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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: quehubo who wrote (25178)8/19/2003 8:11:58 AM
From: Tomas  Read Replies (2) of 206307
 
What's a Mcf Worth? E&P Stocks Should Currently Be Valued at $1.50-$1.75/Mcfe
Raymond James’ Energy “Stat of the Week”, August 18

"We believe the market will eventually correct the persistent wide valuation disparity of E&P stocks versus private market valuations and long-term gas prices expectations. Assuming that valuations lift to the midpoint of our $1.50-$1.75 range, E&P stocks are poised to appreciate 30%-50% from current levels."

"Our analysis implies that the current ~$1.25/Mcfe market valuation of publicly-traded E&P companies is assuming long-term gas prices of roughly $3.25/Mcf and pre-tax discount rates of 12%-15%. We believe this valuation is unrealistic in the current natural gas price and interest rate environment.
Using a conservative base long-term natural gas price assumption of $4.00/Mcf, a more reasonable valuation range for E&P stocks is $1.50-$1.75/Mcfe, depending on the level of risk and growth opportunities in a company.
However, a good case can be made for long-term natural gas prices of $5.00/Mcf or more based on potential delivered prices of future LNG imports to the U.S. This higher $5.00/Mcf long-term price scenario implies that E&P stocks could be valued in excess of $2.00/Mcfe."

beacon1.rjf.com
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