EGN: Updating Model For Permian Acquisition
Analysts at Wells Fargo Securities reiterate their "outperform" rating on Energen Corp (NYSE: 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.
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