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UPDATE: Stifel Downgrades EPL Oil & Gas Following Acquisition Announcement

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In a report published Thursday, Stifel analyst Amir Arif downgraded the rating on EPL Oil & Gas (NYSE: EPL) from Buy to Hold, and removed the $39.00 price target.

In the report, Stifel noted, “We are downgrading EPL from Buy to Hold following yesterday's announcement of EXXI ($21.54, Not Rated) signing an agreement to acquire EPL. Given that we view the offer as full and fair, the deal is friendly, has a high cash component (65%), breakup fee involved, and limited number of buyers for shelf production, we do not see any meaningful probability for competing bids. In addition, with the arb spread fairly narrow (1.1% to the cash/stock offer) and risk of additional downside to EXXI stock in the near-term given the acquisition metrics, we are downgrading EPL from Buy to Hold.

"We believe that EPL shareholders are of two basic groups – one group looking for attractively valued oil exposure and the other being those who prefer to invest in offshore names looking past the production growth challenges in shallow waters and focusing on EBITDA margins and value creation from capital redeployment.”

EPL Oil & Gas closed on Wednesday at $37.50.

Latest Ratings for EPL

DateFirmActionFromTo
Apr 2014Clarkston CapitalDowngradesMarket Perform
Mar 2014Cowen & CompanyDowngradesOutperformMarket Perform
Mar 2014KLRDowngradesBuyHold

View More Analyst Ratings for EPL
View the Latest Analyst Ratings

Posted-In: Amir Arif StifelAnalyst Color Downgrades Analyst Ratings

 

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