What are we looking for
U.S. energy firms that are enjoying success in finding new reserves while keeping costs low. This is day 2 of this stock screen that aims to identify companies whose shares may be offering good value in relation to oil and gas reserve growth, production and overall efficiency. Thursday, we looked at a shortlist of Canadian names; today, we turn our attention stateside.
More on our screen
This screen uses data compiled from Bloomberg, which uses six specific criteria to determine a ranking – the higher the better. They include the costs of finding and extracting oil and gas, the success rate of exploratory wells, production rates and the value of reserves broken down by share. Bloomberg ranked only those companies that had all the necessary data.
What we found
Our list reveals the 20 highest-ranking companies; most are of a good size, with a market capitalization of over $1-billion (U.S.).
Some are decidedly out of favour right now. Take Chesapeake Energy, for example. Shares in the producer of more U.S. natural gas than any company except Exxon Mobil Corp. is almost half of what they were last summer. With the company burdened with a $10.3-billion net debt load and quickly selling off assets, only courageous contrarian investors may want to consider it.
Lesser known is the company that ranked the highest, Goodrich Petroleum Corp. Like many other energy firms hurting badly from depressed natural gas prices, it's been reallocating capital to more profitable oil producing targets. The U.S. exploration and production company has posted a net loss in each of the past four quarters, but analysts generally have a favourable view. Eight rate it as a strong buy, two as a buy and eight as a hold, according to Zacks Investment Research.
Energen Corp., a holding company involved in distributing natural gas in addition to exploring and producing both gas and oil, comes in second. It's been posting a profit in recent quarters and eight analysts rank it either as a buy or strong buy; five rate it as a hold.