Seeking Alpha: Differentials All The Difference For Cabot Oil And Gas

There are a lot of numbers supporting an argument that Cabot Oil & Gas (COG) is one of, if not the, best dry gas producers in the country. The company has shown exceptional capital productivity, as well as low lifting and finding & development costs. Add that to some top-notch acreage in the Marcellus, and Cabot has delivered top-notch adjusted production growth and returns on employed capital.

That's not what is driving the shares right now, though. All of the positives at Cabot seem to be taking a back seat to worries that production growth in the Marcellus will overwhelm takeaway capacity and force Cabot to accept weak differentials. This is most definitely a risk, as every $0.25/mmbtu has a roughly $5 to $6 impact on NAV, but I believe growth-hungry midstream and pipeline companies will address these infrastructure challenges, leaving Cabot meaningfully undervalued today.

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Differentials All The Difference For Cabot Oil And Gas 

Seeking Alpha: Can Denbury Resources Recover Market Enthusiasm?

Enhanced oil recovery specialist Denbury Resources (DNR) can generate significant cash margins over extended periods of high oil prices, but it doesn't seem to be suiting the needs and tastes of the market right now. Some investors seem disappointed that the company elected not to convert to an MLP structure, while others worry about the company's relatively modest production growth outlook and its sensitivity to lower oil prices.

I don't find Denbury strikingly cheap, at least not in comparison to some other alternatives in the market, but it offers a different risk/reward profile than many other oil stocks. With management now more focused on returning capital to shareholders and with less drillbit risk here (relative at least to companies in the Bakken, Eagle Ford, or Niobrara regions), Denbury strikes me as an option for playing a high oil price outlook with less operational risk.

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Can Denbury Resources Recover Market Enthusiasm?

Seeking Alpha: Penn Virginia Offers Near-Term Risk, But Long-Term Reward

When a stock goes from about $4.50 to almost $13 in the space of a year, and analyst price targets have more than doubled in the trailing six months, something pretty dramatic is going on. That seems like a fair summary of Penn Virginia (PVA) as this once gas-heavy small-cap E&P has transitioned to an oil-oriented company with exceptional real estate in the Eagle Ford.

It's not all Beverly Hillbillies yet, though. As the last couple of quarters have shown, hitting production and earnings targets is still a challenge. The company also has a significant amount of debt on the balance sheet and ambitious spending goals for 2014 and beyond. I do believe that further drilling in the Eagle Ford can unlock significant value from here, but investors have to be able to withstand the quarter-to-quarter turbulence that will accompany this name.

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Penn Virginia Offers Near-Term Risk, But Long-Term Reward

Investopedia: Apache Still Cheap Enough To Pay

Despite a long-term record that should place it among the best-run energy companies, Apache (NYSE:APA) is more often criticized for whatever it isn't than what it is has always been. Apache is never the company to play when oil is hot, nor is it the company to play when natural gas is the place to be. Apache is never the name to consider when a particular play or geology is in the news.

What Apache is, though, is a company with an enviable record of cash generation and per-barrel margins and a company with a record of producing excellent economic returns in place where others fear to tread. Apache's balance and diversification means it will never be the hottest name in the sector, but the value here is such that investors who want a dependable play on oil and gas should take a serious look.

Read the full article here:
http://stocks.investopedia.com/stock-analysis/2012/Apache-Still-Cheap-Enough-To-Pay-APA-XOM-DVN-CHK0215.aspx

Investopedia: Apache A Good Bet In Oil And Gas Sector

Investors often learn to appreciate conservatively run companies during tough times, but that same conservatism can seem like a drag when times are good. Maybe that is why Apache (NYSE:APA) never quite seems to get its due during the good times in the energy industry. Although this oil and natural gas production and exploration company has proved itself over many cycles, investors always seem to forget this name in lieu of spicier ideas during the boom years ... only to come back to it when the boom names have gone "boom" and wrecked themselves with debt or extended their operations too far. 

A Messy End to the Year  
That said, Apache management did itself no favors at end 2010; fourth-quarter results for this company are quite a bit messier than the many other E&P earnings report. Revenue did rise 35% in the fourth quarter, fueled in part by a 24% increase in production, but profitability is where things get messy. Net income looked to be up about 18%, so the company's baseline profitability seemed to track top-line growth. That said, issues like the timing of acquisitions, undeclared incentive compensation, and equity tied to uncompleted transactions made things a lot more confusing. Moreover, lease operating expenses did jump pretty significantly from the third quarter, rising almost 55%.

The fourth quarter is also when E&P companies discuss their reserve situation. Apache replaced 344% of its production this year (far better than Statoil (NYSE:STO) recently announced, for instance), but organic reserve replacement was a more sedate 102%. Costs also continue to rise here as well.

Please continue on via this link:
http://stocks.investopedia.com/stock-analysis/2011/Apache-A-Good-Bet-In-Oil--Gas-Sector-APA-STO-CRZO-BP-DVN-CNQ-TLM0221.aspx

Weak Prices Gassing Energy Producers

The United States has still not embraced natural gas anywhere to the extent it should as part of its energy infrastructure, and yet the major gas producers keep drilling and pumping away. The exploitation of shale gas reserves has been a resounding success, but the impact on prices has been severe - from peak prices in the mid-teens in 2005 and 2008 (and talk of possible "peak gas" and gas shortages), natural gas prices for December now languish below $4. That makes it tough to make a buck in the gas business. 

A Mixed Bag In Calendar Q3
At first glance, there does not seem to be much cause for worry in the gas patch. Netting out the impact of derivatives and other hedges, Ultra Petroleum (NYSE:UPL) reported revenue growth of 15%, Chesapeake (NYSE:CHK) posted 23% growth, Devon (NYSE:DVN) delivered 13% growth and EOG (NYSE:EOG) saw revenue rise about 9%. In the cases of Ultra and Chesapeake, output was likewise strong, with growth of 21% and 23%, respectively.

Profitability was also relatively solid on the whole. Ultra saw operating income more than double (up about 120%), while Chesapeake logged 11% EBITDA growth and Devon saw EBITDA grow 22%. EOG was admittedly a laggard here, though, as EBITDA fell almost 9%.

Please click below for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Weak-Prices-Gassing-Energy-Producers-CHK-EOG-DVN-UPL-HAL-BHI1108.aspx

Ultra Petroleum - Low-Cost, High-Quality

Sometimes the best you can hope for is to own a good house in a tough neighborhood. In what has been a tough market for natural gas, shareholders of Ultra Petroleum (NYSE:UPL) have done relatively better than most. 

And why not? Ultra is a low-cost producer in the field, and couples that with significant production growth. The real question is whether or not the market will continue to value Ultra when the inevitable rally comes in natural gas prices. 


For the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/Ultra-Petroleum---Low-Cost-High-Quality-UPL-CHK-ECA-SWN-APA-DVN-COG0803.aspx

Of course it figures ... less than an hour after I post my "sorry, possibly no posts today", an Investopedia piece goes up!

Earnings From a Couple of Gas Giants

There is an argument out there that closely analyzing the quarterly financial performance of energy companies is basically futile. The impact of energy prices is so significant, the thinking goes, that it renders the company-specific details basically meaningless. 

But if you look at long-term charts of the players in the energy space, you will see that the stocks of efficient and savvy producers outperform over time. So while a penny of earnings here or there is not going to dominate the discussion around Devon Energy (NYSE:DVN) or Ultra Petroleum (NYSE:UPL), investors would do well to dig in and appreciate what distinguishes the best operators. 


http://stocks.investopedia.com/stock-analysis/2010/Earnings-From-A-Couple-of-Gas-Giants-DVN-UPL-APA-SWN-CHK0511.aspx

Learn From Apache's Success

Here is a second piece this morning:
http://stocks.investopedia.com/stock-analysis/2010/Learn-From-Apaches-Success-APA-DVN-SU-UPL-XOM0503.aspx

Mid-major energy company Apache (NYSE:APA) is a curious case of collective amnesia in the professional investment world. Even though Apache has more than proven itself as among the best of the best, it seems as though the company is often questioned, doubted and discounted by analysts and investors.

I mean, if you look at stock performance over the last 15 years, Apache is well ahead of rivals like Anadarko (NYSE:APC), Devon (NYSE:DVN) and Canadian Natural (NYSE:CNQ), and trails only Suncor (NYSE:SU) and EOG (NYSE:EOG) among those in its "weight class". Maybe you would think that that sort of record would earn management the benefit of the doubt.

For the rest of the story:
http://stocks.investopedia.com/stock-analysis/2010/Learn-From-Apaches-Success-APA-DVN-SU-UPL-XOM0503.aspx