Entering text into the input field will update the search result below

Mid-Con Energy Partners: Dirt Cheap


  • Like Legacy, Mid-Con Energy Partners looks like an incredibly cheap company at this time.
  • Lower debt than Legacy, plus a high standardized measure, supports this view.
  • In most cases, it wouldn't be unreasonable for shares to trade a few times higher than where they are today.

It’s undeniable at this point that the oil market is fast on its way to rebalancing and that the risk for investors in this space is in the hands of the bears at long last. Many energy companies have already seen their market caps appreciate as investors search for value in a market that is otherwise remarkably pricey. One of the few names that has not risen materially, though, is Mid-Con Energy Partners (NASDAQ:MCEP), a micro-cap E&P operator with modest debt and attractive cash flow prospects if energy prices move any higher.

A look at the assumptions

In another article, I wrote about the prospects offered by Legacy Reserves (LGCY), an E&P operator that has seen its shares soar thanks to major buying from a small investment firm and due to management’s decision to change the company’s status from a pass-through entity to a C-Corp. In that piece, I showed that shares should be worth far more than where they are at today, and management later released an analysis similar to mine showing material upside.

Mid-Con isn’t so much different. Both are small E&P operators that have fallen out of grace with investors. Both have preferred stock that can be converted into common in order to lighten their loads and simplify their balance sheets. Both are pass-through entities that could benefit from a transition into a C-Corp if done the right way. However, there are some differences that need to be considered.

While both have debt, the picture with Mid-Con is far better. As of the last statement on the matter, management said that total debt is $90.2 million, all of which is credit facility debt. Legacy, on the other hand, has $1.37 billion in debt. In all, prior to making the announcement on switching to a C-Corp, Legacy’s debt made up

This article was written by

Daniel Jones profile picture
Robust cash flow analyses of oil and gas companies

Daniel is an avid and active professional investor. He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein.

Analyst’s Disclosure: I am/we are long LGCY, MCEP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am likely to buy more shares of MCEP in the future.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.