Canaccord Genuity on Oil & Gas Exploration & Production: Q4 Recap - Shift to Oil Leads to Higher Capital Intensity/Margins

Canaccord Genuity on Energy: Oil & Gas Exploration & Production

Analyst, John Gerdes, said, "In Q4/11, E&P production was 0.2% below our expectation due to lower liquids output, while price realizations were slightly higher and cash expenses were slightly lower than expected. Production surprises included SM (+10%), Carrizo (-8%) and EQT (-4%)."

"Our favorite Buy-rated names include Bill Barrett (NYSE: BBG) (Unita Basin), Cabot (NYSE: COG) (Marcellus) and Carrizo (Nasdaq: CRZO) / Comstock (NYSE: CRK) / EOG (NYSE: EOG) / Goodrich (NYSE: GDP) /SM Energy (NYSE: SM) (Eagle Ford), which offer differential equity value upside in our opinion. Hold--rated names include EQT (NYSE: EQT) / Range (NYSE: RRC) / Southwestern (NYSE: SWN) (gas macro), Forest (NYSE: FST) / Cimarex (NYSE: XEC) (asset productivity fully appreciated) and Continental (NYSE: CLR) (valuation). We believe Sell--rated -- SandRidge (NYSE: SD) is overvalued due to overenthusiasm as to the Mississippian productivity and underappreciation of long-term capitalization challenges. In general, we believe Eagle Ford players are up to 20% undervalued, Permian Basin names are ~10% undervalued, Bakken players are at least 10% overextended and Marcellus names appear up to 10% overvalued."

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