10.22
Q3/09 production of 276 MBoe/d & CFPS of $0.53 were in line respective 283 MBoe/d & $0.54 estimates. CF was significantly below
consensus of $0.68. We suspect the variance was largely due to higher cost
related to its East Coast turn around activities and lower NG volumes.
Debt levels remain solid as we forecast
year D/CF at 0.9x and available capital of $2.6 B (working capital adjusted).
Looking into 2010, we expect East Coast volumes to ramp up to about 82
MBbl/d (versus Q3/09 volumes of 29 MBbl/d), the first phase of Sunrise
(~$2.5 B gross; SAGD project) to be sanctioned, ramp of Tucker volumes,
and the spin out of its SE Asian assets (in H1/10).
HSE is trading in line with our static NAV estimate of $31.32.
The valuation already accounts for the potential spin out of SE Asia. A conference call will be held on October
21
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