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.

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