SM Energy Continues to Outperform - Analyst Blog
January 16 2012 - 3:15AM
Zacks
We maintain an Outperform rating on
SM Energy Company (SM)––an independent oil and gas
company engaged in the exploration, exploitation, development,
acquisition and production of natural gas and crude oil in North
America.
With significant liquids content
and favorable economics, the Eagle Ford represents an attractive
resource potential in which the company has built a premier
position. Development of the Eagle Ford Shale is an important part
of SM Energy’s goal to increase stockholder value.
While Eagle Ford will likely
accelerate faster than expected because of additional takeaway, the
company also remains proactive in its Haynesville shale position.
SM Energy’s increased capex guidance mainly reflects continued
drilling activities in its Haynesville shale position in East
Texas.
Given the company’s increasing
focus on oil, specifically the Permian and Rocky Mountain regions,
we believe that SM Energy will be able to increase its oil-weighted
activity. SM Energy remains proactive in its production target and
expects production growth of 35–40% in 2012.
Additionally, SM has meaningful
leasehold positions of the leading US shale plays, including the
Bakken, Niobrara, Haynesville, and Granite Wash, which we believe
will provide the company with many years of profitable drilling
inventory. Growth drivers include the South Texas Eagle Ford Shale
and Rockies Williston Basin Bakken/Three Forks shales. We also
believe that SM Energy’s emerging core portfolio will support
visible organic growth for several years.
SM Energy has been able to raise a
significant amount of capital following the sale of a number of
assets, placing itself in a well-capitalized position for growth.
SM Energy has transformed into a resource play with a high-graded
asset base. SM Energy remains proactive in its attempt to hold a
significant position in the emerging shale plays and focus more on
resource, with an inventory of repeatable drilling prospects and a
high rate of return.
SM Energy’s attractive oil and gas
investments, balanced and diverse portfolio of proved reserves and
development drilling opportunities create long-term value for
shareholders. The company holds a Zacks #3, which translates into a
Neutral rating for the short term. It faces competition from
Chesapeake Energy Corporation (CHK).
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
SM ENERGY CO (SM): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
SM Energy (NYSE:SM)
Historical Stock Chart
From May 2024 to Jun 2024
SM Energy (NYSE:SM)
Historical Stock Chart
From Jun 2023 to Jun 2024