Cimarex Poised to Perform in Wake of Amaranth Failure - 500 Beiträge pro Seite
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Cimarex Poised to Perform in Wake of Amaranth Failure
Posted on Sep 21st, 2006 with stocks: XEC
Neal Shanske submits: While perhaps not as spectacular a failure as that of Long Term Capital Management, the reversal of fortune at the Amaranth hedge fund has had a major impact on the market. The sheer volume of positions Amaranth has been forced to unwind has exacerbated the problem, pushing down natural gas even further. Amaranth continues to liquidate positions, and as it does so, natural gas will continue to drop.
Natural gas will stop its fall when Amaranth’s liquidity crisis ends. This will happen in one of several ways. Amaranth will liquidate everything and close up shop, sell enough to restore solvency, or sell distressed assets to a buyer with greater liquidity. Bloomberg reports that another hedge fund, Citadel Investment Group, is in talks with Amaranth to take over open energy trades. Were this to happen, Citadel would be in a position to sit on trades and close the book over time, removing downward pressure from the market.
Natural gas prices would appear to be near a bottom and should rise somewhat once this situation is resolved. In order to take advantage of this, there are several stocks with a natural gas focus in North America that are good buys. My favorite is Cimarex (XEC).
Cimarex is an oil and gas exploration company with all of its activity in the United States. The product mix is 70% natural gas and 30% oil. Cimarex has historically not hedged but announced in August that it had begun hedging natural gas, locking in about 15% of production above $7.
At Tuesday's close of $35.02 (within $1 of the 52-week low and well off the high of $47.80), the company has a P/E of 7 against last year’s earnings. With oil and gas prices down it’s likely that profits will decline as well, but even at 2004’s level of $3.59 per share, the P/E is below 10. Of course, this is offset somewhat by higher production levels than last year given the mild Gulf hurricane season.
Cimarex has been very successful in developing new wells. In 2005, the company drilled 382 wells with a remarkable 88% success rate, resulting in the replacement of 183% of production. The company has announced that it will spend $1 billion on exploration and development this year, up 50% from last year’s number. So far the company has continued its high success rate (134 wells with an 89% success rate in Q2). Sixty percent of the company’s acreage is undeveloped, so there is plenty of opportunity left to grow the already impressive proved reserves 1.4 trillion cubic feet equivalent.
Cimarex is poised to perform well even with oil and gas prices below current levels. The company recently instituted a dividend, has been buying back stock and paying down debt. Would I bet the house on it? No, Amaranth shows the danger of that. But if you can buy at these levels and can wait out (and perhaps buy on) any further drops, I believe you will be amply rewarded.
Update: According to CNBC, Amaranth has transferred its entire energy portfolio to Citadel and JP Morgan Chase (JPM). There’s still a lot of volume to unwind, but now that we’re out of crisis mode, the natural gas market should settle down.
Posted on Sep 21st, 2006 with stocks: XEC
Neal Shanske submits: While perhaps not as spectacular a failure as that of Long Term Capital Management, the reversal of fortune at the Amaranth hedge fund has had a major impact on the market. The sheer volume of positions Amaranth has been forced to unwind has exacerbated the problem, pushing down natural gas even further. Amaranth continues to liquidate positions, and as it does so, natural gas will continue to drop.
Natural gas will stop its fall when Amaranth’s liquidity crisis ends. This will happen in one of several ways. Amaranth will liquidate everything and close up shop, sell enough to restore solvency, or sell distressed assets to a buyer with greater liquidity. Bloomberg reports that another hedge fund, Citadel Investment Group, is in talks with Amaranth to take over open energy trades. Were this to happen, Citadel would be in a position to sit on trades and close the book over time, removing downward pressure from the market.
Natural gas prices would appear to be near a bottom and should rise somewhat once this situation is resolved. In order to take advantage of this, there are several stocks with a natural gas focus in North America that are good buys. My favorite is Cimarex (XEC).
Cimarex is an oil and gas exploration company with all of its activity in the United States. The product mix is 70% natural gas and 30% oil. Cimarex has historically not hedged but announced in August that it had begun hedging natural gas, locking in about 15% of production above $7.
At Tuesday's close of $35.02 (within $1 of the 52-week low and well off the high of $47.80), the company has a P/E of 7 against last year’s earnings. With oil and gas prices down it’s likely that profits will decline as well, but even at 2004’s level of $3.59 per share, the P/E is below 10. Of course, this is offset somewhat by higher production levels than last year given the mild Gulf hurricane season.
Cimarex has been very successful in developing new wells. In 2005, the company drilled 382 wells with a remarkable 88% success rate, resulting in the replacement of 183% of production. The company has announced that it will spend $1 billion on exploration and development this year, up 50% from last year’s number. So far the company has continued its high success rate (134 wells with an 89% success rate in Q2). Sixty percent of the company’s acreage is undeveloped, so there is plenty of opportunity left to grow the already impressive proved reserves 1.4 trillion cubic feet equivalent.
Cimarex is poised to perform well even with oil and gas prices below current levels. The company recently instituted a dividend, has been buying back stock and paying down debt. Would I bet the house on it? No, Amaranth shows the danger of that. But if you can buy at these levels and can wait out (and perhaps buy on) any further drops, I believe you will be amply rewarded.
Update: According to CNBC, Amaranth has transferred its entire energy portfolio to Citadel and JP Morgan Chase (JPM). There’s still a lot of volume to unwind, but now that we’re out of crisis mode, the natural gas market should settle down.
Cimarex Energy ranks No. 92 on FORTUNE's 100 Fastest-Growing Companies List
FORTUNE Magazine
September 22 2006: 10:16 AM EDT
(Fortune) -- Cimarex Energy (Charts) ranks no. 92 on Fortune's 2006 list of the 100 Fastest-Growing Companies. The Denver, Colorado-based company saw profits rise at a rate of 42% and revenues grow 53% with a stock return of 22% on average annually over the past three years.
Each year, Fortune's ranking of Fastest-Growing Companies provides a snapshot of America's economy, and this year the picture is drenched in oil. Last year 18 energy firms cracked the top 100 - up from four in 2000. Now more than a third of the roster - 34 companies - are in the energy biz.
But oil is hardly the whole story. Computer and biotech firms make their usual strong showing. Catering to Americans' obsession with how they look (and how well they see) has been remarkably lucrative: LCA-Vision, a laser surgery provider, lands at no. 5, followed closely by Palomar Medical Technologies, which makes laser devices used in cosmetic skin treatments. T
his year, just two homebuilders made the cut: Toll Brothers at No. 98 and Meritage Homes at No. 99. Last year there were four homebuilders and two land developers on the list.
Fortune's 100 Fastest-Growing Companies list is an annual ranking of U.S. companies by three-year growth in sales, profits and total return that meet key criteria for sales, profit and market capitalization size and sales and profit growth.
FORTUNE Magazine
September 22 2006: 10:16 AM EDT
(Fortune) -- Cimarex Energy (Charts) ranks no. 92 on Fortune's 2006 list of the 100 Fastest-Growing Companies. The Denver, Colorado-based company saw profits rise at a rate of 42% and revenues grow 53% with a stock return of 22% on average annually over the past three years.
Each year, Fortune's ranking of Fastest-Growing Companies provides a snapshot of America's economy, and this year the picture is drenched in oil. Last year 18 energy firms cracked the top 100 - up from four in 2000. Now more than a third of the roster - 34 companies - are in the energy biz.
But oil is hardly the whole story. Computer and biotech firms make their usual strong showing. Catering to Americans' obsession with how they look (and how well they see) has been remarkably lucrative: LCA-Vision, a laser surgery provider, lands at no. 5, followed closely by Palomar Medical Technologies, which makes laser devices used in cosmetic skin treatments. T
his year, just two homebuilders made the cut: Toll Brothers at No. 98 and Meritage Homes at No. 99. Last year there were four homebuilders and two land developers on the list.
Fortune's 100 Fastest-Growing Companies list is an annual ranking of U.S. companies by three-year growth in sales, profits and total return that meet key criteria for sales, profit and market capitalization size and sales and profit growth.
6:06AM Cimarex beats by $0.20 (XEC) 36.71 : Reports Q3 (Sep) earnings of $1.11 per share, $0.20 better than the Reuters Estimates consensus of $0.91; revenues fell 10.0% year/year to $309.3 mln vs the $313 mln consensus.
Antwort auf Beitrag Nr.: 25.174.313 von kfe1000 am 06.11.06 13:52:26Kurt Wulff (McDep Associates) submits: Buy-recommended small cap producers Encore Acquisition (EAC), Cimarex (XEC) and Berry Petroleum (BRY) are among our best U.S. ideas for appreciation considering the commodity outlook, equity valuation and a catalyst to spur new interest.
The quote for six-year oil remains above the long-term expectation of $60 a barrel in our current valuation analysis. After declining in price since last winter, natural gas has been advancing relative to oil since the summer and now the new winter season is about to begin.
McDep Ratios at 0.56 for EAC and 0.57 for XEC, the lowest in our coverage, imply that those stocks are priced for the unlikely case that oil would be less than $40 a barrel. A possible catalyst for investors may be developing as buy-recommended peer Energy Partners (EPL) trades at a McDep Ratio of 0.85 in anticipation of an improved takeover offer perhaps up to a McDep Ratio of 1.0.
In the past, greater price volatility in the small producer stocks has meant more downside. However, it may mean more upside looking ahead for patient, contrarian investors.
The quote for six-year oil remains above the long-term expectation of $60 a barrel in our current valuation analysis. After declining in price since last winter, natural gas has been advancing relative to oil since the summer and now the new winter season is about to begin.
McDep Ratios at 0.56 for EAC and 0.57 for XEC, the lowest in our coverage, imply that those stocks are priced for the unlikely case that oil would be less than $40 a barrel. A possible catalyst for investors may be developing as buy-recommended peer Energy Partners (EPL) trades at a McDep Ratio of 0.85 in anticipation of an improved takeover offer perhaps up to a McDep Ratio of 1.0.
In the past, greater price volatility in the small producer stocks has meant more downside. However, it may mean more upside looking ahead for patient, contrarian investors.
naja, das hier war wohl auch nichts.
eine kleine Bitte an Dich: lass es mit persönlicher Anmache, die ich immer wieder von Dir erlebe.
Das wird Dir in Deinem Börsenleben bestimmt auch gut tun - falls Du eines hast.
eine kleine Bitte an Dich: lass es mit persönlicher Anmache, die ich immer wieder von Dir erlebe.
Das wird Dir in Deinem Börsenleben bestimmt auch gut tun - falls Du eines hast.
Trading Spotlight
Antwort auf Beitrag Nr.: 27.785.255 von beobachter47 am 18.02.07 00:49:36meinem börsenleben geht es gut, da es tagsüber stattfindet und nicht nachts
Antwort auf Beitrag Nr.: 28.123.916 von kfe1000 am 05.03.07 13:22:02na, meinem Börsenleben geht es auch gut, da ich meine Zeit tagsüber nicht mit verzichtbaren Postings verbringe
was macht Cimarex? Ist das jetzt eine Empfehlung von dir?
was macht Cimarex? Ist das jetzt eine Empfehlung von dir?
Antwort auf Beitrag Nr.: 28.123.916 von kfe1000 am 05.03.07 13:22:02na, meinem Börsenleben geht es auch gut, da ich meine Zeit tagsüber nicht mit verzichtbaren Postings verbringe
was macht Cimarex? Ist das jetzt eine Empfehlung von dir?
was macht Cimarex? Ist das jetzt eine Empfehlung von dir?
als nachtrag
6-Jan-07 07:36 ET In Play E&P equity weakness presents compelling acquisition opportunity - Suntrust : Suntrust notes that since early December, with the abject lack of winter weather, E&P equities have declined about 15%. Assuming normal winter weather the remainder of the heating-season, E&P equities should have bottomed last week. Yet, if the current seasonally normal to colder-than-normal weather trends revert to warmer-than-normal conditions in late January and February, then they think new lows for this E&P equity cycle are likely in the second half of February. The firm thinks E&P company valuations now present compelling acquisition opportunities. The firm lists APA, CPE, FST, NBL, PXP, SFY, SGY, TMR, XEC as reflecting the most compelling valuations based on these combined criteria.
6-Jan-07 07:36 ET In Play E&P equity weakness presents compelling acquisition opportunity - Suntrust : Suntrust notes that since early December, with the abject lack of winter weather, E&P equities have declined about 15%. Assuming normal winter weather the remainder of the heating-season, E&P equities should have bottomed last week. Yet, if the current seasonally normal to colder-than-normal weather trends revert to warmer-than-normal conditions in late January and February, then they think new lows for this E&P equity cycle are likely in the second half of February. The firm thinks E&P company valuations now present compelling acquisition opportunities. The firm lists APA, CPE, FST, NBL, PXP, SFY, SGY, TMR, XEC as reflecting the most compelling valuations based on these combined criteria.
earnings haben etwas enttäuscht.
15-Feb-07 06:31 ET In Play Cimarex beats by a penny, ex items (37.06 ) : Reports Q4 (Dec) earnings of $0.71 per share, excluding a $0.01 charge, $0.01 better than the Reuters Estimates consensus of $0.70; revenues fell 30.2% year/year to $283.7 mln vs the $296 mln consensus. Cimarex's exploration and development capital expenditures for 2007 are projected to range from $800 million to $1 billion. First-quarter 2007 production volumes are projected to range between 435 - 445 MMcfe/d. January 2007 Mid-Continent volumes were reduced by approximately 10 MMcfe/d because of ice storms in Kansas, Oklahoma and Texas. Full-year 2007 production is projected to be in the range of 450 - 470 MMcfe/d.
15-Feb-07 06:31 ET In Play Cimarex beats by a penny, ex items (37.06 ) : Reports Q4 (Dec) earnings of $0.71 per share, excluding a $0.01 charge, $0.01 better than the Reuters Estimates consensus of $0.70; revenues fell 30.2% year/year to $283.7 mln vs the $296 mln consensus. Cimarex's exploration and development capital expenditures for 2007 are projected to range from $800 million to $1 billion. First-quarter 2007 production volumes are projected to range between 435 - 445 MMcfe/d. January 2007 Mid-Continent volumes were reduced by approximately 10 MMcfe/d because of ice storms in Kansas, Oklahoma and Texas. Full-year 2007 production is projected to be in the range of 450 - 470 MMcfe/d.
Antwort auf Beitrag Nr.: 28.123.916 von kfe1000 am 05.03.07 13:22:02falls Du Dich tagsüber informieren willst, dann schau u.a. bei GoYellow nach. Ich gebe ja selten Empfehlungen, aber diesmal bekommst Du eine
imo ein übernahmekandidat, we will see.
SeekingAlpha
Cimarex Energy Should Recover from Dry Spell
Tuesday March 20, 8:16 am ET
Kurt Wulff (McDep Associates) submits: Buy-recommended Cimarex (NYSE: XEC - News) had more dry holes than normal in its higher risk Gulf Coast
drilling in 2006, limiting its real return for the year to 4% as measured by increase in reserves.
ADVERTISEMENT
Considering that the company reinvested all of its cash flow, growth of 7% real would have been more normal. One year does not a trend make and XEC appears to have the financial strength
and management ability to do what is necessary to get back on course. Improved Gulf Coast operations and continued success in predictable, low risk Mid-continent and Permian drilling should help XEC beat the volumes in our base projection for 2007, updated to take account of latest quarterly results reported on February 15.
Exceeding stock price by a wide margin, estimated Net Present Value [NPV] of $68 a share matches that from a correlation with reserve life and cash flow for some thirty natural gas and oil producers. XEC is a concentrated play on natural gas whose price appears to be in a renewed uptrend from a low value relative to oil. Below the 200-day average price signifying an out-of-favor stock, Cimarex has a full weighting in our illustrative energy portfolio, concentrated on real assets that promise a high return providing clean fuel for global growth.
XEC 1-yr chart
SeekingAlpha
Cimarex Energy Should Recover from Dry Spell
Tuesday March 20, 8:16 am ET
Kurt Wulff (McDep Associates) submits: Buy-recommended Cimarex (NYSE: XEC - News) had more dry holes than normal in its higher risk Gulf Coast
drilling in 2006, limiting its real return for the year to 4% as measured by increase in reserves.
ADVERTISEMENT
Considering that the company reinvested all of its cash flow, growth of 7% real would have been more normal. One year does not a trend make and XEC appears to have the financial strength
and management ability to do what is necessary to get back on course. Improved Gulf Coast operations and continued success in predictable, low risk Mid-continent and Permian drilling should help XEC beat the volumes in our base projection for 2007, updated to take account of latest quarterly results reported on February 15.
Exceeding stock price by a wide margin, estimated Net Present Value [NPV] of $68 a share matches that from a correlation with reserve life and cash flow for some thirty natural gas and oil producers. XEC is a concentrated play on natural gas whose price appears to be in a renewed uptrend from a low value relative to oil. Below the 200-day average price signifying an out-of-favor stock, Cimarex has a full weighting in our illustrative energy portfolio, concentrated on real assets that promise a high return providing clean fuel for global growth.
XEC 1-yr chart
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