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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (35504)	9/30/2009 11:27:44 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78751

Book value for E&P companies represents historical costs and is not all that relevant. A better measure would be EV/barrel of oil equivalent or even better EV/NPV(proved reserves) which is what MCDEP tries to calculate. When comparing COP to CVX, it is clear that COP has much more debt. When looking at EV/EBITDA (again a poor measure because reserves have a different lifetime), then COP with a 3.7 looks a bit cheaper than CVX with 4.4. COP has not been an efficient allocator of capital in the past, imo - they spend more than their cash flow even when crude prices were rising. They did poor acquisitions (BR) and I generally consider tham a high cost producer. As such, COP will do better than CVX if crude & gas prices rise, if they stay the same or fall, CVX will do better, imo. I own neither one right now, I am not bullish on crude.