(CRK) reports a big beat. $0.41A vs $0.36E
- Do I own it? NO, because I’m more worried about the sub prime snafu.
- Revenues: $174A vs $155 million expected.
- Production: 236 mmcfepd was up 6% sequentially, 32% YoY. 2007 production guidance at 25% to 30%.
- LOE/Mcfe: up a touch due to some offshore expenses but still well within hand at $1.54 ($1.35 last quarter and without the benefit of having listened to the quarterly call yet I bet large that there was some extra workover or repair expense in the offshore LOE which jumped from $1.31 per Mcfe last quarter to $1.62 this quarter.
- Only negative I see is their offshore division came up 0 for 3 on exploration and missed a development well.
- Operations update: Onshore 82 of 86 success rate
o E. Tx / N. La rates continue to hold up at 1.3 mmcfepd IPs. 100% success rate on 66 wells 1H07. They plan to drill their first Cotton Horizontal test next month (after having watched others wade in to the concept first). The golden nugget would be coming close to a (DVN) operated horizontal Cotton Valley test that IP’d at 10 mm/d last winter. CRK has a
o S. Tx still drilling some quality wells with IP’s in the 6 to 7 mmcfepd range and running a 3 rig program now, up from 2 at the end of 1Q.
o Mississippi – couple of exploratory dusters in 2Q
o Offshore 3 duster and two tests underway, one of which has encountered five pays to date. Overall offshore (and this may spook some younger analysts who like to put in fat production wedges): 3 for 11 YTD.
Bottom Line: Solid from a numbers perspective, little light with the exploratory drill bit but that happens. Cash flow here is off the hook with the production growth and the company now trades at a paltry trailing twelve month CF multiple of 2.8x or 3.68x TTM EBITDAX to TEV. That’s just too cheap for this kind of growth.
Ended the day up 8.8% and it has more room to run.
Note to SA Editor: no need to post to SA, this is a breakout for my site report purposes.
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