Oryx Energy: too late to restructure? (Company Profile)

The shares of Oryx Energy has declined steadily from a 1990 high of 54 7/8 down into the low 20s in early 1992, but fell to uncharted depths in heavy trading in March, following CNBC commentator Dan Dorfman's negative comments regarding the outlook for the share price and whether Oryx could maintain its quarterly 30[cents]-per-share dividend. The panjc atmosphere that ensued following Dorfman's observations, which drove the stock down to 17 5/8, led some analysts to question whether the Dallas-based company had any future at all.

More bad news followed in April when Oryx announced a per-share deficit (excluding nonrecurring items) for all of last year. With a debt-to-capital ration of 81%, the company is obviously overleveraged. While some investors fear the $1.6 billion-in-sales independent oil and gas producer is on the verge of financial disaster, the low share price has a powerful attraction for others.

"Survival is not an issue" for Oryx Energy, says Paul Leibman of Denver-based Petrie Parkman. Indeed, he says he is "favorably inclined toward the stock. It's not as if it's riding high at this point."

Timothy Curro of UBS Securities, in fact, thinks Oryx is "definitely a buy," adding, "it is very attractive on cash flow and asset value." Curro thinks that investor fears for Oryx's future are detached from reality." His 12-month target price for the shares is 30.

While Curro admits Oryx's balance sheet is overleveraged, he ...