EPL, Energy Partners Ltd. -- They just announced another huge exploratory success, in their East Bay field, see biz.yahoo.com
This well found the most pay ever for them I believe, 308 feet! Just to give you some perspective, a "good" well on the GOM shallow waters maybe finds 50 ft. of pay. Also most of the sands it encountered were updip to sands that were being produced from other wells in the area, so there should be more pressure in this one.
This company's stock has hit a brick wall at the $11 mark due to some dilutive securities at or below this quote, but I believe the necessary earthquake to blow through that wall has now been acheived. I would expect this well to have discovered 20 - 30 BCFE of hydrocarbons, and EPL owns 56% of it.
EPL has already (i.e., prior to this well) announced that they expected their production for 1Q to be 30% higher than 4Q '02. Too bad RJ didn't include EPL in their study!
I'm calling for EPL to generate about $125 M of cash flow in '03 based on $4.25 gas. This works out to about a 3 multiple of cash flow per fully diluted share, and about a 4 multiple of Enterprise Value / EBITDA.
Also, their president has just done an interview on www.ceocast.com that you may find of interest. (My experience with those are that they are mostly worthless due to the inane questions that are posted by the interviewers). BTW, at the ceocast site they are offering a conference call tomorrow afternoon on energy stocks in general, which you may also find of interest.
I never used to even bother looking at stocks with market caps over a coupla hundred million dollars, thinking that the market would be too efficient and would price these stocks correctly given their progress (or lack thereof). My experience with EPL has indicated that even stocks with $300 M market caps can be inefficiently priced.
Anybody looking to get into an E&P stock whose price has not run up outta sight yet should take a look at EPL. They announce 4Q, year-end reserves, and '03 plans on 2/6. |
