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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 3/10

GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 2/10

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» EPE's 10-Y Financials


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Guru Trades

Q1 2016

EPE Guru Trades in Q1 2016

Paul Tudor Jones Sold Out
Jim Simons 254,417 sh (-42.78%)
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Q2 2016

EPE Guru Trades in Q2 2016

Jeremy Grantham 14,900 sh (New)
Jim Simons 43,200 sh (-83.02%)
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Q3 2016

EPE Guru Trades in Q3 2016

Joel Greenblatt 14,476 sh (New)
Jim Simons 128,728 sh (+197.98%)
Jeremy Grantham Sold Out
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Q4 2016

EPE Guru Trades in Q4 2016

Jim Simons Sold Out
Joel Greenblatt 13,141 sh (-9.22%)
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Insider Trades

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Business Description

Industry: Oil & Gas - E&P » Oil & Gas E&P    NAICS: 211111    SIC: 1311
Traded in other countries:EPR.Germany,
EP Energy Corp is an oil exploration and production company, engaged in the acquisition and development of oil and natural gas properties. It operates in the Eagle Ford Shale, the Wolfcamp Shale, the Altamont field and the Haynesville Shale.

EP Energy Corporation was incorporated on August 30, 2013. It is an oil exploration and production company. It is engaged in the acquisition and development of unconventional onshore oil and natural gas properties in the United States. Its operating areas include the Eagle Ford Shale, located in South Texas, Wolfcamp Shale, Altamont, and Haynesville Shale. The Company's oil and natural gas exploration and production activities are regulated at the federal, state and local levels in the United States and Brazil.

Guru Investment Theses on EP Energy Corp

Third Avenue Management Comments on EP Energy Corp - Sep 25, 2015

As the energy markets churned weaker over the quarter, we continued to look for attractive investment opportunities, as it was our sense that many investors were shooting first and asking questions later on their sales. We continue to believe that the current price weakness is a supply driven shock, and not what we believe would be a more worrisome lack of demand driven sell off.

The one‐two punch of higher Saudi Arabian production and potential future Iranian production have pushed oil down to the low $40 per barrel range, well below what we believe is a realistic industry wide break‐even level in the mid‐$60’s or higher, even with the benefit of recent service cost reductions that are likely not sustainable over time. In the near term we have seen a strong demand response in higher oil use and over the medium term we would expect a drop in production of higher cost barrels, which would reduce supply and lead to higher oil prices.

As we sifted through the sell‐off looking for good companies, we identified EP Energy Corp. (NYSE:EPE) as it has similar characteristics to our investment in Rosetta Resources with high quality acreage in two of the most attractive shale regions in North America in the Eagle Ford and the Permian.

EPE is an independent oil and gas exploration and production company that was previously owned by El Paso Energy. The company was sold in May 2012 to private equity investors Apollo Global Management, Riverstone Holdings, Access Industries and Korea National Oil Corporation (KNOC) for $7.2 billion. EP Energy began trading publicly in January 2014 and the private equity sponsors continue to own 85% of the shares outstanding. EPE operates in four areas: the Eagle Ford Shale in Southern Texas, the Wolfcamp Shale in the Permian Basin in West Texas, the Altamont field in the Uinta Basin in Northeastern Utah and the Haynesville Shale in North Louisiana.

EPE’s management has an excellent track record of growing oil and gas production at a 27% compound annual growth rate over the past five years and proven reserves increased by 14% last year. The company’s Eagle Ford acreage is its most economic area in the current oil and gas price environment with break‐even (a company‐defined 10% return on capital) at an oil price of $40 per barrel. EPE’s Permian Midland Basin acreage holds significant growth potential. The Wolfcamp wells have a 10% return at $44 per barrel oil which is almost as economic as the Eagle Ford acreage as a result of lower costs and improved drilling results. The Permian acreage provides EPE with long term growth opportunities with more than twice the acreage as the Eagle Ford and over 3,000 potential drilling locations. In addition the Wolfcamp is six‐times thicker than the Eagle Ford with at least 6 potential producing zones versus one in the Eagle Ford.

Although EPE has $4.9 billion of debt and a Net Debt to EBITDA ratio of 1.9 times, which is at the high end of our comfort zone, we are very comfortable with the financial strength of the company since none of the debt is due prior to 2018. In addition EP has an enviable hedge position with 95% of 2015 expected oil production hedged at a floor of $88 per barrel and 75% of estimated 2016 oil production hedged at a floor of $80 per barrel which will allow the company to live within cash flow without having to add additional debt. EP’s hedges have a current market value of around $875 million which if monetized could be used to repay debt and bring the Net Debt to EBITDA ratio down to 1.6 times.

We are confident that management’s history of improving drilling results across all of their acreage positions as well as continued cost reductions will support continued earnings improvement despite weak oil and gas prices. We also think that EPE could be an attractive acquisition target for a mid‐sized E&P that wants to enter or add to its position in the very attractive Eagle Ford and Permian plays. In addition EPE may consider divesting its Altamont or Haynesville acreage at the right price.

From Third Avenue Management's third quarter Small-Cap Fund shareholder letter.

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Valuation & Return


More Statistics

Revenue (TTM) (Mil) $1,052
EPS (TTM) $ -14.85
Short Percentage of Float29.09%
52-Week Range $1.60 - 7.49
Shares Outstanding (Mil)252.45

Analyst Estimate

Dec16 Dec17 Dec18
Revenue (Mil $) 1,476 1,181 1,243
EPS ($) 0.69 -0.16 -0.08
EPS without NRI ($) 0.69 -0.16 -0.08
EPS Growth Rate
(Future 3Y To 5Y Estimate)
Dividends per Share ($)
» More Articles for EPE


Articles On GuruFocus.com
Seadrill Among Energy Stocks Trading With Low P/E Dec 29 2015 
Third Avenue Management Comments on EP Energy Corp Sep 25 2015 
EP Energy: Strong Operational Execution Makes This Oil Stock a Smart Investment May 06 2015 
EP Energy's Asset Profile Makes It a Good Investment Mar 29 2015 
Weekly CEO Buys Highlight: NRP, SFXE, OPK, EPE, OMN Oct 12 2014 
Weekly CEO Buys Highlight: FSFR, FSIC, OPK, EPE, ACXM Aug 23 2014 
Largest Insider Buys of the Week May 23 2014 

More From Other Websites
EP Energy to Host Fourth Quarter and Full Year 2016 Results Webcast on March 2 Feb 22 2017
EP ENERGY CORP Files SEC form 8-K, Change in Directors or Principal Officers Feb 21 2017
EP ENERGY CORP Files SEC form 8-K, Change in Directors or Principal Officers Feb 15 2017
EP ENERGY CORP Files SEC form 8-K, Regulation FD Disclosure, Financial Statements and Exhibits Feb 14 2017
Is the Options Market Predicting a Spike in EP Energy (EPE) Stock? Feb 10 2017
EP ENERGY CORP Files SEC form 8-K, Change in Directors or Principal Officers Feb 09 2017
EP Energy's CEO to Present at Credit Suisse Energy Summit on February 14 Feb 09 2017
EP ENERGY CORP Files SEC form 8-K, Entry into a Material Definitive Agreement, Termination of a... Feb 07 2017
EP ENERGY CORP Files SEC form 8-K, Regulation FD Disclosure, Financial Statements and Exhibits Feb 02 2017
EP Energy Announces Pricing of 8.00% Senior Secured Notes Due 2025 Feb 01 2017
What Are Analysts Recommending for EP Energy? Feb 01 2017
EP Energy Stock Reaction after Joint Venture Announcement Feb 01 2017
EP Energy LLC -- Moody's rates EP Energy's proposed secured notes Caa1 Jan 31 2017
EP Energy Announces Offering of its Senior Secured Notes Due 2025 Jan 31 2017
How Does the Permian Basin Position EP Energy? Jan 31 2017
Why Is EP Energy Increasing Focus in the Wolfcamp? Jan 31 2017
EP Energy, Wolfcamp Enter into Drilling JV in Permian Basin Jan 31 2017
EP Energy Announces Drilling Joint Venture in Permian Jan 31 2017
After hours buzz: Alphabet, Starbucks, Microsoft and more Jan 26 2017

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