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Carl Icahn Lifts Energen Ownership Stake, Aims Takeover

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Energen Corporation (EGN - Free Report) recently provided an update that Carl Icahn has boosted its stake holding in the company. This time, the activist investor raised its ownership from 6.9% to 7.5%.

Icahn has been boosting its stake in Energen in a bid to take over the company. 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.

With exclusive focus on the prolific Permian Basin, Energen’s volume mix primarily comprises crude oil. 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. Through 2018, the explorer expects production to grow to 95.5 MBOE/D. The ‘oilier’ nature of its volume mix positions it well to benefit from higher oil prices.  

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 17.5%, lower than the industry’s 46.2%. Moreover, the company’s strong cost-control initiatives should boost its profits. 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.

The pricing chart of Energen is also impressive, reflecting investors’ appreciation for the company’s developments. Over the past year, the stock has rallied 55.7%, outperforming the 25.2% collective gain of 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 are Continental Resources, Inc. (CLR - Free Report) , Murphy Oil Corporation (MUR - Free Report) and Marathon Oil Corporation (MRO - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental beat the Zacks Consensus Estimate for earnings in all the prior three quarters, the average positive surprise being 80.5%.

Murphy Oil surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters.

We expect Marathon Oil to witness year-over-year earnings growth of 336.8% in 2018.

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