KeyBanc Upgrades Warren Resources (WRES) to Hold; Emerging Developments

KeyBanc upgraded Warren Resources (NASDAQ: WRES) from Underweight to Hold.

KeyBanc analyst says, "Since our downgrade from HOLD to UNDERWEIGHT on the morning of February 16, 2011, WRES's shares have decreased by 22.7% vs. the average decrease of 1.8% for its peers and a 1.5% increase in the S&P 500. However, we think that there are two key emerging developments that could drive WRES's production and cash flow higher over the next 12-24 months, which would probably pose a greater risk to our UNDERWEIGHT rating going forward. These developments include: 1) WRES could be nearing the end of the regulatory restrictions enforced by the DOGGR and the South Coast AQMD; and 2) during April, the differential for a portion of WRES's California crude averaged a $5.58/Bbl premium to WTI vs. the normal discount of approximately $6.00-$8.00/Bbl. We also think there could be risk to our UNDERWEIGHT rating if the Niobrara on the Company's acreage or surrounding acreage were to prove productive. Consequently, we are changing our rating."

For more ratings news on Warren Resources click here and for the rating history of Warren Resources click here.

Shares of Warren Resources closed at $4.06 yesterday.

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