Devon Energy Research Report - Competitor Review
This report reflects the research and analysis I've performed on this company. It is provided for informational purposes only and does not constitute personalized financial advice nor an endorsement or solicitation to purchase stock in this or any other company. Please do your own due diligence or hire a financial advisor before making any investment decisions.- Updates
- None
- DVN:US research report posted: 2007, July 29
- Risk Detail
- Possible Upside
- Competitor Review
- Valuation and Assessment
Competitors
Chesapeake Energy (click here for our report on CHK) - leading driller of onshore natural gas producers
- Pros
- 2nd leading position in the Barnett Shale
- Comprise 15% of US domestic drilling leads to advanced knowledge of geology and resource characteristics
- In-house drilling, infrastructure and seismic segments help control costs
- CEO McClendon one of the savviest in the industry.
- Cons
- Over-leveraged relative to industry peers
- Serial diluter
EOG Resources – low cost producer in the industry; trades at a premium as measured by P/E ratio
- Pros
- Shuns acquisitions, focusing entirely on drilling for growth
- Has some Barnett exposure
- Extremely cost-conscious and fiscally conservative
- Cons
- Not attractively priced
- Position in the Rockies may not be as economical due to infrastructure and government challenges
Anadarko Petroleum – most aggressively leveraged as well as risky plays
- Pros
- Have grown reserves faster than production for each of the last 25 years
- Considering spinning off some assets as a Master Limited Partnership (MLP)
- Highest net margins of the companies I looked at
- Cons
- Debt-to-capital: 67% high for the industry
- Has leveraged future growth to deepwater Gulf of Mexico and Rockies
- Risky in both operational sense and capital structure sense.
EnCana – refocused on Canadian oil sands projects and North American natural gas
- Pros
- Huge gas wells drilled in the Deep Bossier region of TX
- Partnering with ConocoPhillips in the oil sands play
- Cons
- Oil sands subject to significant cost overruns
- Rockies exposure not ideal
Author is long this stock.
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