EOG Resources is the biggest player in Eagle Ford and was the subject of a by SA Contributor Heather Ingrassia on April 2, 2014. Trading at over 18 times earnings and about 7 times cash flow, EOG is fairly valued at about $100 a share if the reserves turn out to be correctly estimated. If they are overstated, the stock will suffer.
Chesapeake also has exposure to shale oil in Eagle Ford and shale gas in the Marcellus area. Chesapeake is enjoying very high profitability at natural gas prices of $4.30 per Mcf, offering high leverage to the current hydrocarbon prices with target returns on investment for new wells coming in at 110%. However, at 36 times earnings, the stock has discounted just about everything positive likely to happen and seems quite vulnerable to any pullback in commodity prices or downward revisions to reserves. In the current environment, I think CHK could very easily trade higher, and for the time being, I will simply avoid the stock.Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.
I believe this article could have been written a year ago when the price of EOG was trading at $64 (post-split valuation).
Humdinger of a Winter
How cold has it been this year in Fargo? InForum is reporting:
Deep frost frustrated utility crews in the metro area all winter, freezing far more water lines than usual.
After such a bad year, at least one city is considering charging residents if they need to have a water line thawed more than once during the winter.
Fargo has spent about $300,000 to thaw out about 300 frozen pipes this winter. Typically, only a few thousand dollars are spent thawing about 25 pipes.
“This year was horrific,” said Ben Dow, Fargo’s public works director.
Moorhead Public Service, the city’s publicly owned utility, spent an estimated $15,000 on about 30 frozen pipes this year. One to five frozen pipes is the winter norm, utility officials said.