SM Energy Upgrade by Stifel - Jan 12
Posted: Tue Jan 12, 2021 12:17 pm
SM Energy Company (SM, $9.24, Buy; Target $12.00) -
Raising Target Price Following Virtual Meetings - Michael S. Scialla at Stifel
- Virtual meetings with institutional investors on 1/7/21 and 1/8/21 centered on potential uses of FCF, development of SM's Permian assets, and the emerging Austin Chalk play. We came away incrementally more positive on the latter and are raising our target price to $12 from $8 based on a stronger Austin Chalk type curve. While the early stage play has yet to be fully delineated, management's confidence in the Chalk stems from a robust geologic model that recently identified a high porosity landing zone. As such, we anticipate new wells will be comparable to three 2020 Chalk wells that appear to generate competitive returns with the company's Permian Basin assets.
RBC Capital also upgraded SM to a BUY with a $12.00 price target. My valuation is $11.50 as of today and it will go a lot higher if natural gas moves over $3.00/mcf. SM's production is approximately 48% crude oil and 52% natural gas and NGLs.
Raising Target Price Following Virtual Meetings - Michael S. Scialla at Stifel
- Virtual meetings with institutional investors on 1/7/21 and 1/8/21 centered on potential uses of FCF, development of SM's Permian assets, and the emerging Austin Chalk play. We came away incrementally more positive on the latter and are raising our target price to $12 from $8 based on a stronger Austin Chalk type curve. While the early stage play has yet to be fully delineated, management's confidence in the Chalk stems from a robust geologic model that recently identified a high porosity landing zone. As such, we anticipate new wells will be comparable to three 2020 Chalk wells that appear to generate competitive returns with the company's Permian Basin assets.
RBC Capital also upgraded SM to a BUY with a $12.00 price target. My valuation is $11.50 as of today and it will go a lot higher if natural gas moves over $3.00/mcf. SM's production is approximately 48% crude oil and 52% natural gas and NGLs.