UPDATE: Stifel Nicolaus Downgrades Cimarex Energy to Hold, Removes PT
In a report published earlier today, Stifel Nicolaus downgraded its rating on Cimarex Energy (NYSE: XEC) from Buy to Hold, and removed its $80.00 price target.
Stifel Nicolaus said it made its decisions “given expectations of further slowdown in Cana (liquids rich) drilling with a limited ability to offset the decline without any ramp-up in the Permian. As a result, we see downside risk to 2H12 and also 2013 outlooks for the company. The company only has three key assets. Gulf Coast has no key activity until late 2012 and has already become a smaller part of the overall mix at 6% of 2012 production. Cana, which accounts for about 50% of production, is liquids rich drilling, with economics having coming down meaningfully to the 20% IRR range based on our estimates, making the drilling economics not as attractive once corporate costs are burdened in. The Permian, which accounts for about 43% of production, has several different plays within the area, but we see limited ability to ramp-up activity here in the near-term without sacrificing returns/efficiencies.”
Cimarex Energy Co. closed on Friday at $55.12.
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