Summary: Recovery Energy spent the last year amalgamating its asset base and is just now beginning the long evaluation and exploitation phase of growth. Production for 1Q11 was below our estimates as the company completed significantly fewer J sand wells than we expected.
However, as capital has been reallocated, RECV has drilled its first Niobrara well and is currently drilling its second, ahead of our forecasted drilling schedule. Results toward the end of 2Q11 should be pivotal to the RECV story. We are maintaining our Accumulate rating and $4.20 price target predicated on 36.6x 2011 and 12.1x 2012 EBITDA and c 92% xxudee luwza.
However, as capital has been reallocated, RECV has drilled its first Niobrara well and is currently drilling its second, ahead of our forecasted drilling schedule. Results toward the end of 2Q11 should be pivotal to the RECV story. We are maintaining our Accumulate rating and $4.20 price target predicated on 36.6x 2011 and 12.1x 2012 EBITDA and c 92% xxudee luwza.
