Chesapeake Energy Corporation (CHK), Murphy Oil Corporation (MUR): Don’t Overlook These Oil & Gas Companies

Concentrating on core assets

Talisman Energy Inc. (USA) (NYSE:TLM) is following through with its $7 billion divestiture plan, which focuses on the U.S. and international segments equally. It is expected that it will sell assets worth around $2.5 billion in the upcoming 12 months-18 months. The company’s assets in Duvernay, Ocensa pipeline, Kurdistan, and Papua New Guinea are expected to sell in the near-term. The total value of these assets stands around $7 billion, and it expects to use the sale proceeds to reduce its debt of $4.4 billion. In addition, the company can increase its investments in oil-rich regions like Eagle Ford and the Montney play. It is expected that its debt to equity ratio will decline from 0.48 to 0.46.

The company is shifting its focus to its core assets in North America and Asia-Pacific to match the rising demand in these regions. It has productive assets in Marcellus, Eagle Ford, Western Canada, Montney play, Malay Basin, and Vietnam. The company is expected to generate 85% of its revenue from these regions. Moreover, Montney can play as a lucrative asset, with reserves of 0.6 trillion cubic feet equivalents in this region, and it has over 15,000 barrels of oil in the Vietnam assets. By focusing on these regions, analysts expect an EPS surge from $0.09 last year to $0.27 in 2014.

Conclusion

By focusing on asset sales and natural gas, Chesapeake Energy Corporation (NYSE:CHK) will grow its revenue. Meanwhile, Murphy Oil Corporation (NYSE:MUR) will concentrate on oil exploration and production by spinning off the U.S. downstream business and selling assets in the UK. The company has the assets to increase production, which will result in surging revenue. Moreover, cost reduction and increasing production in the core regions will boost Talisman Energy Inc. (USA) (NYSE:TLM)’s EPS. Hence, I recommend all three stocks.

Shweta Dubey has no position in any stocks mentioned. The Motley Fool has the following options: long January 2014 $30 calls on Chesapeake Energy.

The article Don’t Overlook These Oil & Gas Companies originally appeared on Fool.com and is written by Shweta Dubey.

Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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