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Carl Icahn Boosts Energen (EGN) Ownership, Plans Takeover

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Energen Corporation has provided an update that Carl Icahn has increased stake holding in the company from 3.8% to 4.3%.

Carl Icahn is boosting its stake in Energen as the activist investor is planning a takeover. In May, Icahn and Keith Meister — the hedge fund manager of Corvex Management — expressed intentions to acquire Energen, which is undervalued as per their estimates. It is to be noted that Corvex, with an 8% stake in Energen, is considered the second-largest stockholder.

Energen primarily operates in the Permian Basin, a prolific oil and gas play in the United States. From 2012 to 2017, the company boosted Permian net production to 76.1 thousand barrels of oil equivalent per day (MBOE/D) from 30.8 MBOE/D. Energen expects to raise production further to 95.5 MBOE/D in 2018. Higher production expectations amid recovering crude prices should boost the company’s cashflow.

The company also has strong cost-control initiatives. For 2018, Energen estimates lease operating expense (LOE) per barrels of oil equivalent between $6.40 and $6.60, lower than $6.61 recorded in 2017. On top of that, the oil and gas explorer’s balance sheet is significantly less debt-laden as compared to the industry. The debt-to-capitalization ratio of Energen is 21.3%, lower than the industry’s 86%. 

All these developments are reflected in the company’s impressive pricing chart. Over the past year, the stock has rallied 44.3%, outperforming the 19% collective gain of all the stocks belonging to the industry.

Headquartered in Birmingham, AL, Energen currently carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players in the energy space include Anadarko Petroleum Corporation , Eclipse Resources Corporation and Chevron Corporation (CVX - Free Report) . Anadarko carries a Zacks Rank #2 (Buy), while Eclipse and Chevron sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

We expect Anadarko Petroleum to witness year-over-year earnings growth of 229.6% in 2018.

Eclipse is expected to record revenue growth of 13.5% through 2018.

Chevron will likely see year-over-year earnings growth of 130.3% in 2018.

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