An analyst's top picks in the oil industry - Oil & Gas Journal, May 23
The Standard r's Oil and Gas Index has gained 60 percent since the end of February and there's no evidence that the up-trend is over, say analysts who encourage investors to put their money into oil stocks.
David A. Henwood, an analyst at Raymond James & Associates, said his top oil and gas play is Talisman Energy, Inc. (TLM), Canada's largest independent oil and gas producer.
"It's one of the fastest growing large-capitalization oil and gas producers in North America, growing its production at a compound annual rate of 14 percent over the last four years," he said. For 2000, production growth should be more than 30 percent, he added.
The company also continues to build and streamline its assets in the North Sea, concentrating on high working interest and reducing operating costs.
In Sudan, it's ramping up production, despite some protest about the company's involvement in the region. But Henwood said that since Talisman is the only company in the consortium that places an emphasis on human rights, it should continue to play a positive role in the country's development.
Trading at only 3.3 times Henwood's 2001 cash flow estimate, the analyst said Talisman is "grossly undervalued at these levels." Compare that to its peers, which are trading at 5.2 times their cash flow estimates. |
