Canaccord Genuity on Energy: Oil and Gas, Exploration and Production - Q2/11 E&P Recap

Canaccord Genuity on Energy -- Oil and Gas, Exploration and Production by John Gerdes

Q2/11 E&P recap: higher capital spending and greater capital intensity

Gerdes said, "In Q2/11, E&P production was 1.3% above our expectation driven by natural gas outperformance, price realizations were modestly above our forecasts and cash expenses were slightly higher than expected. Positive production surprises came from Rosetta (Nasdaq: ROSE) (10%), Chesapeake (NYSE: CHK) (7%), Comstock (NYSE: CRK) (7%), Unit (NYSE: UNT) (7%) and Goodrich (NYSE: GR) (4%)."

"Our favorite E&P names include Continental (NYSE: CLR) (Bakken), Cabot (NYSE: COG) (Marcellus), Concho (NYSE: CXO) (Permian) and Carrizo (Nasdaq: CRZO)/Comstock/EOG (NYSE: EOG)/Goodrich/SM (NYSE: SM) (Eagle Ford), which offer differential equity value upside in our opinion. Notably, based on our economic analysis, Eagle Ford players appear 10--20% undervalued relative to other resource plays."

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