Other natural gas and oil producers include Chesapeake Energy Corporation (NYSE:CHK), SandRidge Energy, Inc. (NYSE:SD), Devon Energy Corp (NYSE:DVN), and Apache Corporation (NYSE:APA). Chesapeake Energy Corporation (NYSE:CHK) and SandRidge Energy, Inc. (NYSE:SD) have had management issues as well as financial problems related to their overextension, though Chesapeake’s CEO is out and activists are gaining a measure of control over SandRidge as well. The sell-side is actually optimistic on Chesapeake, with the forward earnings multiple only being 11 there; SandRidge is expected to be unprofitable both this year and in 2014. The Street is forecasting that Devon Energy Corp (NYSE:DVN) and Apache Corporation (NYSE:APA) are set for strong improvement as well. Devon, which was dragged into the red in 2012 due to impairment charges and had its revenue fall 11% in the fourth quarter of 2012 versus a year earlier, trades at 11 times forward earnings estimates. Apache was profitable, but with trailing and forward P/Es of 15 and 7 respectively it is clear that analysts are quite bullish on the company.
We don’t find PDC particularly attractive compared to its peers. The company looks quite dependent on higher natural gas prices, a dicey enough prospect in any case, and even assuming an improvement in the market we’d note that analyst expectations have some larger companies priced much more cheaply in terms of forward earnings. As a result we’d be more interested in using Chesapeake, Devon, or Apache as ways to play the natural gas thesis.
Disclosure: I own no shares of any stocks mentioned in this article.