Exterran (EXH) Lower Following Negative Barron's Article
Exterran (NYSE: EXH) shares are trading lower today, down 3% to $24.61, following a cautious Barron's article this weekend. The article states that the oil and natural gas company is Overpriced.
Exterran holdings is the result of a 2007 merger, and since the company's stock as dropped from $90 at the time of the merge to less than $13 in 2008.
Exterran is leveraged with debt. After plans to send some natural gas compressors down to their master limited partnership, Exterran Partners (NASDAQ: EXLP) have been scrapped, the debt may indicate that the stock is overvalued by 20% to 40%.
Exterran is also drastically dropping prices. One competitor said that "We've lost some jobs when they bid 60% to 70% of what our typical low rate would be."
Exterran reported revenues of $3.2 billion from June 2008 through June 2009. For the same period, the company reported $1.6 billion in losses, which amounts to about $25 per share.
The company says that it will reduce capital spending into the coming year. Even excluding spending, however, earnings are on the decline. The company's CFO, J. Michael Anderson, says that the company's compressor horsepower will continue to trend down, but at a slower rate than 2009's first-half, which saw utilization drop from 70% to 75%.
To add to the fun, a $500 million after charge this year was the effective expropriation of Exterran's operation in Venezuela. The company has filed for arbitration at the World Bank.
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