Constellation Energy Partners Defines Margin of Safety

Thesis: Constellation Energy Partners is an oil and gas limited liability company that owns natural gas assets. The company is presently hampered by debt taken on during the energy boom in the past few years and has thus refocused on using operating cash flows to reduce long term debt. The market cap of the partnership is currently valued in the public market at roughly 27% of the PV-10 NAV (Net Asset Value)[1] using NYMEX strip prices (12/31/09). Investing in the partnership offers a margin of safety in relation to their asset base and catalysts for share appreciation over the next two years include the resumption of maintenance and growth cap-ex as well as dividend reinstatement. Company Overview: Constellation Energy Partners was organized by Constellation Energy Group and offered to the public in 2006. The purpose is to acquire energy assets with a long life as well as develop and produce from them. [Read the full article]

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Together, we are all trying to build our fortune by finding well-run companies at bargain-basement prices. But it takes work — scouring company earnings reports, scrutinizing key data, and assessing the competition. Because of that, we’ve created a screen based on the massive data aggregated from the more than 160,000 investors competing on our Motley Fool CAPS platform. Each quarter, we check in on select companies after they file a 10-Q and track community sentiment — so you can see how your company is doing. Here’s the community sentiment on BreitBurn Energy Partners L.P. (Nasdaq: BBEP) both this quarter and last (for comparison), as well as opinions on some related companies. Source: Motley Fool CAPS. Dates given are the posting dates of BreitBurn Energy Partners L.P.’s most recent quarterly and/or annual reports to the SEC’s website. Percentages are calculated from the number of members rating each company. [Read the full article]

Helmrich & Payne (HP) and Nabors Industries (NBR), two contractors that drill for natural gas at the behest of gas producers, are the better names in natural gas drilling services, believes UBS Securities analyst Angie Sedita. But even those two may not be worth owning at the moment: she downgraded both today to Neutral from Buy. Sedita concerned that with natural gas producers — HP and NBR customers increasing capacity by 5% to 6% this year, on average, drilling for gas is becoming a crowded industry with little support from demand, with natural gas prices weak and stockpiles still high. (This morning Department of Energy report showed a lower than expected drawdown of natural gas inventories last week.) We believe dayrates will continue to climb over the coming months which will drive earnings. [Read the full article]

Buy-recommended Cenovus Energy (CVE) offers unlevered appreciation potential of 9% to a McDep Ratio of 1.0 where stock price would equal Net Present Value of US$27 a share. Fourth quarter results, released on February 11, support our estimate for unlevered cash flow (Ebitda) in 2010. Cenovus has been operating as an independent company since separation from buy-recommended Encana (ECA) on November 30, 2009. The new entity has the ambitious target to quadruple bitumen (heavy oil) production by 2017. Cash flow from natural gas and other oil reserves in Canada would finance the development. In a 50/50 joint venture with buy-recommended ConocoPhillips (COP), the heavy oil would be refined in the U.S. into gasoline, diesel and other final products. Reserves to support perhaps half of bitumen growth to 2017 appear counted as proven. Reserve life and projected cash flow support NPV in an industry context. [Read the full article]

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