Stone Energy (SGY)

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Stone Energy (SGY)

Post by dan_s »

I just completed updating my forecast model for Stone Energy (SGY). The stock is trading at less than 2X cash flow per share which is ridiculous.

Fair Value = $30/share

Part of this is the result of the Market's selloff of all GOM producers since the BP oil spill (which BTW will soon be under control). An even bigger reason is that Stone is preceived by the market to be a gasser when in fact about 66% of their revenues this year will be coming from the sale of oil. The ratio could be even higher by year-end as the Amberjack Field development continues. Amberjack is an oilfield.

Another plus for Stone is that as their oil production goes up combined with expiring hedges, their realized oil price will also go up.

I would rate SGY a BUY up to at least $20/share.

Dan
Dan Steffens
Energy Prospectus Group
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