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ATP Oil & Gas: Both Value and Momentum

Not a good analysis. No-one values reserves at the current market price. Reserves in the ground are always valued at a fraction of the market price. Look at Chesapeake Energy (CHK), for example. CHK has 12 trillion cubic feet of proven reserves of gas. Its enterprise value is $25.5 billion. This works out to an enterprise value of $2.125/thousand cubic feet of reserves. The enterprise value of ATPG is $1.86/thousand cubic feet of reserves. So, CHK's EV/Mcf is only 14% higher than ATPG's. Given the difference in the financial strength of the two companies, it's hard to see that ATPG is undervalued at all.

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