Comparing Two Energy Plays

PointState Capital has reported that it now holds a position of 1.6 million shares in PDC Energy (PDCE), an independent oil-and-gas exploration and production company with a market capitalization of $1.5 billion. This is up from the 1.1 million shares that it held at the beginning of this year and gives the fund over 5% of the total shares outstanding. PointState was founded by Sean Cullinan and several other former portfolio managers at Duquense Capital after billionaire Stanley Druckenmiller closed the fund.

Much of PDC's acreage is located in onshore U.S. shale plays with a particular focus in the Appalachian and Rocky mountains. Only 40% of PDC's production volumes by energy equivalent in the first quarter of 2013 was crude oil. However, due to the wide spread between oil and natural gas prices, oil was responsible for more than 70% of the revenue that the business generated from sales of petroleum products. In turn, sales of petroleum products made up 84% of revenue, excluding a loss related to commodity price risk management. This represented a 21% decline in revenue vs. a year earlier. Even adding back a large impairment of PDC's oil-and-gas properties results in an operating loss for the quarter. The company also recorded significant interest expenses....391 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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