenges Ahead

In a report published Thursday, Imperial Capital analyst Kim Pacanovsky reiterated an In-Line rating on Warren Resources, Inc. (NASDAQ: WRES), but lowered the price target from $1.60 to $0.75.

In the report, Imperial Capital noted, "We are maintaining our In-Line rating on WRES shares and lowering our one-year target to $0.75 from $1.60, due to weak natural gas pricing and large negative Appalachian differentials, along with the poor visibility of direct gas sales to P&G beyond mid-2015.

"We are cautiously neutral on shares of WRES, noting that we do not expect reserve increases in 2015 due to low spending. If reserves drop slightly, which is a possibility, this could serve to reduce the borrowing base below the expected April redetermination. While reducing activity substantially in 2015 (which will likely continue into 2016), Warren is also looking at other options, such as divestitures and additional capital markets transactions, to ensure its health in 2016."

Warren Resources closed on Wednesday at $0.90.