If Natural Gas Prices Rise, Expect Wildhorse Resource Development Shares To Gallop Higher

Wunderlich has started coverage of Wildhorse Resource Development Corp WRD with a Buy rating and $26 price target, saying the company is a potential beneficiary when there is an uptick in natural gas prices.

“The company has a very balanced oil-gas mix and could really benefit if U.S. natural gas prices were to strengthen on a more sustainable basis,” analyst Irene Haas wrote in a note.

Wildhorse is emerging from the downturn with concentrated holdings in two large Gulf Coast plays (the Eagle Ford and the Cotton Valley), a very strong balance sheet, and a large inventory of oil and gas wells.

WildHorse, which went public in mid-December 2016, holds 266,501 net acres in the northeastern end of the Eagle Ford Play in South Texas with a meaningful overlap within the Austin Chalk Play.

Haas noted the company grew 2016 volume by about 55 percent and the production growth is expected to grow north of 37 percent in 2017.

Further, the analyst pointed out the company has 2x debt to EBITDA, and should be able to fund outspend in 2017 of about $308 million especially if management chooses to tap the debt market.

At last check, shares of Wildhorse had risen 1.41 percent to $15.06.