• 4 minutes Is The Three Gorges Dam on the Brink of Collapse?
  • 8 minutes The Coal Industry May Never Recover From The Pandemic
  • 11 minutes China Raids Bank and Investor Accounts
  • 9 hours Biden admits he has been tested for Cognitive Decline several times. Didn't show any proof of test results.
  • 1 hour Putin Forever: Russians Given Money As Vote That Could Extend Putin's Rule Draws To A Close
  • 1 hour During March, April, May the states with the highest infections/deaths were NY, NJ, Ma. . . . . Today (June) the three have the best numbers. How ? Herd immunity ?
  • 12 hours Apology Accepted!
  • 4 hours Tesla Model 3 police cars pay for themselves faster than expected, says police chief
  • 14 hours U.S. natural gas at major disadvantage in Europe and China.
  • 15 hours Biden came out of his basement today (Thursday) and said , "we have 120 Million deaths from Covid 19.
  • 3 hours Why Oil could hit $100
  • 3 hours The Political Genius of Donald Trump
  • 16 hours Putin Paid Militants to Kill US Troops
  • 21 hours CoVid in Spain, 9 months before China
  • 20 hours Per most popular Indian websites it was Indian troops not Chinese troops breach of LAC that caused the clashes. If you know any Indian media that claim to the contrary please provide the link
  • 20 hours The world is headed for big problems - interview with very smart economist

Breaking News:

OPEC Production Falls To Three Decade Low

Editorial Dept

Editorial Dept

More Info

Premium Content

Is This The Most Undervalued Energy Stock?

When a sector is under pressure, as energy is now, individual stocks often get dragged down with everything else to a point that just defies logic. That is the case now with the Colorado-based oil and gas E&P company PDC Energy (PDCE). The stock has lost over half its value since the 52-week high just under a year ago and is now trading at trailing and forward P/Es of 11.59 and 7.21 respectively. Those are low, even for an energy stock, but there are signs that won’t last, and a bounce back looks likely.

When an industry is facing tough times, companies face a choice. They can baton down the hatches, reduce costs, cut production, and try to ride out the tough times, or they can take advantage of the weakness and expand in anticipation of a recovery. PDCE took the second tack, and that is in part why their stock has been hit so hard.

A couple of months ago, they announced the acquisition of SRC Energy in an all-stock deal valued at around $1.7 billion. Issuing stock for any purpose dilutes the value of existing shares, but the value of the acquisition also has to be considered. When a company makes that move in a depressed market, there is a tendency to undervalue the purchase, and that is what happened here.

SRC is a good fit for PDC. The acquisition leaves them with a large, contiguous lease in the Denver-Julesburg (DJ) basin and should result in significant cost savings, yet the stock is lower now than when the deal was announced.

Perhaps…





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News