Balance is the most important attribute of this stock from the Oil and Gas Operations industry. 44% of the company’s proven natural reserves was from natural gas at the end of 2006: 56% of the company’s reserves were from oil and natural gas liquids. Therefore, investors who wish to maintain presences in both these energy segments will appreciate the strategic degrees of freedom that this stock offers.
Reliability is another important criterion in favor of this stock. US and other first world investors who worry about natural assets and exploration rights in exotic countries will be reassured to know that all of this company’s oil and gas reserves lie within Texas, Louisiana, and New Mexico. Similarly, all of the company’s revenues come from within the United States. The stock is therefore insulated from foreign currency fluctuations, and related developments on the international stage.
Certainty about geological formations and reserves deep under the surface of the earth are always suspect to revisions, but this company has a sound profile in this important investment aspect. 75% of its proven reserves at the end of 2006 have been developed. The company has been able so far to compensate all downward revisions in its proven reserves with extensions and new discoveries. It also has a deliberate policy of acquiring proven reserves within the North America. Investors are therefore relatively assured that the company has excellent prospects of maintaining its present level of production. The company has proven reserves at the end of 2006, equivalent to about a decade of daily operations.
The price to cash flow over the last 4 quarters is just 5.90 compared to 10.49 for the industry. The company is growing faster than its industry segment, and has a better gross margin as well.
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