ENDEV ENERGY INC. $1.19 (Toronto symbol ENE; SI Rating: Speculative) (1-888-739-4623; www.endevenergy.com; Shares outstanding: 88.9 million; Market cap: $105.8 million) explores for and develops oil and natural gas in central Alberta.
In the three months ended September 30, 2006, Endev’s revenue fell 20.8%, to $14 million from $17.6 million. Cash flow per share fell 38.5%, to $0.08 from $0.13.
Endev’s average daily output rose 11% in the latest quarter, to 3,746 barrels of oil equivalent from 3,376 barrels. In 2007, Endev plans to spend $40 million on exploration and development. It plans to raise output to around 4,300 barrels of oil equivalent.
In the quarter, the company’s average realized price for oil was $70.16 U.S. However, its realized price for gas dropped 40%, to $5.49 U.S. from $9.15 U.S. The lower price pushed down cash flow, given the company’s high gas weighting. Production is weighted 21% toward crude oil and liquids and 79% natural gas.
Endev’s debt of $42.6 million is 45% of shareholders’ equity, but just 1.5 times annual cash flow.
The company’s shares now trade for 3.7 times cash flow.
Endev is a buy for aggressive investors.