Goldman sees more than 15 years of drilling inventory in the core natural gas properties and likes the company’s plan to “deploy the bulk” of its free cash flow to shareholders. Goldman’s 12-month price target on the stock is $117, well below the $145.08 per-share average of 14 analysts.
The company’s market cap is about $12.3 billion, and second-quarter sales totaled about $2.8 billion. The stock’s 52-week range is $56.75 to $105.93, and shares closed Wednesday night at $102.08. Chesapeake pays an annual dividend of $6.87 (yield of 6.71%), and the total shareholder return for the past 12 months was 89.8%.
Delek US
Delek US Holdings Inc. (NYSE: DK) is a refiner and marketer of petroleum and biodiesel products, the owner and operator of product storage and distribution facilities, and the owner and operator of around 240 convenience stores. Goldman likes the company’s refining business, which the analysts say “drives improved capital allocation flexibility” with room for more upside. The company does face a challenge in unlocking its full value due to sum-of-the-parts valuation issues. Goldman’s six-month price target is $34, on par with the average target of $33.77 of 14 analysts.
Delek’s market cap is about $5.9 billion, and second-quarter sales totaled about $5.9 billion. The stock’s 52-week range is $14.07 to $35.23, and shares closed Wednesday night at $26.33. Delek pays an annual dividend of $0.80 (yield of 3.04%). The total shareholder return for the past 12 months was almost 70%.
Ovintiv
Formerly known as Encana, Ovintiv Inc. (NYSE: OVV) is also an independent oil and gas exploration and production company. It holds assets in the Permian and Anadarko basins, the Bakken shales, and the Uinta Basin in eastern Utah, along with several projects in Canada.
Goldman approves of the company’s focused debt reduction and Ovintiv’s plan to direct 50% of free cash flow (not including dividend payments) to shareholders. Inflation, pricing, production and costs must all break right in order to make the dream come true. Goldman’s 12-month price target on the stock is $62, compared to the average target of $56.70 of 24 analysts.
Ovintiv’s market cap is about $12.2 billion, and second-quarter sales totaled about $3.74 billion. The stock’s 52-week range is $28.73 to $63.30, and shares closed Wednesday night at $47.97. The company pays an annual dividend of $1.00 (yield of 2.08%) and the total shareholder return for the past 12 months was 78.7%.
Weatherford
Weatherford International PLC (NASDAQ: WFRD) is an oilfield services company that operates worldwide. According to Goldman’s analysts, Weatherford “carries discovery value” because the equity is based on the same factors as those that apply to large-cap rival Schlumberger, also Buyated by Goldman and one of the stocks on the firm’s Conviction List.
The international business, especially from the Middle East, is a strong differentiator for Weatherford as it is for Schlumberger. The risks to that outlook are primarily on the execution side. Goldman’s 12-month price target on the stock is $38, compared to the average target of $45.40 of five analysts.
Weatherford’s market cap is about $2.2 billion, and second-quarter sales totaled about $1.06 billion. The stock’s 52-week range is $16.53 to $40.16, and shares closed Wednesday night at $30.15. The company does not pay a dividend, and the total shareholder return for the past 12 months was nearly 80%. The total return includes a debt paydown of more than 11% but no share buybacks.
Originally posted at 24/7 Wall St.
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