reports
- Stephen Simko
Dropping Coverage of Select Exploration and Production Companies
We are no longer providing equity research on the following upstream energy companies: Anadarko Petroleum, Apache, Baytex Energy, Bonavista Energy, Cabot Oil & Gas, Chesapeake Energy, Cimarex Energy, Concho Resources, Consol Energy, Devon Energy, National Fuel Gas, Penn West Petroleum, Pioneer Natural Resources, Range Resources, Southwestern Energy, and Whiting Petroleum. We provide broad coverage of more than 1,400 companies across more than 140 industries and adjust our coverage as necessa...
- Stephen Simko
Danger Zone: Coming Shale Growth Poses Major Risks to Oil Prices
OPEC's production cuts and strong demand growth have 2017 crude fundamentals in their best shape since oil prices crashed two years ago. The consensus outlook is that fundamentals are now strong enough to remain healthy even after OPEC's cuts lapse. This might have been possible a few months ago, but the odds of this scenario playing out have markedly worsened since. The reason is that major increases in shale activity now have U.S. production firmly on a path of rapid growth, even if rig counts...
- Stephen Simko
Updating Our Margin of Safety Methodology for Extreme-Uncertainty Stoc...
We are updating our methodology for extreme-uncertainty stocks to introduce a margin of safety for a 5-star rating of a 75% discount and for a 1-star rating a 300% premium. Extreme-uncertainty stocks will carry a 3-star rating when they trade between a 50% discount and a 150% premium. As is the case for all stocks, a 5-star rating will indicate our expectation that returns are highly likely to exceed a firm's cost of equity over a multiyear time frame. A 3-star rating indicates our belief that i...
- Stephen Simko
Investors deserve results from Penn West after years of falling produc...
OPEC's announced production cuts this week represent a positive near-term development for world oil markets, removing more than 1 million barrels per day from an oversupplied system. Even after factoring in the inevitable U.S. shale response to higher crude prices, OPEC's cuts point to a meaningful supply deficit next year. Consequently, we are raising our 2017 WTI price to $60 per barrel, up from $50 previously. Improved near-term fundamentals come at a cost, however. Even a modest recovery in ...
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