QUOTE AND NEWS
Market Intelligence Center  Sep 17  Comment 
For a hedged play on St. Mary Land & Exploration Co (SM), MarketIntelligenceCenter.com’s option-trade picking algorithms recommend the Nov. '14 $85.00 covered call for a net debit in the $81.20 area. That is also the break-even stock price for...
Market Intelligence Center  Aug 21  Comment 
For a hedged play on St. Mary Land & Exploration Co (SM) MarketIntelligenceCenter.com’s patented trade-picking algorithms recommend the Nov. '14 $75.00 covered call for a net debit in the $71.85 area. That is also the break-even stock price for...
OilVoice  Aug 21  Comment 
SM Energy Company NYSE SM announce that Ramiro G. Peru has been appointed to serve as a director of the Company effective August 20 2014. Mr. Peru will serve as an independent director and as a m
OilVoice  Aug 18  Comment 
SM Energy Company NYSE SM announces that its board of directors approved a revised capital expenditure budget for 2014. The Company is also providing updated 2014 production and cost guidance as w
OilVoice  Jul 14  Comment 
SM Energy Company NYSE SM announces that Rose M. Robeson has been appointed to serve as a director of the Company effective July 11 2014. Ms. Robeson will serve as an independent director and as
Market Intelligence Center  Jun 24  Comment 
Monday’s trading in St. Mary Land & Exploration Co (SM) gives options traders an opportunity for a 6.38% return. By selling the Aug. '14 $80.00 call and buying the Jan. '15 call at the $50.00 level for a net debit of $28.20, traders will book a...
Market Intelligence Center  Jun 3  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center  are highlighting two trades on St. Mary Land & Exploration Co (SM) today after it closed at $75.27 on Monday. For more...
Market Intelligence Center  May 29  Comment 
St. Mary Land & Exploration Co (SM) is an excellent choice for either a diagonal spread or a covered call expiring in Jul. '14 at the $75.00 level according to MarketIntelligenceCenter.com’s patented algorithms. A covered call on St Mary Land...
Market Intelligence Center  May 14  Comment 
For a hedged play on St. Mary Land & Exploration Co (SM) MarketIntelligenceCenter.com’s patented trade-picking algorithms selected a Aug. '14 $75.00 covered call for a net debit in the $70.42 area. That is also the break-even stock price for the...
Market Intelligence Center  May 12  Comment 
St. Mary Land & Exploration Co (SM) presents a trading opportunity that offers a 4.65% return in just 96 days. A covered call on St Mary Land and Exploration at the $70.00 level expiring on Aug. '14 offers an assigned return rate of 4.65% or...




 
TOP CONTRIBUTORS

St. Mary Land and Exploration (NYSE: SM) is an independent oil and natural gas company that explores for and produces oil and natural gas from land reserves in North America. St. Mary looks to focus on maximizing production from existing properties, shielding itself from risk by acquiring oil and gas properties that complement the company's existing operations rather than exploring new, high-risk areas.[1] St. Mary devotes more of its resources to developing its properties than any of its competitors, who have larger exploration budgets but are less focused on improving existing assets. St. Mary uses the capital it saves on exploration to hire teams of geologists, geophysicists and engineers with local expertise to focus on improving production in the locations where it has valuable reserves.

Headquartered in Denver, Colorado, St. Mary conducts operations in 5 key areas within the United States: The Rocky Mountains, ArkLaTex (Arkansas, Louisiana, and Texas), the Mid-Continent, the Permian Basin and the Gulf of Mexico. St. Mary's production revenues have grown in each of the past three years due to the increase in oil and gas prices, and its proven reserves have grown as well thanks to key low-cost acquisitions. Over the past 5 years SM has increased its oil and gas production by nearly 10% per year.

Company Overview

High oil and gas prices coupled with a focus on development of existing properties have enabled St. Mary to generate impressive returns on invested capital over the past several years. St. Mary is achieving upwards of 90% success rates in some of its fields, namely the Gulf Coast and Permian Basin regions. Overall, highly productive areas such as the natural-gas fields in the Hanging Woman Basin in Wyoming and Montana, helped drive up earnings nearly 60% in 2005 to $739.6 million. However, increased operation costs have accompanied St. Mary's production growth, hurting its margins on the balance sheet.

The company has also been able to increase its total production by 10% each year due to its efficient development of and continued investment in promising acquisitions such as the Sweetie Peck acquisition in the Permian Basin. In the future St. Mary could encounter problems with government regulations and environmental restrictions because a portion of the company's developed acreage is on federal land in the Hanging Woman Basin. The Hanging Woman Basin is a promising new acquisition that St. Mary is counting on for long-term growth.


[2]
[3]

Trends and Forces

  • St. Mary's New Acquisitions are the Key to Revenue Growth- Since St. Mary focuses much of its resources on the development of existing properties rather than on exploration, it must maximize production in each of its acquisitions to maintain its economic niche. The recent acquisitions of oil and natural gas properties in the Permian Basin and Hanging Woman Basin are two examples of regions where the company will focus on long-term production growth. The company also recently completed its most expensive acquisition of oil and gas properties in the Sweetie Peck Field in West Texas for $247.6 million.[4] The forecast of revenues that St. Mary expects to gain from it unproved properties is very optimistic. But niche acquisitions have kept St. Mary a profitable company, and the company continues to prove its ability to exceed production expectations in its acquisitions.
  • St. Mary's Operating Costs Continue to Grow- The dramatic increase in gas and oil prices has stimulated St. Mary to deviate slightly from its traditional model and increase exploration activities, since high demand has depleted existing gas and oil deposits. Exploration and production companies are poised to benefit from increases in the demand for energy because the incentive to seek new drilling opportunities is linked to cost increases of oil and gas. On one hand the increase in energy prices has been exceedingly beneficial for St. Mary. However, high oil prices have also exposed St. Mary to volatile drilling and operating costs.
    • OPEC's Role- OPEC sets the price of the crude oil produced by two thirds of the world’s oil reserves, and it controls production in member countries to protect this price. These artificially high oil and gas prices are important to St. Mary’s profitability and protect it from volatile price cycles and harsh price competition. St. Mary’s is not restrained by OPEC's regulations, but enjoys the benefits of OPEC's management of supply and demand in the oil industry.
  • Emerging Technology in Hybrid and Alternative Energy Sources Could Threaten the Long-term Stability of the Oil Business- Rising oil prices have led both consumers and companies to seek out alternative sources of energy and invest in renewable energy such as nuclear, solar, wind, biofuels, and ethanol. As the global consumer demand shifts toward renewable energy sources due to recent environmental concerns over climate change, this change in consumer consciousness may adversely affect the oil and gas industry. With the advent of hybrid and fuel cell vehicles and the cost of gasoline becoming dangerously close to $4 per gallon, consumers have become less inclined to purchase gas guzzling SUV’s opposed to more fuel-efficient cars. As a result oil and gas companies stand to lose if the industry encounters a sudden decrease in demand.

Competition

St. Mary encounters competition with a number of independent oil and gas companies with interests in the same regions where St. Mary owns properties and conducts operations. St. Mary competes for new and promising acquisitions with larger companies with greater resources that could potentially threaten St. Mary if they are able to muscle St. Mary out of lucrative acquisition opportunities. St. Mary's focus on onshore North America development may limit growth in the near future as some of its top competitors are beginning to develop growing interests in deepwater oil exploration.

Below is a table comparing several independent oil & gas companies across several metrics.[5]

Proved Reserves Square Footage
Revenue TTM ($M)Operating MarginProduction (MMcfe/Day)[6]Oil (MMBbls)Natural Gas (Bcf)LNG (MMBbls)Gross developed acreage (in thou)Gross undeveloped acreageGross Total
FST93433.2%31080.377811276684169182
DNR811.0439.9%220126288224471695
EOG376048.5%156111860953777827912056
KWK514.2142.8%1676.312414893616102546
NBL289040.2%4082963231193410,29512229
NFX181027.3%6641141586159360067599
PXD171018.9%1617292741618741659218466
PXP102026.9%1009333111149587.5736.5
RRC868.3538.0%27653.7143653.7145817563214
SM86238.4%25474.2482.599212912283
STR270030.1%35528.4146128.4240118254226
SWN107029.1%1987.997952016082128
XEC129033.1%44959.8109059.8194544456390
XTO512059.4%1527214.469405331828083990
[7]





Footnotes

  1. SM 2007 Annual 10-k Report, pg.3
  2. Google Finance
  3. SM 2006 Annual 10-k Report, "Properties" pg.23
  4. SM 2006 Annual 10-k Report, pg.39
  5. All data compiled from company annual reports and 10-K's
  6. MMcfe/day, or millions of natural gas cubic feet equivalent, is a measure of the level of production per day that converts oil into the energy-yielding natural gas equivalent using a ratio of 6 to 1 (natural gas to oil)
  7. All information Complied from 2006 Annual 10-k Reports


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