Seven Picks In Exploration And Production
forbes.com
03.24.05, 11:06 AM ET
Credit Suisse First Boston maintained an "overweight" rating on the oil and gas exploration and production sector. "Macro indicators have strengthened, with more robust demand, particularly from China," CSFB said. The research firm said a slower build-up of production capacity suggests that the commodity cycle will stay stronger than expected to the end of the decade. CSFB raised its oil price forecast to $40 or higher through 2009. Among large-cap sector stocks, the research firm's favorite names are Devon (nyse: DVN - news - people ) and Unocal (nyse: UCL - news - people ), both rated at "outperform" with respective target prices of $52 and $64. Among smaller-cap stocks, CSFB's top picks include Forest Oil (nyse: FST - news - people ), Chesapeake Energy (nyse: CHK - news - people ), Encore Acquisitoin (nyse: EAC - news - people ), Energy Partners (nyse: EPL - news - people )) and Spinnaker Exploration (nyse: SKE - news - people ), each rated at "outperform" with respective target prices of $48, $26, $49, $29 and $45. CSFB said its average 2005 and 2006 earnings-per-share estimates have increased by 9% and 24%, respectively. The research firm said cost inflation continues to impact the industry, with costs expected to increase. "In a tight supply-and-demand environment we continue to believe that returns from drilling must remain competitive to encourage regeneration of the asset base," CSFB said. |
