2. This Week in Energy
• US production still
increasing, gasoline
stockpiles high
• Libya exports coming
back online
• Concerns over losing
Iraqi production
waning
Energy sector down 1.85%: Global oil supplies are
on the rise, sending prices lower
3. This Week’s Top 5 Energy Performers
NYSE: PE up 4.95%
NASDAQ: AHGP up 3.88%
NASDAQ: MRD up 3.84%
NYSE: CXO up 3.82%
NYSE: SUSP up 3.48%
4. Parsley Energy
Why is it up this Week?
• After its Initial public offering back in May,
several analyst groups initiated coverage
this week. Most of which is favorable
–Most Recent: RBC Capital rating of sector
perform with a very favorable price target
5. Parsley Energy
Who is it?
Parsley is a exploration & production company in the
heart of the Permian Basin
Pros:
• Location, the Permian is a great place to be right
now
• Lots of potential well sites to grow production
Cons:
• Only getting 53% oil in production, low compared
to other Permian players
• Priced at extremely high premium (TEV/EBITDA=
23.9x)
6. Parsley Energy
Does this week matter in the big picture?
Price targets and analyst opinions won’t
change this business, nor the long term
outlook for this stock
What really matters right now is whether the
company can grow production, so watch for
earnings reports and conference calls to get
a better picture of guidance
7. Alliance Holdings GP
Why is it up this Week?
• Analysts at Raymond James seem to really
like this coal stock, giving it a strong buy
rating and a price target of $77.00
– Price as of end of week: $68.87
8. Alliance Holdings GP
Who is it?
General Partner of Alliance Natural Resource Partners, just about the only coal
company in America that is actually making money today
Pros:
• Reducing costs while increasing production
• Squeaky clean balance sheet
• Raising distributions
Cons:
• Coal is a tough place to be, coal prices are
weak from oversupply
• Long term outlook for coal in US in decline
9. Alliance Holdings GP
Does this week matter in the big picture?
Price targets and analyst opinions don’t
really mean much, but…
ARLP is slowly gaining market share
thanks to its low cost production in the
Illinois Basin region, which is leading to
higher distribution payments at the
General Partner
10. Memorial Resource Development
Why is it up this Week?
• After its Initial public offering back in June,
several analyst groups have initiated
coverage with strong buys
11. Memorial Resource Development
Who is it?
General Partner of Memorial Production Partners, a Natural Gas producer with
acreage in the Rockies, East Texas, and Louisiana
Pros:
• Lots of room to grow production (up 54% since
Q1 2012)
• E. Texas & Louisiana acreage in region with high
demand & lots of infrastructure to get it to
market
Cons:
• 1 year decline rates very high (approx. 65%), very
challenging for E&P company structured as a
MLP
12. Memorial Resource Development
Does this week matter in the big picture?
Price targets and analyst opinions won’t
change this business, nor the long term
outlook for this stock
Investors in this company need to worry
more about company growing production to
cover its high decline rates and that the MLP
can cover its distributions
13. Concho Resources
Why is it up this Week?
• Several Analysts have increased their 2014
earnings estimates for Concho thanks to
better than expected production growth
–Earnings for FY 2014 increased from $4.31 to
$4.35 per share
14. Concho Resources
Who is it?
Exploration & Production company focused solely on the Permian Basin
Pros:
• Strong acreage position in one of US’ best shale
formations
• Production growing fast (up 23% y-o-y)
• Strong cash operations compared to many small
E&P companies (operational cash flow covers
80% of capital expenditures)
Cons:
• High premium for shares (P/E ratio of 49.3x)
• High level of debt (debt/capital =49.4%)
15. Concho Resources
Does this week matter in the big picture?
Increased production leading to better than
expected earnings is a good sign
What really matters for Conch in the future is
to be able to cover its capital expenditures
with cash flow from operations
16. Susser Petroleum Partners
Why is it up this Week?
• Ummm…good question
– No press releases, no analyst rating changes, no
tangible changes to the business
– Somebody might give some technical analysis
explanation, but it’s just up, end of story.
17. Susser Petroleum Partners
Who is it?
A Master Limited Partnership specializing in wholesale distribution of refined
petroleum products, mostly supplying retail stations owned by Susser Holdings
Pros:
• Long term fee based contracts provide stable
cash flows
• Strong distribution coverage (coverage ratio=
1.22x)
• Well financed General Partner (Energy
Transfer Partners)
Cons:
• Very low margin business (gross margin 1.4%)
• Priced pretty high for MLP (price/distributable
cash flow=19.46x)
18. Susser Petroleum Partners
Does this week matter in the big picture?
Nothing happened. So how can that have any
tangible impact on the long-term impact of
the company?
19. How You Can Profit from
America’s Energy Tax
“Loophole”…
