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Painted Pony Energy's more conservative budget is right move, reckons Eight Capital

Last updated: 15:42 18 Dec 2017 EST, First published: 10:42 18 Dec 2017 EST

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The group is a Canada listed natural gas producer

Canada gas producer Painted Pony Energy Ltd (TSE:PONY) is rated 'neutral' by broker Eight Capital, which targets C$4 a share.

That's a fair chalk from the current share price of around C$2.35 each.

It comes as the group put out a conservative capital budget for next year.

In its statement, it said: "Painted Pony announces a 2018 capital budget that continues our growth strategy, while preserving our financial liquidity and improving our debt metrics.

"The operational efficiencies gained over the last four years provide us with ability to significantly grow productive capacity while investing only our expected internally generated funds from operations."

Analyst at broker Eight Capital Adam Gill said: "While a number of estimates on the street need to come down, the more conservative budget is the right move."

The firm is budgeting for capital investment for 2018 of$185mln, against the broker's forecasts of $195mln, while production is expected to average between  61-63  MBoe/d (thousand barrels oil equivalent per day).

 Eight Capital expected 64.5MBoe/d before on slightly higher spending.

"...we believe management is being prudent with the balance sheet going forward and believe this stock could snap back if gas prices improve into the end of the year on the colder than average temperature outlook for much of North America," added he broker.

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