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PRO Top Ideas
Top Ideas are high-conviction long or short ideas focused on market mispricings with asymmetric risk/reward profiles.
EQT Corporation: The Midstream Advantage
- Based on a sum-of-the-parts analysis, EQT’s upstream business is one of the best values in the Marcellus/Utica E&P peer group.
- The company is developing takeaway solutions in the Marcellus that may support production growth to over 3 Bcf/d by 2018.
- The stock has a catalyst in the form of a potential monetization of the General Partner interest in the MLP.
- The recently acquired Midland acreage has the potential to evolve into a second core operating area.
- Despite the natural gas pricing headwinds in the Marcellus/Utica area, the stock's risk/reward profile appears skewed very favorably to the upside.
Antero Resources: Rich Valuation Represents A Risk
- Antero’s strong stock performance has resulted in trading multiples that are among the highest among large-capitalization E&P stocks and among its Marcellus and Utica peers.
- While the company's production growth guidance is impressive, it is to some degree a result of significant outspending of internal cash flow and does not represent an organic growth rate.
- The risk to natural gas price realizations is elevated and may contribute to the stock's price correction.
Halcón Resources: Success In The TMS Redefines Upside Potential
- Recent drilling results in the Tuscaloosa Marine Shale, both by Halcón and other operators, indicate that the play’s ultimate success is increasingly probable.
- A week ago, Halcón received an important endorsement of its TMS asset from Apollo Global Management in the form of the first tranche of a $400 million mezzanine financing.
- Given the scale and quality of Halcón’s position in the TMS, the asset may prove defining for the stock’s valuation.
- Factoring in the potential impact from the TMS, the stock’s risk/reward profile appears favorable.
Sanchez Energy: From 'Asset-Poor' To 'Asset-Rich'
- Sanchez emerged as the winning bidder on Shell's Eagle Ford assets. The purchase price is highly favorable to Sanchez.
- In an optimistic scenario, the transaction could add over $1 billion to the stock’s intrinsic value.
- From a strategic perspective, the acquisition fully resolves the company’s drilling inventory challenge.
- Only a small portion of the potential upside is reflected in the post-announcement price move.
Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story'
- The article provides illustrative valuation analysis of Kodiak’s drilling inventory, including risks and upsides.
- The stock is priced very reasonably relative to its value potential.
- The transition into full development mode and substantially reduced operating risk should help to close the gap between the stock price and the underlying NAV.
- SandRidge Energy: Disappointing Asset Sale Reinforces Valuation Concerns
- Bill Barrett: The Niobrara And Uinta Upside
- Cabot Oil And Gas: 50% Growth And Free Cash Flow Shows The Stock's High Multiple Is Warranted
- Comstock Resources: In Search Of New Growth
- Penn Virginia: Outlook Remains Strong Despite Recent Outperformance
- EXCO Resources: Fundamentals Remain Weak, Despite Leadership Change
- Carrizo Oil & Gas: Oil-Focused Portfolio With Assets In All The Right Places
- SM Energy: Just Getting Started
- Goodrich Petroleum: Transformation Underway
- Clayton Williams: Leveraged To Momentum In 2 Top Oil Plays
- Forest Oil: Disappointing Asset Sale Raises Valuation Concerns
- SandRidge Mississippian Trust I: Risk Of Downward Re-Pricing
- Penn Virginia: Strong Value Upside Driven By Quality Of Eagle Ford Assets
- QEP Resources: Bakken 'Monster' Wells Validate Strong Upside Potential