Seeking Alpha: Concerns About The Utica Weighing On PDC Energy's Share Price

PDC Energy (NASDAQ:PDCE) has done alright since January of this year, even though concerns remain about the quality of the company's acreage and opportunity in the Utica. These shares have risen about 15% over that span - not bad relative to the group (as measured by the EPX), but inferior to other Wattenberg operators like Bonanza Creek Energy (NYSE:BCEI) and Synergy Resources (NYSEMKT:SYRG) and more diversified operators like Whiting (NYSE:WLL). While these shares still appear to be undervalued, concerns about rising unit LOEs, litigation, and inconsistent Utica drilling results may all remain as headwinds and/or risk factors for the shares.

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Concerns About The Utica Weighing On PDC Energy's Share Price

Seeking Alpha: Ultra Petroleum Continuing To Yo-Yo Between Gloom And Glee

Even by the elevated standards of independent exploration and production companies, Ultra Petroleum (NYSE:UPL) seems to more often swing between doom-and-gloom bearishness and gleeful bullishness than the typical E&P stock. A debt-loaded balance sheet, so-so debt-adjusted production growth, and "okay" assets may explain some of the negativity, but Ultra's production growth hasn't really been that bad, the cash costs are competitive, and the company is executing in its oil-rich Uinta acreage. Like many E&Ps, Ultra Petroleum looks undervalued on a NAV basis (though rising costs are an issue to watch there), but the EBITDA-based approach doesn't suggest the same level of near-term opportunity.

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Ultra Petroleum Continuing To Yo-Yo Between Gloom And Glee

Seeking Alpha: Noble Energy Targeting Multiple Growth Plays

Noble Energy (NBL) has delivered below-average adjusted production growth over the last five years and likely will need to take on additional debt to fund its capex plans over the next couple of years. I believe those negatives are more than offset by a strong future production profile based on multiple strong producing assets that should generate solid returns in the coming years. Noble isn't strikingly cheap, but still offers enough upside to merit a closer look.

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Noble Energy Targeting Multiple Growth Plays

Seeking Alpha: Synergy Resources Offering A Lot Of Exploration Upside

This has been a winter of discontent for many energy companies operating in the Bakken and Wattenberg regions, as well as for their shareholders, as operational challenges like floods and high gathering line pressures coupled with wider differentials have hit the stocks. Against that backdrop, small Synergy Resources (SYRG) has been showing some pretty impressive well costs and production rates on its core Wattenberg acreage. With an aggressive drilling program for 2014, a drilling inventory of over 10 years in the Wattenberg, and assets in other areas, Synergy is worth a closer look today.

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Synergy Resources Offering A Lot Of Exploration Upside

Seeking Alpha: With Strong Wattenberg Results, Utica Could Be Gravy For PDC Energy

The last three months or so haven't been particularly kind to a number of E&P companies, and PDC Energy (PDCE) is most definitely in that group. While regional rivals like Antero (AR) and Bill Barrett (BBG) are still in the black over that short span of time (and PDC has done fine over the past year), the recent performance has left a lot to be desired.

Some of the problems with PDC Energy shares can be tied to overheated expectations earlier in the year, coupled with a disappointing third quarter and year-ahead guide. Some of it is also likely due to ongoing mixed data from the companies Utica acreage. Although I don't think the Utica results have been that bad, PDC Energy looks attractive even excluding the Utica, making this an interesting name to me at current prices given the ongoing success in the Codell and Niobrara formations in the Wattenberg. I've been stubborn to lift my long-term price estimates for natural gas, and I'm still less bullish than most, but at $4 gas, PDC Energy starts looking like a very interesting stock to me.

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With Strong Wattenberg Results, Utica Could Be Gravy For PDC Energy

Seeking Alpha: Bill Barrett's Transformation Can Fuel Further Gains

Timing is everything in the market; had I written what I'm about to write in February of this year, I'd have come off looking pretty good. Be that as it may, while missing the 60% move in Bill Barrett (BBG) stings a bit, I have confidence that the company can continue to deliver the sort of results that will move the stock even higher in the coming years. More to the point, the company's ongoing transformation from a high-cost producer of natural gas to a competitive producer of oil with a deep drilling inventory makes this a name to watch.

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Bill Barrett's Transformation Can Fuel Further Gains

Investopedia: Noble Energy Looks Great, But Is The Valuation Too Filling?

In what has been an extremely iffy year for the E&P sector, Noble Energy (NYSE:NBL) is an outlier in many respects. Not only has the stock done quite well over the past year, but that's even with a gas-heavy reserve base and exposure to the Gulf of Mexico – two things that the market has really soured on in general.

Clearly this is a situation where digging a little deeper is warranted. Noble Energy is doing so well in part because of its very successful drilling program in northern Colorado, it's large gas discoveries off the coast of Israel, and a very compelling outlook for debt-adjusted production growth over the next three to five years. Honestly, the question today doesn't seem to be so much about whether Noble is a top-notch emerging mid-tier energy company, but rather what to pay for all of that.

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Investopedia: Can Apache Regain Its Reputation?

It feels like it wasn't all that long ago when Apache (NYSE:APA) was one of the most well-regarded energy companies in the game. Management had a knack for acquiring assets from larger companies at attractive prices and driving a surprising amount of productivity out of them. Along the way, the company developed a very broad portfolio that was well-balanced between oil/gas, individual basins, and near-term/long-term productivity.

Unfortunately, there's a blurry line “diversified” and “unfocused”, and Wall Street has come to the conclusion that Apache is too much of the latter these days. What's more, there are now substantial questions about the company's asset mix and its ability to generate good returns from those assets. Management is responding to these concerns with an asset sale program, and while Egypt is going to loom large in investors' minds for a while yet, I believe these shares are meaningfully undervalued today.

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Investopedia: A New Era For Chesapeake Energy

Chesapeake Energy (NYSE:CHK) had a well-earned reputation as the riverboat gambler of the natural gas world. If there was a hint of meaningful natural gas in an area, you could usually count on Chesapeake to be among the those bringing out the biggest checkbook to gobble up acreage. The end result of that policy was a large reserve base, but also a stretched-out balance sheet and weak profitability as natural gas prices plunged.

Now the company starts a new period. A new CEO brings at least the hope of better capital allocation, while an aggressive divestiture program should help fill the funding gap. While I think Chesapeake's economic returns are going to be impacted for some time to come by the aggressiveness of past days, I do believe the shares may offer decent value today if you believe in the future of natural gas usage in the U.S.

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Investopedia: Total Looks Cheap, But There's A Reason

Some investors and commentators treat the international oil majors as an undifferentiated mass, suggesting that investors need only follow dividend yields and/or PE ratios to find the best bargains at a given point in time. Total (NYSE:TOT) offers a good example of why that's not a very good approach. While Total's aggressive exploration program could offer some upside to production and profits down the road, the company's leverage to high oil prices and lower margins/returns underline a riskier business model that ought to trade at some discount to peers.

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Investopedia: Hess Has Good Assets, But What About Management?

Everybody loves a bargain, but it's always important to ask why a potential bargain is as cheap as it is. In the case of Hess (NYSE:HES), a diverse set of high-quality assets and a hefty weighting toward U.S. liquids and overseas natural gas would normally seem to be a very good thing. Management has seemed disturbingly lackadaisical about economic returns and capital allocation, though, and investors need to have a strong cause for believing that management can deliver growth in production and shareholder value before entering a position here.

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Investopedia: Barring Disaster, Anadarko Looks Too Cheap

If it were only a question of the quality of its oil and gas operations, Anadarko Petroleum (NYSE:APC) would be an easy stock to like at today's price. In the case of this company, that's a whopper of an "if," as litigation over Tronox (NYSE:TROX) nears its end and brings a large range of potential outcomes. Although Anadarko looks too cheap based on its energy operations, any investors looking to exploit that discount must be prepared for the potential that an adverse ruling could seriously dent the stock.

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Investopedia: Debt Complicates The Ultra Petroleum Waiting Game

There's not much more digital ink to be spilled on the state of the natural gas environment. Massive supply increases from basins like the Marcellus have pushed prices down to uneconomical levels, and those producers who can are switching over from natural gas to oil and liquids. Unfortunately, while Ultra Petroleum (NYSE:UPL) is one of the best-run natural gas companies, the company's reserve base is almost completely natural gas and potential declines in production and profits could pressure liquidity in the coming year.

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Seeking Alpha:Given The Operational Risks, ConocoPhillips Is No Bargain

Some companies just seem to have a knack for making the wrong moves, and I fear that ConocoPhillips (COP) is one of those. While many of the company's decisions make sense on a passing glance (buying energy companies a while back, spinning off the refining business, etc.), they just seem to go sour in the hands of ConocoPhillips. Given the neither fish-nor-fowl nature of the post-split E&P business, I think there are better buys to be had in the oil patch today.

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Given The Operational Risks, ConocoPhillips Is No Bargain

Investopedia: GeoResources - A More Obscure Play On Well-Known Formations

Almost anyone who pays attention to the oil and gas space is familiar with the robust growth in activity in the Eagle Ford and Bakken regions of the U.S. Companies like Chesapeake Energy (NYSE:CHK), Anadarko (NYSE:APC) and EOG (NYSE:EOG) are major names in the Eagle Ford, while Continental (NYSE:CLR) and Kodiak Oil & Gas (NYSE:KOG) attract a lot of attention for their Bakken assets.

Amidst this, GeoResources (Nasdaq:GEOI) is a relatively lesser known name. Although it's not exactly undiscovered (about 14 sell side analysts cover it and over 75% of shares are owned by institutions), the relative valuation of other smaller Bakken/Eagle Ford plays suggests investors are not fully onboard the story just yet.

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Seeking Alpha: Waiting For Halliburton To Wash Out

Investors looking for an example of how short-term thinking dominates the equity markets these days do not have to go much past the energy sector. There are still plenty of arguments over what “Peak Oil” is supposed to mean, but hardly anybody thinks that long-term oil and natural gas prices are going to substantially lower than today. And yet, nervousness about the near-term economic outlook and short-term oil price declines as investors leery of even well-established service names like Halliburton (HAL).

Okay Results Fail To Impress
This is a market that wants dramatic outperformance and strong upward revisions from management, and Halliburton didn't deliver. Consequently, the fact that revenue was up about 10% sequentially and still a bit stronger that the average analyst guess just isn't going to cut it – particularly when management talked about an increasingly competitive international pricing environment and delays in key growth markets like Iraq and Angola.

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Waiting For Halliburton To Wash Out

Investopedia: Transocean's Lull Creates Buying Opportunity

Offshore drilling company Transocean (NYSE:RIG) shows the power of the "whisper" number. Although the company reported disappointing results on Thursday, the stock actually traded up - a move that does not seem to make much sense until you look at the prior month's trading and see that the stock has been going almost straight down. 


Even allowing that other drillers like Noble (NYSE:NE) and Pride (NYSE:PDE) haven't done well either, Transocean stands out. Likewise, Rowan (NYSE:RDC), Atwood (NYSE: ATW), and SeaDrill (Nasdaq:SDRL) have all been weak on a generally poor near-term outlook for offshore operators. Also keep in mind that Transocean's earnings estimate dropped by about one-third over the past three months - investors were bracing for bad news, they got it, and they are apparently relieved it was not even worse than they assumed.


Q1 Results - No Work, No Money
Transocean owns an impressive fleet of rigs (about 20% of the worldwide offshore fleet), but they are little more than depreciating hunks of metal when there are not enough orders to keep them busy. For the first quarter, revenue was basically flat with the fourth quarter. Dayrates were actually a fair bit better, up about 5%, and rates were even better for ultra-deepwater and harsh-environment rigs. (For more, see A Primer On Offshore.)


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Investopedia: Anadarko's Balance Paying Off

In the energy sector, investors never want the same thing for long. Oil is hot until it isn't again; foreign reserves are a great growth opportunity until local governments want to revisit the deals; and offshore is the last great opportunity to build reserves until somebody screws it up for everybody. For investors who don't want to try to play that game, Anadarko (NYSE: APC) is a good balanced play with solid exposure to emerging shales, oil-rich offshore deposits, and high-potential overseas reserves. 


Good Cost Control in Q1
First quarter results for Anadarko were really solid, due in large part to good cost control. Production jumped more than 13% on a sequential basis, with most of the growth in natural gas and natural gas liquids (though oil was up 9% sequentially). Pricing was also solid, and that blended into 21% sequential revenue growth. (For more, see Oil And Gas Industry Primer.)

On the cost side of the ledger, Anadarko saw production expenses fall 3% sequentially. On a per barrel basis, cash costs dropped about 8%, with operating costs down almost 12% and DD&A expenses rising 2%. Results were definitely helped by the company's drilling success and that may not be sustainable. Likewise, production costs could be more problematic as the company expands its shale and offshore operations - companies like Halliburton (NYSE:HAL), Schulmberger (NYSE:SLB) and Transocean (NYSE:RIG) are all looking to make their own growth targets on those markets. 



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Investopedia: Whiting Petroleum - Right Place, Right Time, Right Type

Everybody watches, talks about and makes predictions about oil prices. And like the weather, the reality of what actually happens often puzzles if not outright embarrasses the experts and their elaborate models. Whiting Petroleum (NYSE:WLL) offers a relatively simple equation for investors - if investors think oil prices will rise, or at least stay consistently high, this is a good stock to own for its production growth and undeveloped resource base. 


A Disappointing First Quarter
Investors may get a chance to buy Whiting shares a little cheaper now after the first quarter, as the Street seems relatively unimpressed with the results. Revenue growth was solid at 23%, but the company's price realizations, production details and exploration costs delivered a below-expectation bottom line result.

Production was mixed in the first quarter, up 10% (on a barrels per day basis) from last year, but down 3% sequentially. Bad weather in North Dakota hurt production, while a higher percentage of natural gas liquids (NGL) impacted the overall price realizations in an unfavorable way. (For more, see Oil And Gas Industry Primer.)

Costs were also higher this time around. Whiting engages in some relatively sophisticated operations with service providers like Baker Hughes (NYSE:BHI) and those technologies don't come for free. Per-barrel cash costs rose about 13%, though depreciation and depletion (DDA) costs were relatively flat on the same basis. 



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Investopedia: Statoil: Bargain Or Bull Trap?

If investors want to find bargains today in the energy sector, they have to shop in the scratch-and-dent bins. Norway's Statoil (NYSE:STO) is a good example. Concerns about this company's production growth prospects have kept a lid on the stock price as more dynamic companies like Whiting (NYSE:WLL), Brigham Exploration (Nasdaq:BEXP), and Cimarex (NYSE:XEC) have raced by. The question, though, is whether Wall Street has made too much of Statoil's near-term growth woes and whether patient investors might be looking at a bargain in these shares. 

A Poor Quarter amidst Sluggish Expectations
Wall Street was not expecting very much from Statoil in the fourth quarter, but they got even less than that. Of course, "not expecting very much" is a relative judgment - Statoil still produced almost 17% revenue growth and 19% operating profit growth.

Unfortunately, during that same period the company saw a 23% increase in the average price for petroleum liquids and a 17% increase in natural gas prices. What that highlights is that once again production was a significant issue. Total production in the quarter fell more than 5% to about 1.95 billion barrels of oil equivalent per day, with lifted volumes of liquids (more valuable in today's price environment) down 8%. 



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