Tuesday, January 11, 2011

Venoco's (NYSE:VQ) Monterey Shale Could Quadruple Cash Flow by 2015

Global Hunter Securities says most investors don't understand the value Monterey Shale adds to Venoco (NYSE:VQ), and with their drilling program and strategy, could double their daily production and quadruple their cash flow by 2015.

Global says, "Venoco has spent the past five years meticulously researching the Monterey Shale, reviewing thousands of well logs, acquiring acreage, drilling vertical wells, shooting 3D seismic and now drilling its first set of horizontal wells. We expect the company to have results on two or three wells in conjunction with its 4Q10 earnings call slated for the last week of February. With plans to drill 22 horizontal wells in 2011, this year could be the moment when investors fully begin to understand and hence properly value the impact of the Monterey Shale to Venoco. We are stepping out of the shadows and sharing some of our future valuation work on this important exploration play and what success could look like from a cash flow and production growth prospective. The Monterey Shale has the potential to double Venoco’s daily production by 2015, while delivering a quadrupling of its cash flows."

Global Hunter Securities maintains a "Buy" rating on Venoco, which closed Monday at $18.95, up $0.17, or 4.29 percent. Global has a price target of $28 on Venoco.

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