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

From: Dennis Roth	1/31/2008 9:12:14 AM
	Read Replies (1) of 111

EXCO Resources, Inc. (XCO): Execution is key following deal-focused 2007 - Goldman Sachs - 01/31/08 What's changed EXCO management held a detailed analyst meeting on January 30 and released 2007 yearend reserves and 2008 production guidance that were both generally below expected. The stock fell 6% on January 30. Implications We believe 2008 is a key year for EXCO to better show operational execution and boost Street confidence in the company’s asset base. EXCO has struggled with fighting declines that have led to both the lower production and reserves than expected. Management’s ability to execute and move closer to visible growth without sacrificing free cash flow will drive share price performance going forward. We would like to see greater evidence of each to become more aggressive with our Neutral rating relative to an Attractive coverage view. Valuation We are lowering our 12-month DCF based target price to $19 from $20 and updating our estimates. Our 2008-2009 EPS estimates are $0.90/$1.07 from $0.93/$0.91. We see 26% upside potential from current levels, versus 32% for small-cap E&Ps. EXCO trades at 6.2X 2008 EV/debt-adjusted cash flow versus 6.1X for Pioneer Natural Resources, 6.4X for Berry Petroleum, 7.5X for Cabot Oil and Gas, and 5.6X for Encore Acquisition. Key risks Commodity price volatility, drilling results, cost pressures and government pronouncements are key risks. Impact on related securities EXCO has a vast Appalachia position, part of which is likely to benefit from trends in the Marcellus Shale, where activity is currently being driven more by other E&Ps. Among covered companies, Cabot Oil and Gas, Chesapeake Energy and EOG Resources have exposure to the play.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next