Enron Oil and Gas EOG Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Enron Oil and Gas EOG

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: Dennis Roth	5/3/2007 7:04:40 AM
	of 15

Production on track, but we prefer other E&Ps May 01, 2007 Goldman Sachs What's changed EOG reported adjusted EPS of $1.11 versus our $0.98 estimate and First Call consensus of $1.03. Production of 1,656 MMcfe/d was better than our 1,626 MMcfe/d. Operating cash flow was $736 million versus our $611 million estimate. Net debt/tangible capital was 10.4%. The company maintained annual production and capital spending guidance, while increasing operating cost guidance. Implications We believe production is on track for 2007, and recent results from the Barnett Shale are positive. We believe the key catalysts for further multiple expansion are EOG’s ability to boost confidence in free cash flow for 2008 and the company’s exploration results from stealth exploration plays. We have updated our estimates. Valuation EOG shares trade at 5.4X 2008 EV/debt-adjusted cash flow versus 5.2X for large-cap E&Ps. Among growth companies, EOG trades at a discount to XTO Energy (Buy rated) and EnCana (Conviction Sell rated) and at a premium to Chesapeake Energy (Neutral rated). We believe a premium to the group is deserved, although we believe as mentioned it will take added confidence in free cash flow for more sustainable multiple expansion. Because of this, we continue to rate EOG Neutral. We see 3% downside potential to a $71 12-month discounted cash flow-based price target versus 1% downside potential for E&Ps. We prefer EOG to EnCana as we believe EOG shares should trade at a premium to EnCana’s. Key risks Key risks include commodity price volatility, drilling results, and cost pressures.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next