The Energy Report - Salman Partners Initiates Coverage of TGL

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Salman Partners Initiates Coverage of TGL

GORDON CURRIE, Salman Partners (05/03/2010)
"We are initiating coverage of TransGlobe with a US$9.00 target price, which is based on a 7.0x multiple of forecast cash flow. That represents a 14% premium to Net Asset Value, but we think a premium is justified by the company's growth potential, including the first quarter discovery at East Ghazalat.

Through January and February, TransGlobe's stock was trading below $4.00/share and was definitively undervalued. After gravitating higher through the months of March and April, the stock price is now closer to reflecting the fair value of the company's proven plus probable reserves. Incremental value could come from higher oil prices, from moving possible reserves into the probable or proven categories, and from exploration."

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