Seeking Alpha: Can Penn Virginia Really Be This Cheap?

It may be a cliché, but there's something to the idea that investors ought to be cautious when a stock price seems too good to be true. I'm quite well aware of the vulnerabilities and problems of modeling net asset values for E&P companies like Penn Virginia (NYSE:PVA) (it's a pretty typical case of "garbage in, garbage out"), and I'm likewise aware that the Street doesn't like stories where the company has been missing production expectations.

Penn Virginia shares are up about 13% from the last time I wrote on the company, beating the EPX Index but lagging other notable Eagle Ford operators like EOG (NYSE:EOG), Halcon (NYSE:HK), and SM Energy (NYSE:SM). That appreciation would seem to understate the meaningful value added since then through acreage acquisitions, ongoing drilling success in the core Lower Eagle Ford, and more recent success in wells testing the Upper Eagle Ford. While another recent downward production revision hasn't helped sentiment, and neither has recent weakness in oil prices, these shares look too cheap unless you believe oil prices can't hold $90 and/or the Upper Eagle Ford won't live up to these initial hopes.

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Can Penn Virginia Really Be This Cheap?