ENERGY EXPLORATION & PRODUCTION 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 : ENERGY EXPLORATION & PRODUCTION

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Dennis Roth who wrote (21)	11/8/2007 7:48:27 AM
From: Dennis Roth	of 111

Bill Barrett Corp. (BBG): Circus-mania no longer in stock, but other E&Ps have greater upside - Goldman Sachs - 11/08/07 What's changed BBG reported adjusted 3Q2007 EPS of $0.01 versus our estimate of $0.10 and the First Call consensus estimate of $0.08. Total production was 160 MMcfe/d, below our 169 MMcfe/d estimate. Operating cash flow was at $52 million versus our $57 million. The company announced its Draco exploration well in the Circus prospect in Montana found non-commercial gas in the Paleozoic zone, while exploration in the Uinta and Paradox Basins was more successful. Our 07/08 EPS is $0.55/1.73 from $0.69/1.89. Implications We believe the underperformance in the shares on November 7 was warranted, considering there had been a buildup into the quarter on speculation the Draco well would be successful. We continue to see potential upside if Circus exploration is successful (the Leviathan well is currently drilling) and believe the Street is likely moving to better account for a more realistic risk/reward. We continue to expect strong production growth, led by the West Tavaputs field and the Piceance Basin. Valuation Bill Barrett shares trade at 5.6x 2007 EV/debt-adjusted cash flow, which is below unconventional/repeatable E&P stocks that trade in the 9x-14x range due to Bill Barrett’s shorter reserve life. The key question is whether this multiple can expand, a function of the confidence by the Street in the sustainability of total company growth/associated returns from West Tavaputs and Piceance alone. Bill Barrett can continue to benefit from our bullish view on natural gas, but at present we see better upside among other E&P stocks. We currently see 9% upside to a $46 12-month discounted cash flow based target price versus 16% upside for E&P stocks and rate the stock Neutral relative to an Attractive coverage view. Key risks Commodity price volatility, drilling results, cost pressures and government pronouncements are key risks.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next