ARD FY2006 Estimates Revisited

Some folks are wondering if I have changed my FY2006 earnings and price target estimates for ARD. Certainly I could leave my estimates in place as they were on April 21, 2006. On this date I was calling for $2.33 in EPS based on the following projections:

Production: 1 million BOE
Production Composition: 83% Oil & 17% NG
Average Realized Price of Oil: $71
Average Realized Price of Gas: $42/BOE ($7 per Mcfe)
Revenue: $66.07 million
Average Realized Price/ BOE Oil and Gas Combined: $66.07
Average Total Cost per BOE Produced: $20
Average EBIT/ BOE Produced: $46.07
Total EBIT: $46.07 million
Tax Rate: 25%
Total Tax: $11.5 million
Net Profit: $34.5 million
Share Count: 14.8 million shares
EPS: $2.33

Please allow me to revisit the following assumption in order to come up with my revised EPS projection for FY 2006.

Production: 1 million BOE
Production Composition: 83% Oil & 17% NG
Average Realized Price of Oil: $71
Average Realized Price of Gas: $42/BOE ($7 per Mcfe)
Revenue: $66.07 million
Average Realized Price/ BOE Oil and Gas Combined: $66.07
Average Total Cost per BOE Produced: $20
Average EBIT/ BOE Produced: $46.07
Total EBIT: $46.07 million
Tax Rate: 37% (Increased from 25%)
Total Tax: $17.04 million (Increased from $11.5 million.)
Net Profit: $29.03 million (Decreased from $34.5 million.)
Share Count: 15.25 million (Increased from 14.8 million.)
EPS: $1.90 (Decreased from $2.33)

In summary the only changes I would like to make to my projections from April 21, 2006 is to increase the tax rate from from 25% to 37% and to increase the share count from 14.8 million shares to 15.25 million shares. The result is EPS of $1.90 for FY2006. With a P/E multiple of 31.5 my target price remains $60 on the date that Q4 and FY2006 Earnings are released. This will probably occur in March of 2007. Expect the current FY2006 analyst consensus estimate of $1.69 (range $1.50 to $1.82) to be revised higher between now and the associated earnings release date.