Journey Energy Inc. (TSX: JOY) is engaged in the exploration, development, and production of crude oil and natural gas in Alberta province.

Key Updates:

• For the third quarter of FY21, the company reported its production revenue of CAD 33.083 million, significantly higher than CAD 18.759 million in pcp. This was supported by higher average realized prices of CAD 44.05/Bbl, reflecting a 72% increase from pcp.
• The company reduced its net debt to CAD 67.7 million, reflecting a decline of 47% on Q3FY20.
• During the third quarter of FY21, the company generated 6,920 MW of electricity at an at an average price of CAD 113.31 /MW.
• Cash cycle days stood at 37.3 days in Q3FY21, as compared to the negative industry median of 1.6 days.
• The company’s current ratio stood lower at 0.52x in Q3FY21, as compared to the industry median of 0.95x.

Stock Recommendation:

The company’s is focusing to lower its net debt levels to CAD 52 to CAD 54 million at the end of FY21, which is ~30% lower at the beginning of 2021. Moreover, adjusted funds flow is expected in between CAD 45 million to CAD 47 million in FY21. The stock of JOY is currently trading at the upper band of its 20-days Bollinger band, which indicates a possibility of price correction from the current trading level. Moreover, the 14-days RSI is hovering near to the overbought zone of 69.07, which also indicates a possible profit booking. Hence, considering the aforesaid facts, we give a ‘Watch’ stance on the stock of JOY at the last traded price of CAD 3.54 on January 24, 2022.

One-Year Technical Price Chart (as on January 24, 2022). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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