AG Edwards Downgrades St. Mary Land Exploration

Analyst Michael S. Scialla says he lowers his rating to hold partly on valuation

AG Edwards downgraded St. Mary Land Exploration (SM ) to hold from buy.

Analyst Michael S. Scialla says he is downgrading partly on valuation, as the stock is up 46% this year vs. his group's average appreciation of 34%. He also downgrades on a diminished outlook for two emerging plays.

He notes that the results of the first 6 Bakken re-entry wells in North Dakota, where single laterals have tested at an average rate of only 125 barrels of oil per day (Boe/d), vs. 300-to-760 Boe/d in Montana, have been disappointing. Meanwhile, permitting issues could prevent the company from ramping development of its Powder River CBM project as quickly as he previously thought.

Scialla sees $2.31 2005 earnings per share, and $1.85 for 2006.

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report.
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