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

To: Dennis 3 who wrote (50449)	12/29/2012 5:37:32 PM
From: Spekulatius	1 Recommendation Read Replies (1) \| Respond to of 78764

DVN has 3B BOE in proces reserves, which are roughly 20% crude, 20% NGL and 60% NG. Right now, they are switching Capex to crude. With a ~24B$ enterprise value, you are paying 8$BOE for above resource mix. In addition, DVN has conaiderable acreage and a midstream business that is roughly worth 4B$. Ng prices have been trading up, which may not show up yet in DVN income statement, because of hedging, but sooner or later it should. The biggest issue with DVN (and other E&P) is that they are FCF negative due to overspending in Capex. I think this will subside and my provide a catalyst for thr stock. The NAV valuation are ballpark numbers from Morningstar and S&P and would imply a valuation of a little more than 12$BOE, which is hardly challenging. I am adding to this stock slowly. The solid balance sheet makes financial distress very unlikely, so I think it is a low risk bet in the E&P space.