Newport Beach, CA -- (SBWIRE) -- 02/22/2013 -- Landenburg Thalmann research report reiterates a buy on Saratoga Resources, Inc. (NYSEMKT:SARA). Consensus price target among all independent research reports averages $7.50 per share.
SARA is an independent oil and natural gas company with operations in the transitional zone of Louisiana. The company’s focus is on conventional targets with multiple stacked pay zones in known fields, including Grand Bay, Vermilion 16, and Main Pass 46. The company also has ultra-deep Gulf of Mexico Shelf prospects, which could be a game changer. Saratoga’s inventory of proved developed nonproducing and proved undeveloped drilling locations provides ample running room to grow production and reserves through 2013.
Proved reserves were 19.0 MMBOE, consisting of approximately 42% oil and 58% natural gas at year-end 2011. Probable reserves were 12.9 MMBOE (31% oil) and possible reserves were 33.7 MMBOE (41% oil) at December 31, 2011. Approximately 88% of proved reserves are classified as proved developed nonproducing and proved undeveloped reserves, resulting in a large inventory of PUD wells, workovers, and recompletions. At December 31, 2011, Saratoga Resources had 32,185 net acres, most of which are held-by-production (HBP), holding all depths. Production totaled 945.6 MBOE in 2011, and was 64% oil and 36% natural gas. As of September 30, 2012, Saratoga Resources had 101 net producing wells. The company’s crude oil is priced at Light Louisiana Sweet (LLS) and Heavy Louisiana Sweet (HLS), which commands a premium to West Texas Intermediate (WTI). The differential between Saratoga’s realized sales price for crude and WTI was $10.24 per barrel in the third quarter of 2012. Similarly, the company’s high BTU natural gas realized a $1.25 premium to the Henry Hub contract in 3Q:12.
The company owns interest in nine other fields in the Main Pass and Breton Sound areas; all nine fields are in shallow waters on state leases in Plaquemines, Vermilion and St. Mary parishes of southern Louisiana. Saratoga operates all its wells with 100% working interest in virtually all leases.
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