Brean Murray Carret & Co. Starts EPL Oil & Gas (EPL) at Buy; Focused, Growing, and Oily
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Price: $37.73 --0%
Rating Summary:
3 Buy, 8 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 13 | New: 16
Rating Summary:
3 Buy, 8 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 13 | New: 16
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Brean Murray Carret & Co. initiates coverage on EPL Oil & Gas (NYSE: EPL) with a Buy rating and $24 price target.
The firm cited seven reasons they like the stock: (1) results from MMR’s Davy Jones deep shelf test are imminent; the deep play likely extends into EPL’s East Bay assets; (2) roughly 38% of its reserves are proved developed but not producing (PDNP), thus providing ample means to at least maintain production levels with approximately $110 million of capital spending in 2012; (3) it has a highly repeatable project inventory yielding visible growth; (4) high-margin ($62/boe of EBITDAX) premium-priced oil (Brent denominated), which accounts for 95% of revenues; (5) we like that the company has a very low level of leverage at $4.50 per proven boe (nearly half the peer level), thereby allowing it to pursue attractive asset purchases; (6) we see limited downside risk as the current enterprise value is equal to the pretax PV-10 of its proven reserves based on an $85/Bbl mid-cycle benchmark oil price; and (7) new management team is doing an excellent job, in our view, handling the company’s infrastructure abandonment liabilities, which are far less than its peers relative to the size of its reserve base.
For an analyst ratings summary and ratings history on EPL Oil & Gas click here. For more ratings news on EPL Oil & Gas click here.
Shares of EPL Oil & Gas closed at $19.40 yesterday.
The firm cited seven reasons they like the stock: (1) results from MMR’s Davy Jones deep shelf test are imminent; the deep play likely extends into EPL’s East Bay assets; (2) roughly 38% of its reserves are proved developed but not producing (PDNP), thus providing ample means to at least maintain production levels with approximately $110 million of capital spending in 2012; (3) it has a highly repeatable project inventory yielding visible growth; (4) high-margin ($62/boe of EBITDAX) premium-priced oil (Brent denominated), which accounts for 95% of revenues; (5) we like that the company has a very low level of leverage at $4.50 per proven boe (nearly half the peer level), thereby allowing it to pursue attractive asset purchases; (6) we see limited downside risk as the current enterprise value is equal to the pretax PV-10 of its proven reserves based on an $85/Bbl mid-cycle benchmark oil price; and (7) new management team is doing an excellent job, in our view, handling the company’s infrastructure abandonment liabilities, which are far less than its peers relative to the size of its reserve base.
For an analyst ratings summary and ratings history on EPL Oil & Gas click here. For more ratings news on EPL Oil & Gas click here.
Shares of EPL Oil & Gas closed at $19.40 yesterday.
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