Dont forget Noble Energy. They are very well respected in the oil patch. Case in point.
Deutsche Bank sees opportunities in E&P
By Lisa Sanders, MarketWatch
Last Update: 1:16 PM ET April 1, 2005
DALLAS (MarketWatch) - Deutsche Bank launched coverage of the exploration and production sector Friday, saying that higher gas prices and the cash they generate for producers present opportunities for the group.
Deutsche Bank, which said it forecasts oil at $43 a barrel and $6 per thousand cubic feet for gas in 2005, noted that one benefit of high oil prices is they prompt industrial consumers to switch their fuel option to natural gas
"Fundamentally stronger natural gas and oil markets have unlocked the economics that play to many of the independents downhole skills," analyst Jay Saunders said in a report to clients.
Saunders sees further upside to the group's share prices, despite a 20% increase in value year-to-date.
He initiated coverage of 19 stocks with buy recommendations on 12. Range Resources Corp. (RRC: news, chart, profile) , Apache Corp. (APA: news, chart, profile) , and Noble Energy (NBL: news, chart, profile) are his top picks.
Saunders likes Range for its 5,260 drilling locations on 2.5 million gross acres, its 167% reserve replacement at $7 oil-equivalent barrels over the past three years, and its expected 2005 volume growth of 20 percent. It has a large position in Appalachia and leverage to "high-reward" plays in Mississippi and East Texas.
Apache is a favorite because of its approach to acquisitions - it only buys assets, not companies - its strong, clean balance sheet, and its underappreciated performance via the drill bit. Apache leads its peers in terms of return on investment at 165%.
Noble was able to replace 295% of reserves in 2004 at $5.19 per oil-equivalent barrel.
"Noble should benefit from diversification from the traditional shallow Gulf of Mexico shelf, addition of low-cost Rockies production and a growing presence of high-return international volumes in the production stream should improve addition costs and returns in the near futures," Saunders said.
