/biz/ - Business & Finance

>>53875875
On the one hand, this strategy will necessarily dictate that EPM will never have the most profitable operation in existence, as the other developers would keep the best fields for themselves, but that EPM can do "okay' in operations so long as they buy fields that are decent. The advantage of this is that EPM will have lower debt loads and capital expenditures than if it was actually buying the machinery to BOTH develop and run its operations. As a result, EPM has no debt, or at least, very little. However, they're currently spending all of their cash buying new fields in various locations for geographic diversification. The company is also diversified (or as diversified as it could be) in its products, offering Oil, Natural Gas, and NGLs.

The company is trading at a mid-level price over the last year and its valuation metrics are mostly good, perhaps Price/Book could be a little lower. It looks pretty comparable to its competition outside of a MONSTER dividend yield, which can be explained by the manner of its operations requiring historically little CAPEX relative to its sector or debt to pay.

However, this is a unique operation and that reflects in comparisons between EPM and its competition. EPM is the LEAST profitable company in its niche when compared to those with similarly low levels of short interest, and it also has an unusually low FCF margin, roughly 0%. While the company has no debt, it's spending its entire cash flow on expansion, which could be risky in a market with so much geopolitical/regulatory exposure, though not as risky as taking out debt to develop new wells.