Canaccord Genuity

Sundance Energy (SEA) closed at $0.14 on Tuesday, and has received a A$0.185 (US$0.14ps) indicative offer from a US based private equity manager with expertise in the energy sector. The bid is highly conditional and subject to due diligence. With SEA trading at a significant discount to the bid price we see the risk reward as compelling. We retain our BUY call and A$0.39ps price target, which is based on a risked DCF using a 10% discount rate, long-term oil price of US$60/bbl and AUDUSD of 0.7. Oil price stability has enabled a significant ramp-up in US M&A with transactions in the 2Q reaching $16.9bn vs $5.7bn in the 1Q; Private Equity backed Enervest recently paid $1.2bn for two Eagle Ford properties. During SEA's history it has sold ~$385mn in assets generating an average return on divestment of 85%. It is a proven deal doer with strong relationships with numerous US upstream players. Livewire subscribers can see our updated note here: (VIEW LINK)


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