Mariner Energy Inc.ME

Morningstar Rating

Stock Research and Analysis

by Catharina Milostan

Mariner Energy prudently curbs its 2009 capital spending but stays on course with projects under way to start up production from new oil and gas fields. While flush with drilling success in 2008, Mariner is taking its time to develop these discoveries so it can conserve near-term cash and take advantage of falling oil service costs. Read more

Bulls Say

Mariner Energy's operating prowess offshore continues with new offshore production startups planned for 2009.

Offshore drilling success in 2008 gives Mariner a steady pipeline of new field startup projects during the next few years.

Mariner had 100% drilling success at longer-lived west Texas Permian properties in 2008, supporting plans to boost longer-term production when oil and gas prices recover. Read more

Bears Say

Low oil and gas prices plus typically high offshore drilling costs may challenge Mariner's near-term profitability.

Financial market turmoil and lower oil and gas prices could force Mariner to curb drilling and project-development plans even further.

Mariner's Texas and Gulf of Mexico operations are vulnerable to storm disruptions, like 2008's Hurricanes Gustav and Ike, that could disrupt production periodically. Read more

Strategy

Mariner Energy plans to use its offshore Gulf of Mexico experience to seek new exploration prospects and develop new discoveries and existing fields. It also plans to expand onshore in the Permian Basin in West Texas and grow through selective acquisitions, including Gulf of Mexico assets spun off from Forest Oil in 2006 and other property acquisitions. Read more

Management

Chairman, president, and CEO Scott Josey joined Mariner Energy as chairman in August 2001 and was appointed CEO in October 2002 and president in February 2005. Josey joined Mariner when Enron was an owner and stayed on through Mariner's purchase by private equity owners during Enron's bankruptcy and its transition to a public company. Read more

Profile

Mariner Energy is a Houston-based oil and gas producer operating onshore in west Texas and offshore in shelf and deep-water Gulf of Mexico. In March 2006, Mariner added offshore Gulf of Mexico properties that were spun off from Forest Oil through an exchange of stock. Read more

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