Cost Structures Provide More Certainty for Oil and Gas Companies: Philip Weiss, Senior Analyst at Argus Research Company, Interviews with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - June 28, 2013 - The Wall Street Transcript has just published its Oil & Gas Review 2013 Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increasing Demand for Midstream Assets - U.S. Energy Infrastructure Build Out - Emerging Shale Plays - Oil and Gas Transportation Infrastructure Demand - Master Limited Partnerships Distribution Growth - Outlook for Natural Gas Liquids - Low Treasury Yields and MLP Dividends

Companies include: Anadarko Petroleum Corp. (APC), Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Chesapeake Energy Corporation (CHK), Atlas America Inc. (ATLS), Hess Corporation (HES), Transocean Ltd. (RIG), ConocoPhillips (COP), Schlumberger Limited (SLB) and many more.

In the following excerpt from the Oil & Gas Review 2013 Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are you top three stock picks right now, and what do you like in particular about each of those stocks?

Mr. Weiss: The first one I'm going to look at right now is probably Transocean (RIG). I come back to the idea of liking the oil price. The company had a tough year in 2011, and their difficulties continued into this year, but I think that we're starting to see signs of a turnaround. So this is more of a value play to me, where the stock price has been depressed for some time - it peaked at over $160 in 2008 and is in the mid-$40s now.

The shares have had a pretty good year this year relative to other companies I cover, but I still think there's more room to run. Oil prices are favorable, and I think there's a relatively good chance they stay that way. They've got a lot of good contracts, their efficiency is growing and the number of deepwater resource plays is also growing. Another possible benefit is that they also sold 35 or so their jack-up rigs to a private equity firm. Transocean is going to retain a piece of that business, but I still like the move. It will benefit margins, and with the jack-up market being relatively strong, it should be a good time to sell these rigs, many of which are relatively old.

I also think that company will continue to improve the efficiency of its operations, which should be another big plus. After a really strong first quarter, the shares have been underperforming in the second half. The first quarter has really carried performance for the year. But I think that there's a whole lot of opportunity for that stock, because I think that the commodity price is favorable, and they've got a very significant revenue backlog. I believe it's approaching $30 billion. I think that's a really big part of their story. They're buildings new rigs, and I think that's important, and they have contracts for those rigs, which is even better. And I think that's the first one that I think of in terms of companies that are really well positioned right now. One thing to remember though is that this looks like a deep value play, so it may take a little bit longer to generate strong gains. But I think it's one that you have an opportunity now to get a good price and do well on that stock.

The next one that I'm going to say is - I really like ConocoPhillips (COP). That's one of those stocks I think you can...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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