SM Energy (SM)

[dan_s]

SM is primarily focused on the Eagle Ford and Bakken, but they also have a large stake in the Powder River Basin. It has the potential to become a "Core Area" for them and I think Wall Street is totally missing this in their valuation of SM.

EOG and Devon Energy (DVN) are also in the PRB. I believe this could become another big horizontal drilling play in early 2015 and it is HEAVILY WEIGHTED TO OIL.

Read this:

"The Powder River Basin (PRB), an area in Wyoming traditionally exploited for its coal resources and coalbed methane gas opportunities, has more than doubled its oil output since 2009. The Energy Information Administration’s (EIA) Today in Energy segment for September 15, 2014, credits the rise in production to new drilling and completion practices, or largely the use of horizontal drilling and hydraulic fracturing. Approximately 590 PRB wells have been drilled since 2009 and production is currently 78 MBOPD – 105% higher than 2009’s output of 38 MBOPD."

Full Article:
http://www.oilandgas360.com/eps-finding ... f-26401157

[dan_s]

On 9/15 I sent my recent profile on SM to Stifel. On 9/17 they issued an updated report on SM with the following conclusion.

"We are raising our target price to $110 from $95 and our NAV estimate to $143
from $132 per share. In our view, the stock's 26% discount to our peer group
(based on equally weighted EV/2015E EBITDA and price/NAV) neglects the
company's exceptional returns, strong financial position, and solid growth outlook."

My Fair Value Estimate is $160/share and I believe more analysts will upgrade this one after they see the Q3 results.