CLR and XEC

[dan_s]

From my last weeks reading. XEC has been on our Watch List for awhile and will now be adding CLR. - Dan
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Shares of oil exploration and production company Continental Resources (CLR) are off 3 cents at $42.92 despite kind words this morning from Madison Williams analyst Andrew Coleman, who chose the stock as his favorite among “oil-weighted E&P” companies, with Cimarex Energy (XEC) his favorite natural gas name.

Writing that a surfeit of drill rigs in the U.S. natural gas business has put a cap on gas prices, Coleman recommends staying away from natural gas-heavy E&P companies — which is difficult, given U.S. E&P’s are “weighted” 70% to natural gas. More and more, he likes companies already having lots of liquified natural gas or oil investments.

Cimarex is a case in point, with the highest liquid content among its gas-weighted peers, at 35%, writes Coleman. He likes the company management’s “fiscal discipline” and the asset mix. Coleman’s price target is $84.

Continental Resources is his favorite among oil-weighted E&Ps, with plans to spend $1.3 billion in production this year, way, way up from $500 million last year. The company has the highest cash margin of its E&P peer group, at $7 per thousand cubic feet equivalent. Coleman’s target on Continental shares is $54.