Replies to post #488 on AS IRON SHARPENS IRON

[downsideup]

I tend to agree with the analysts on this one. Slashing the exploration budget means not finding growth, and with over a billion in debt and no cash, they will be eating seed corn to pay the dividend. Apply CVX as a benchmark, and you see they have 7B in debt, but 11B in cash. Etc.


http://www.businessweek.com/investor/content/dec2008/pi2008125_526086.htm?campaign_id=yhoo

MORGAN KEEGAN DOWNGRADES BERRY PETROLEUM, BILL BARRETT, TXCO

Morgan Keegan analyst Chris Pikul says he downgrades Berry Petroleum (BRY), Bill Barrett (BBG) and TXCO Resources (TXCO) to market perform from outperform, as he repositions his universe to focus on companies with highest quality assets, strong balance sheets and best opportunities for low-cost reserve/production growth in a lower price environment.

Pikul notes in BRY's case, even though the company is appropriately managing liquidity position, it is poised to scale back drilling in 2009; he thinks lower-trending oil prices, high debt levels will likely discourage investors from BRY stock, barring a dramatic turnaround in oil prices.