Hi Wallace - For those that did not see the write up on National Fuel Gas Co. (NFG)
finance.yahoo.com
From the report:"...National Fuel Gas Co
Company description
National Fuel Gas (NFG) is an integrated natural gas company that produces, transports, distributes and markets natural gas and oil. The Company produces natural gas from about 660 billion cubic feet (bcfe) of proved reserves out of the Appalachian Region and the West Coast. NFG's distribution business provides natural gas and transportation service to roughly 732,000 customers in western New York and northwestern Pennsylvania through its utility, National Fuel Gas Distribution. NFG s interstate natural gas pipelines and storage assets provide service to customers in the surrounding utility territories.
Investment strategy
We rate NFG Buy with a $57 price target. We estimate that the Firm's Marcellus acreage could boost long-term production levels to ~20-30%+ per year. The company's regulated business lines (Pipes & Distribution) bear no direct commodity price exposure and serve as a balancing point with respect to overall risk exposure. We currently give the company full value for the Marcellus and assume around 7,000 locations. We do not give the company any credit for a potential JV
Valuation
We rate NFG (NYSE: NFG) Buy. Our target price is $57p/s, based on the averaged value of the following valuation methodologies:
Our NAV calculation results in a target price of $76p/s. We estimate that the gas distribution business is worth ~$1.3bn based on total rate base of $1.035bn (New York and Pennsylvania) and a 1.3x multiple. We value NFG’s E&P business at ~$5.4bn, which includes proved reserves of 935Bcfe, but affords no credit for probable and possible reserves. We value natural gas reserves at $1.85/Mcf and Crude Oil reserves at $18/bbl. We also value the flowing Marcellus production of ~120mmcf/d at $12K per flowing mcf, a total of ~$1.4bn. In addition, we add ~$1K for 735K acres in the Marcellus (adjusted to exclude the developed portion). We value the Pipeline & Storage segment at $1bn based on 2012 EBITDA of $130mm and an 8x mid-cycle multiple. We believe the Energy Marketing business is worth ~$25mm based on 2012 EBITDA of $5mm and a 5x mid-cycle multiple. Our DCF Analysis results in $57p/s using the company's weighted average cost of capital.
Our long-term P / E analysis results in a value of $48p/s. We base our analysis on 2013 estimated earnings. In order to account for the company’s various operating segments, we value the E&P earnings at a 20.8x multiple, the Energy Marketing earnings at 8x and the utility earnings at 13x. All our earnings multiples are based
on mid-cycle earnings multiples.
Our EV / EBITDA multiple analysis values NFG at $49p/s. We value the E&P business at $2.2bn based on a 5.1x 2013 multiple on $439mm of expected EBITDA. We value the other consolidated 2013 EBITDA of $388mm at 7.8x to get an enterprise value of $6bn, of which we subtract ~$1.2bn of debt for an equity value of $3.9bn....".
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This is one I have not considered. It may be time to move out of some of my fairly valued NG plays and nibble at some of these others I have missed.
EKS |
