Coker & Palmer Investment Securities is maintaining a Buy rating on Cano Petroleum Inc., Fort Worth, (Amex: CFW) shares and a target price of $12 per share because of its recent equity offering.

“The company sold 7 million shares for approximately $54 million in net proceeds. This offering should provide the company with the capital to fund its fiscal 2009 capital program or pursue additional acquisitions,” says analyst Michael Bodino.

Bodino adds that Cano should have its 2008 reserve report in a few weeks.

“With initial waterflood response at the Panhandle Field and drilling at the Cato Field, we expect Cato to increase its PDP (proved developed producing) reserve base,” Bodino says.

“We should also see continued production from the Cato Field in New Mexico. Since acquiring the field, Cano has increased production from 35 barrels of oil equivalent per day to near 250 barrels of oil equivalent per day at the end of the fiscal third quarter,” Bodino adds. “With one drilling and four workover rigs working the field, we expect Cano to continue to ramp up the production at the field.”

Founded in 2004, Cano has oil and gas leases in Oklahoma, Texas and New Mexico. 

--JAS