BONAVISTA ENERGY $14.96 - Toronto symbol BNP

BONAVISTA ENERGY $14.96 (Toronto symbol BNP; Shares outstanding: 187.0 million; Market cap: $3.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.6%; www.bonavistaenergy.com) explores for oil and natural gas in Alberta, Saskatchewan and British Columbia. Its production is 63% gas and 37% oil.

In the three months ended September 30, 2013, Bonavista’s cash flow per share gained 27.1%, to $0.61 from $0.48 a year earlier. Its production rose 12.5%, to 73,632 barrels of oil equivalent a day (including gas) from 65,464.

Bonavista plans to spend $500 million to $550 million on exploration and development in 2014. The company’s plans include drilling an estimated 140 to 150 wells, which will let it push up its average 2014 production to as high as 79,000 barrels of oil equivalent a day.

The company’s shares yield a high 5.6%. Bonavista pays out just 35% of its cash flow as dividends.

The stock trades at 5.6 times Bonavista’s forecast 2014 cash flow of $2.68 a share. Its long-term debt of $977.1 million is a manageable 32.6% of its $3.0-billion market cap.

Bonavista Energy Corp. is a buy.

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