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WPX Energy

posted Jan 4, 2012, 11:22 AM by Jeff Davies   [ updated Jan 5, 2012, 6:14 AM ]
WPX is the recent e&p spin-off from WMB.  I hate natty gas as much as the next guy, but after pulling together financials from the company filings, WPX looks too cheap to me relative to other names leveraged to the red-headed commodity.  WPX trading at $1/proved Mcfe and $3,400 per flowing Mcfe vs BBG at $2.17/$7,800, ECA at $1.22/$6,300 and SWN AT $2.61/$9,000.  While growth outside the Piceance won't be easy and the company certainly has some marginal plays in its portfolio, I'd expect them to ramp in the Bakken and Marcellus.  Tough to go long anybody leveraged to natty, but a pairs trade could work nicely.

Edit:  If I back out 69% of Apco mkt cap from WPX EV in addition to reserves and production, I get WPX trading at 65 cts per proved Mcfe and about $2,200 per flowing Mcfe.