EGN: Updating Model For Permian Acquisition

Analysts at Wells Fargo Securities reiterate their "outperform" rating on Energen Corp EGN. According to Wells Fargo Securities, “EGN acquired 8,700 net acres in Permian Basin in the heart of the Wolfberry trend from a private seller for $185MM in cash. The acquisition includes estimated reserves totaling 18MMBoe and flowing production of approximately 900Boe/d. Eighty-nine percent of the proved reserves or 16MMBOE are PUDs which have a future development costs of approximately $325MM. EGN estimates the all-in acquisition cost to be approximately $21.11/BOE of proved which includes the future cost to develop the PUDS. Excluding the future development costs we estimate that EGN paid approximately $10.28/Bbl of proved which may be more comparable to its peers.” “EGN hedged approximately 78% of the oil production from this acquisition through 2014 at prices above $80/Bbl which is currently above the strip. EGN estimates that its full-cycle break even is around a low-to-mid $30/Bbl price, which making this an attractive acquisition especially when you combine it with its solid oil hedge position, in our view,” the analysts add. More Analyst Ratings here