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Cairn Energy (CNE LN): Outlier

We recently put the following chart together that shows just how cheap and high quality Cairn Energy (CNE LN) is relative to the entire universe of independent exploration & production companies (E&P) with market caps above $250 million. In the chart, we used Cairn’s first full year of projected EBITDA at current oil prices, and used trough cash levels to calculate the EV. Not only is Cairn an outlier in that it’s the cheapest stock in the selected universe (and also high quality), but it’s holding in Cairn India is also half the valuation of the industry, despite having modestly better-than-median ROIC.

Independent E&P Industry Landscape

Cairn

 

Notes: Data from CapIQ, includes all independent E&P Companies with a market capitalization greater than $250 million. ROIC defined as EBITDA / Net Tangible Assets. Size of bubbles = market capitalization in USD. Cairn’s valuation uses estimated EBITDA in the first full year of UK production at current oil prices as well as trough net cash assuming all exploration unsuccessful.


This article has been distributed for informational purposes only. Neither the information nor any opinions expressed constitute a recommendation to buy or sell the securities or assets mentioned, or to invest in any investment product or strategy related to such securities or assets. It is not intended to provide personal investment advice, and it does not take into account the specific investment objectives, financial situation or particular needs of any person or entity that may receive this article. Persons reading this article should seek professional financial advice regarding the appropriateness of investing in any securities or assets discussed in this article. The author’s opinions are subject to change without notice. Forecasts, estimates, and certain information contained herein are based upon proprietary research, and the information used in such process was obtained from publicly available sources. Information contained herein has been obtained from sources believed to be reliable, but such reliability is not guaranteed. Investment accounts managed by GreenWood Investors LLC and its affiliates may have a position in the securities or assets discussed in this article. GreenWood Investors LLC may re-evaluate its holdings in such positions and sell or cover certain positions without notice. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of GreenWood Investors LLC.

Past performance is no guarantee of future results.

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