Six Increasingly Profitable Independent Energy Plays Unburdened by Debt

Michael Teague |

For the time being, global crude prices are caught between the Chinese economy and the Russian military.

The consensus over China appears to for a slowdown in the near-term at least, meaning less demand, and lower commodity prices, especially if it turns out to be something even worse than a slowdown. With regard to events in Eastern Ukraine, however, consensus is a significantly more complicated affair, though Russia’s decisive and unflinching display of military power over the last two weeks should leave no doubt about its ability, if not intent, to take hold other former Soviet territories after Crimea, a scenario that would no doubt result in higher crude prices.

While it is not clear what this will mean for oil and gas stocks, investors who are seeking refuge from global headwinds may want to take a look at independent US producers who are somewhat less vulnerable to the economic and political events currently shaking global markets.

The following six independents represent a wide section of the market-cap scale, and bear the kind of fundamentals that pave the way for growth and profits in the future.

 

Methodology

 

●     Return on Equity equal to or greater than 15 percent: A robust ROE indicates that a company is both fiscally prudent and operationally disciplined enough to generating profits out of the money it receives from shareholders.

●     Debt/Equity Ratio less than 1: Given the lengthy duration of oil and gas projects, the market can tolerate relatively higher debt levels from independents, and that makes producers who keep their borrowing down all the more attractive (as long as they manage to remain profitable as well, of course).

●     Earnings per Share Growth of 50 percent or greater in 2014: Independent producers who see drastic gains in net-income on a per share basis could very well be reaping the rewards of a successfully completed project, or the acquisition of acreage with proven reserves.

 

Cimarex Energy Co. (XEC)

Market-Cap & Price: $9.75 billion / $111.89 per share

Return on Equity (ttm): 23.10 percent

Debt/Equity Ratio: 0.23

Earnings-per-Share & 2104 EPS Growth: $6.47 / +58.60 percent

 

Panhandle Oil and Gas Inc. (PHX)

Market-Cap & Price: $347.56 million - $45.50 per share

Return on Equity (ttm): 18 percent

Debt/Equity Ratio: 0.06

Earnings-per-Share & 2104 EPS Growth: $2.01 / +89.90 percent

 

Cabot Oil & Gas Corporation (COG)

Market-Cap & Price: $14.22 billion / $33.96 per share

Return on Equity (ttm): 12.50 percent

Debt/Equity Ratio: 0.52

Earnings-per-Share & 2104 EPS Growth: $0.66 / +112.90 percent

 

Delek Logistics Partners LP (DKL)

Market-Cap & Price: $784.05 million / $32.62 per share

Return on Equity (ttm): 69.70 percent

Debt/Equity Ratio: 0

Earnings-per-Share & 2104 EPS Growth: $3.40 / +170.50 percent

 

EOG Resources Inc. (EOG)

Market-Cap & Price: $50.38 billion / $185.97 per share

Return on Equity (ttm): 15 percent

Debt/Equity Ratio: 0.38

Earnings-per-Share & 2104 EPS Growth: $8.04 / +281 percent

 

Equal Energy Ltd. (EQU)

Market-Cap & Price: $189.31 million / $5.30 per share

Return on Equity (ttm): 38.60 percent

Debt/Equity Ratio: 0.27

Earnings-per-Share & 2104 EPS Growth: $0.34 /+290.90 percent

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
COG Cabot Oil & Gas Corporation 22.66 -0.17 -0.74 3,582,696
PHX Panhandle Oil and Gas Inc 24.15 -0.85 -3.40 15,750
DKL Delek Logistics Partners L.P. representing Limited 26.75 0.80 3.08 92,701
XEC Cimarex Energy Co 139.08 1.57 1.14 901,897
EOG EOG Resources Inc. 103.74 -1.01 -0.96 4,078,342
PCRBY Pricer AB ADR (Sponsored New) 0.97 0.00 0.00 0

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