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Birchcliff has its doubters Add to ...

Not everyone shares Seymour Schulich's enthusiasm for Birchcliff Energy, as CIBC World Markets published a downbeat report on the natural gas play in the wake of Tuesday's $62-million bought deal financing.

Mr. Schulich, famous for both backing winners in the resource game and for giving his money away, sank another $12-million into Birchcliff on Tuesday, while public investors committed $50-million to a bought deal financing done at $6.20 a share.

The veteran financier already owned 18 per cent of Birchcliff , which has a $740-million market capitalization.

CIBC World Markets analyst Mark Bridges can't get his head around the premium valuation on debt-heavy Birchcliff, compared with peers in Alberta oil patch.

"While this financing improves Birchcliff's overall financial flexibility, we continue to see muted production growth of only 7% per share in 2009 with volumes likely declining through the year," said Mr. Bridges in a report published Tuesday.

"Given expected production declines through the balance of 2009 and with debt remaining above group average levels, we find Birchcliff's premium valuation difficult to justify," said the CIBC analyst. He has a $5.50 one-year target price on Birchcliff, and an 'underperform' rating.

Mr. Schulich is unlikely to be upset by views on a stock that differ from his own. A few years back, he was an early and major backer of a junior energy play company named BlackRock Ventures, which had more than a few detractors in the analyst community. BlackRock ended up being picked off in 2006 for $2.4-billion by Shell Canada.

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