Here's Why We Should Bet on SilverBow (SBOW) Stock Right Now
We are upbeat about SilverBow Resources Inc. 's SBOW prospects and believe it is a promising pick right now.
The company currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities for investors.
Let's take a look at the other factors that make this upstream energy player an attractive bet.
Access to Eagle Ford's Core Gas Acres
The company operates exclusively in the Eagle Ford with access to 101,000 net acres. The company estimated its proved reserves at 994 billion cubic feet equivalent (Bcfe), of which 43% has been proved developed. The reserve base is reflecting SilverBow's strong production prospects.
Except first-quarter 2018, the company has been consistently witnessing sequential growth in daily production since the first quarter of 2017. The company is also projecting its daily production to grow sequentially in fourth-quarter 2018.
Positioned to Capitalize on Clean Energy Demand
Natural gas accounted for 83% of the company's total production. Since natural gas has been used primarily to generate electricity, the company is well placed to cash in on the clean energy demand. Through 2018, natural gas contributed to roughly 32% of the nation's electricity generation, queuing ahead of coal, per U.S. Energy Information Administration .
Strong Emphasis to Lower LOE
The company has been giving strong emphasis on reducing lease operating expenses (LOE). In third-quarter 2018, the upstream energy player reported LOE of 24 cents per thousand cubic feet equivalent (Mcfe), lower than 41 cents in the year-ago comparable quarter. In fourth-quarter 2018, the company expects LOE to decline further, thereby boosting the bottom line.
Other Stocks to Consider
Other prospective players in the energy space are TC PipeLines, LP TCP , Cabot Oil & Gas Corp. COG and Unit Corp. UNT . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
TC PipeLines beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 15.6%.
Cabot will likely post earnings growth of 113.2% and 59.9% through 2018 and 2019, respectively.
Unit Corp. surpassed the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 21.3%.
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