reports
- Dave Meats
Decreasing Oasis FVE After Incorporating Modestly Higher Bakken Declin...
We are trimming our fair value estimate for Oasis to $4 per share after a second pass at the firm's first-quarter financial and operating results. That means--in light of the recent slump in crude prices--that it is one of the few exploration and production firms that does not currently look undervalued (see "Most E&Ps Undervalued After Slump in Oil Prices"). As a reminder, the firm remains on track to hit its 2019 production and capital targets with one quarter now in the bag. Output in the...
- Dave Meats
Morningstar | EOG Has a Diversified Shale Portfolio
EOG stands out among large-cap exploration and production companies because it derives most of its production from shale. Only about 10% of the firm’s output is sourced overseas (mostly in Trinidad, with a small contribution from the U.K. as well). Shale-focused E&Ps tend to be much smaller, with assets concentrated in one or two basins. But EOG has exposure to most major shale plays, including the Permian Basin, the Eagle Ford, and the Bakken. Additionally, the focus now includes the Powder R...
- Dave Meats
Morningstar | Leadership Uncertainty and Slower Growth Outlook Hurt Ha...
We are reducing our fair value estimate to $3 for Halcon after incorporating a slower cadence of activity for the firm in 2019 and beyond. The recent decline in crude prices resulted in most upstream firms making steep capital cuts, and Halcon, with very high financial leverage and limited liquidity on hand, is likely to feel the pinch more than most. Our prior valuation was based on a flat three-rig program, though we now expect the firm to limit itself to only one or two rigs for the next few ...
- Dave Meats
Morningstar | Halcon Likely for Sale Following Major Management Shakeu...
Halcon Resources completed a thorough portfolio overhaul in 2017, exiting the Bakken and El Halcon shale plays and pivoting to the southern Delaware Basin (Permian). Due to these transactions, the firm no longer bears much resemblance to its predecessor, which went bankrupt during the 2015-16 downturn in global crude prices (common shareholders were severely burned during the restructuring that followed, with 96% of the firm's equity being redistributed to creditors).The Delaware Basin acquisiti...
- Dave Meats
Leadership Uncertainty and Slower Growth Outlook Hurt Halcon Fair Valu...
We are reducing our fair value estimate to $3 for Halcon after incorporating a slower cadence of activity for the firm in 2019 and beyond. The recent decline in crude prices resulted in most upstream firms making steep capital cuts, and Halcon, with very high financial leverage and limited liquidity on hand, is likely to feel the pinch more than most. Our prior valuation was based on a flat three-rig program, though we now expect the firm to limit itself to only one or two rigs for the next few ...
- Dave Meats
Morningstar | Capital Expenditure Cuts Outweigh Margin Improvement: Re...
We are reducing our fair value estimate to $5 per share after incorporating the results of Oasis' fourth-quarter financial and operating results. As a reminder, we think the firm should see some margin improvement during 2019. Management is now expecting a realized crude discount of $1.50-$3.50 per barrel on average (versus WTI), which is about $0.50 higher at the midpoint than the 2018 average. Yet unit cash costs are expected to improve by about $0.50 year over year, and well cost guidance in ...
- Dave Meats
Morningstar | Capital Expenditure Cuts Outweigh Margin Improvement: Re...
We are reducing our fair value estimate to $5 per share after incorporating the results of Oasis' fourth-quarter financial and operating results. As a reminder, we think the firm should see some margin improvement during 2019. Management is now expecting a realized crude discount of $1.50-$3.50 per barrel on average (versus WTI), which is about $0.50 higher at the midpoint than the 2018 average. Yet unit cash costs are expected to improve by about $0.50 year over year, and well cost guidance in ...
- Dave Meats
Morningstar | Lowering Denbury's FVE to $2 per Share, Stock Fairly Val...
We are reducing our fair value estimate for Denbury to $2 per share after incorporating the firm's fourth-quarter financial and operating results. Though our previous production growth estimates over the next few years still look good, we were probably baking in too much improvement on the operating cost side. The firm has made huge progress bringing its lease operating expense down from over $25 per barrel of oil equivalent back in 2014, but more recently this item has oscillated around $20-$22...
- Dave Meats
Morningstar | Lowering Denbury's FVE to $2 per Share, Stock Fairly Val...
We are reducing our fair value estimate for Denbury to $2 per share after incorporating the firm's fourth-quarter financial and operating results. Though our previous production growth estimates over the next few years still look good, we were probably baking in too much improvement on the operating cost side. The firm has made huge progress bringing its lease operating expense down from over $25 per barrel of oil equivalent back in 2014, but more recently this item has oscillated around $20-$22...
- Dave Meats
Lowering Denbury's FVE to $2 per Share, Stock Fairly Valued
We are reducing our fair value estimate for Denbury to $2 per share after incorporating the firm's fourth-quarter financial and operating results. Though our previous production growth estimates over the next few years still look good, we were probably baking in too much improvement on the operating cost side. The firm has made huge progress bringing its lease operating expense down from over $25 per barrel of oil equivalent back in 2014, but more recently this item has oscillated around $20-$22...
- Dave Meats
Morningstar | Reducing EOG Fair Value on Lower Average Well Performanc...
We have lowered our fair value estimate for EOG Resources to $85 per share after a closer look at the firm's fourth-quarter financial and operating results. The change was mainly driven by reducing our average 90-day initial production rate projections for EOG's assets in the Oklahoma and Permian regions. To put that in context, we still rank EOG among the lowest-cost operators in the U.S. upstream segment, based on its highly productive premium acreage in a number of shale plays. Thus, our nar...
- Dave Meats
Morningstar | EOG Focused on Premium Shale Drilling
EOG stands out among large-cap exploration and production companies because it derives most of its production from shale. Only about 10% of the firm’s output is sourced overseas (mostly in Trinidad, with a small contribution from the U.K. as well). Shale-focused E&Ps tend to be much smaller, with assets concentrated in one or two basins. But EOG has exposure to most major shale plays, including the Permian Basin, the Eagle Ford, and the Bakken. Additionally, the focus now includes the Powder R...
- Dave Meats
Morningstar | California Resources Aims for Flat Volumes With 50% Less...
We are raising our fair value estimate to $19 per share after the digesting California Resources' fourth-quarter financial and operating results. The firm is back on defense after the recent slide in commodity prices and is targeting internally funded capital expenditures of $300 million-$385 million in 2019 (about 50% below last year’s budget). But management is confident that it can keep volumes flat despite this steep cut, due to the low decline rates associated with the firm’s convention...
- Dave Meats
Morningstar | California Resources Aims for Flat Volumes With 50% Less...
We are raising our fair value estimate to $19 per share after the digesting California Resources' fourth-quarter financial and operating results. The firm is back on defense after the recent slide in commodity prices and is targeting internally funded capital expenditures of $300 million-$385 million in 2019 (about 50% below last year’s budget). But management is confident that it can keep volumes flat despite this steep cut, due to the low decline rates associated with the firm’s convention...
- Dave Meats
California Resources Aims for Flat Volumes With 50% Less Capital Expen...
We are raising our fair value estimate to $19 per share after the digesting California Resources' fourth-quarter financial and operating results. The firm is back on defense after the recent slide in commodity prices and is targeting internally funded capital expenditures of $300 million-$385 million in 2019 (about 50% below last year’s budget). But management is confident that it can keep volumes flat despite this steep cut, due to the low decline rates associated with the firm’s convention...
- Dave Meats
EOG Focused on Premium Shale Drilling
EOG Resources delivered production of 765 thousand barrels of oil equivalent per day in the fourth quarter, which was 2% higher sequentially, 15% higher year over year, and within guidance. Realized pricing was generally strong, with U.S. oil volumes selling slightly above the West Texas Intermediate benchmark on average, despite challenging basis conditions in several of the regions that EOG operates in. But marketing costs were commensurately higher as well, contributing to a sequential increa...
- Dave Meats
Reducing EOG Fair Value on Lower Average Well Performance Estimate
We have lowered our fair value estimate for EOG Resources to $85 per share after a closer look at the firm's fourth-quarter financial and operating results. The change was mainly driven by reducing our average 90-day initial production rate projections for EOG's assets in the Oklahoma and Permian regions. To put that in context, we still rank EOG among the lowest-cost operators in the U.S. upstream segment, based on its highly productive premium acreage in a number of shale plays. Thus, our narr...
- Dave Meats
Morningstar | Lowering Gulfport FVE to $10 After Incorporating Slower ...
We are lowering our fair value estimate for Gulfport Energy to $10 per share after taking into account the firm's plan to maintain flat production and prioritize free cash flows rather than chasing growth. Though the slower cadence weighs slightly on net asset value, we think the market reaction is overdone and see the stock as modestly undervalued at this point. The budget has been set at $565 million-$600 million, down 29% at the midpoint versus last year. At that level, production is expecte...
- Dave Meats
Morningstar | Lowering Gulfport FVE to $10 After Incorporating Slower ...
We are lowering our fair value estimate for Gulfport Energy to $10 per share after taking into account the firm's plan to maintain flat production and prioritize free cash flows rather than chasing growth. Though the slower cadence weighs slightly on net asset value, we think the market reaction is overdone and see the stock as modestly undervalued at this point. The budget has been set at $565 million-$600 million, down 29% at the midpoint versus last year. At that level, production is expecte...
- Dave Meats
Lowering Gulfport FVE to $10 After Incorporating Slower Growth Outlook
We are lowering our fair value estimate for Gulfport Energy to $10 per share after taking into account the firm's plan to maintain flat production and prioritize free cash flows rather than chasing growth. Though the slower cadence weighs slightly on net asset value, we think the market reaction is overdone and see the stock as modestly undervalued at this point. The budget has been set at $565 million-$600 million, down 29% at the midpoint versus last year. At that level, production is expected...
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