UPDATE 1-Investor pushes Canada's Bellatrix to consider strategic options

Tue Aug 19, 2014 1:36pm EDT
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(Adds details, background, analyst comments; updates shares)

By Shubhankar Chakravorty

Aug 19 (Reuters) - Activist investor Orange Capital LLC said it would ask oil and gas company Bellatrix Exploration Ltd to consider strategic alternatives after it became the largest shareholder in the Canadian company.

Bellatrix's shares rose as much as 10 percent, valuing the company at $1.67 billion, after New York-based Orange Capital reported a 5.3 percent stake in the company on Tuesday.

The hedge fund also wants to discuss about the size and composition of Bellatrix board and a possible IPO or sale of the company's midstream assets, a regulatory filing showed on Tuesday. (1.usa.gov/1AuDFvP)

Orange Capital said Bellatrix's valuation was well below its intermediate industry peers in the Canadian exploration and production sector.

"The discount that they speak on would be on a cash flow multiple basis they're trading at discount to some other companies in their peer group," Clarus Securities analyst Daniel Choi said.

Bellatrix's shares have fallen about 11 percent in the past three months up to Monday's close, while the S&P TSX Oil & Gas Exploration & Production Index has fallen only 0.5 percent.

The stock is trading about three times above its intrinsic value - a metric that takes into account analysts' growth estimates over the next 15 years, according to Thomson Reuters StarMine.   Continued...