EPL Oil & Gas (EPL) Jumps on Upgrade to "Buy"

Michael Teague |

The $1 billion-dollar independent oil & gas exploration/production firm Energy Partners Ltd. (EPL) was trading nearly 7 percent higher on Friday following an upgrade from Canaccord Genuity from “hold” to “buy.”

The gains for Energy Partner’s came early and persisted throughout the day’s trading, despite the fact that another ratings firm, Sasquehanna, initiated coverage on the stock at “negative” at the same time. EPL is a Houston, TX-based company that does the bulk of its work in state and federal waters in the Gulf of Mexico, and is coming off a strong 2013, on a gain of nearly 25 percent for the full year.

In the new year, however, shares have struggled slightly, off about 6 percent, including Friday’s gains. Canaccord’s decision to upgrade EPL was based on valuation, as the company is trading at just over 9 times earnings, significantly behind the industry average of around five times greater than that.

Furthermore, the ratings firm gave Energy Partners’ stock a price target of $37, a significant premium on the company’s current share price of $28. Though an independent explorer/driller, the company is not one of those whose revenues and profits are tied to the onshore “shale boom” of recent years.

Instead, Canaccord believes that the company’s offshore assets are of high-quality. EPL is currently sitting on at least 77.5 million barrels of oil equivalent, and owns interests in at least 37 different producing fields in the Gulf of Mexico shelf.

If nothing else, today’s upgrade is an indication that the “shale boom,” for all of its magnitude and consequence, is still only one component among several that currently make up the US “energy revolution,” and that more traditional wells, as well as other types of unconventional sources, will continue to play a significant role going forward.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
NEGXF Nexgenrx Inc n/a n/a n/a 0

Comments

Emerging Growth

ParcelPal Technology Inc.

ParcelPal Technology Inc is a community based delivery service. The Company through its mobile delivery app enables businesses and individuals to quickly and affordably have items delivered locally though crowd-sourced…

Private Markets

Uber

Uber connects riders with safe, reliable, convenient transportation providers at a variety of price-points in cities around the world. Uber makes money from charging their drivers 20% of the fare…

Snapchat

Snapchat is the fastest way to share a moment with friends. The mobile app, allows users to not only share photos with friends but also control how long they can…