These Two Can Weather Low Oil & Gas Prices

Article Excerpt

These two stocks now trade at low multiples to cash flow based on the 12 months to September 30, 2008. However, oil and gas prices have fallen sharply since the end of the third quarter, which will cut their cash flow in the fourth quarter. This trend will likely continue into next year. Nevertheless, with their low debt and high development spending, both are well-positioned to withstand lower prices. CIMAREX ENERGY $27.96 (New York symbol XEC; SI Rating: Extra risk) (303-295-3995; www.cimarex.com; Shares outstanding: 83.3 million; Market cap: $2.3 billion) is an oil and gas explorer and producer primarily focused in western Oklahoma, Kansas, the upper Gulf Coast areas of Texas and South Louisiana, the Permian Basin area of West Texas, plus the Gulf of Mexico. Cimarex’s production averaged 484.9 million cubic feet equivalent per day in the latest quarter. Natural gas makes up 72% of output. Production for the full year 2008 will likely average 485 million cubic feet. In the three months…