Today's Trends: What Does The Market Like?

The valuation sweet spot for publicly-traded E&P companies is best defined by looking at market capitalization (i.e. most recent share price multiplied by shares outstanding). Using a sample of 33 firms, we found that investors favored firms whose market capitalizations were between five to ten billion U.S. dollars. To gauge valuations, we compared each firm's standardized measure of discounted net cash flows (as reported to the SEC) versus their market capitalization.

We took up this exercise as a quest to see if there was any distinction being made by the market based on the intensity/mix of what firms were producing. Given the weakness of natural gas prices over the last year, we anticipated that companies with a focus on oil would favor better. However, our analysis showed that the market was not relying on this factor primarily for its selection process. In fact, three of the top five firms based on relative valuations had very little exposure to oil exploration.

GRAPH: Rankings From Highest to Lowest Valuation Premiums For U.S. E&P Frims


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.


Our Privacy Pledge

From the Career Center
Jobs that may interest you
Cost Accountant
Expertise: Accounting
Location: Midland, TX
Facilities Engineering Manager
Expertise: Engineering Manager|Facilities Engineer|Refinery / Plant Operations Supervisor
Location: Lake Charles, LA
United States Houston: Accountant
Expertise: Accounting|Financial Analyst
Location: Houston, TX
search for more jobs

Brent Crude Oil : $52.72/BBL 3.31%
Light Crude Oil : $48.51/BBL 3.01%
Natural Gas : $2.89/MMBtu 1.36%
Updated in last 24 hours