NEW YORK (TheStreet) -- Plummeting oil prices continue to pressure energy companies.
Independent oil and gas operator InterOil Corp (IOC) stands out because it knows how to manage its finances at a time of falling energy prices. Still, the stock is down nearly 16% on the year.
It's been worse over the past 52 weeks, with IOC down 33%. Compare that to the Energy Select Sector ETF(XLE) - Get Report, which is down 12%. This exchange-traded fund includes Exxon Mobil(XOM) - Get Report, Chevron(CVX) - Get Report and Schlumberger(SLB) - Get Report.
InterOil reports fourth-quarter and full-year results Tuesday. Is it worth hanging on to this stock until oil prices come back up again? The answer is yes, thanks to cushioning by the company's strong balance sheet, which includes roughly $380 million in net cash. The company generates another $240 thousand in operating cash flow. The company doesn't pay a dividend.
It is also actively buying back its stock, giving investors incentive to be patient.
When factoring cash, cash equivalents and net receivables totaling more than $450 million, InterOil has over $750 million in liquid assets to run its business, as of the most recent quarter. Total expenditures for last quarter was just north of $130 million so InterOil isn't under pressure to cut capital expenses unlike other energy companies.
InterOil is expecting to post a narrower loss of $1.31 per share for 2015 compared with a loss of $1.55 per share expected for 2014. Analysts have a consensus buy rating while the an average 12-month price target is $64, suggesting more than 55% gains from Friday's close of around $41.
Still, there are risks. InterOil operates at a loss. The company's success hinges on more stable oil, even though its net profit will likely improve as InterOil continues its divestments including the sale of an interest in PRL 15 to French energy companyTotal SA(TOT) - Get Report. With prices below $44 per barrel Monday, that stability isn't here yet.
Combined with its access to $300 million credit facility led by Credit Suisse, InterOil has plenty of options and room to maneuver through weak oil.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.