Cimarex Energy's Q4 Justifies Higher NPV
Buy-recommended Cimarex (XEC) offers unlevered appreciation potential of 22% to estimated Net Present Value [NPV] of $85 a share, up from $76 a share. Fourth quarter results released on May 6 verify oil volume growth and high regional natural gas price that both contribute to higher NPV.
Projected volumes along with current futures prices promise a continuing high level of unlevered cash flow (Ebitda). Projected cash flow capitalized at unlevered multiples (PV/Ebitda) related to reserve life (Adjusted R/P) supports NPV. At the same time, the industry backdrop continues to be positive with an uptrend for oil price and catch up potential for natural gas.
Improving industry conditions along with company performance seem to be contributing to higher stock price. For example, three months ago when the stock was $46 a share, the ratio of Enterprise Value [EV] to Ebitda was 3.6. Now with the stock price up to $68 a share, EV/Ebitda remains near the same low level at 3.8.
Originally published on May 6, 2008.
Related Articles
|
Hedge Fund Jobs
Job Seekers: Search jobs by category, get job alerts by email or live feed, apply online See full list of jobs »
Employers: See all recruitment options, get applications online or by email Post a job »
Trading Center
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
More by Kurt Wulff