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The 2014 All-America Research Team: Oil & Gas Exploration & Production, No. 2: William Featherston

< The 2014 All-America Research TeamWilliam FeatherstonUBSFirst-place appearances: 0

Total appearances: 12

Team debut: 2003

William Featherston of UBS repeats in second place, thanks in part to his “thorough and detailed reports,” one money manager offers, “including net-asset-value models that we can use to understand a company’s intrinsic valuation.” Featherston is cautious overall on the group, citing oil prices that are higher than his long-term normalized assumption of $95 a barrel as well as outperformance in the first half of the year that pushed valuations to levels in line with historical averages in his 2015 estimates. As a result, “we are recommending names selectively that offer above-average debt-adjusted growth, inexpensive valuation and distinct catalysts,” he explains. Examples include Anadarko Petroleum Corp., which trades in the large-cap space at the biggest price to net-asset-value discount relative to its peers, he notes. The Woodlands, Texas, company could also sell its working interests in several assets, including stakes in Western Gas Partners and a liquefied-natural-gas project in Mozambique, he points out, “to help pull its net asset value forward and provide proceeds for a share-repurchase program, pay down debt and increase net cash.” Featherston also likes EOG Resources, reasoning that the Houston-based company is “probably the large-cap leader in unconventional shale development,” having been one of the first movers in several big shale plays, including the Williston Basin’s Bakken formation, the Barnett shale in Bend Arch–Fort Worth province and Eagle Ford formation in south Texas. Further, given the Houston-based company’s track record and technological prowess, he deems it well positioned for both current and future shale plays. Finally, “the multiple you’re paying for the growth that they’re delivering is attractive relative to its peers,” Featherston advises.


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