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Harold Hamm, the Chairman, CEO and largest shareholder of Continental Resources (CLR), told The Wall Street Journal that he estimates the Bakken formation to have 24 billion barrels of oil. The Bakken formation is a rock unit occupying about 200,000 square miles on the subsurface of the Williston Basin in parts of Montana, North Dakota and Saskatchewan. In this formation contains the oil that Harold Hamm is talking about. This formation has produced an oil boom in North Dakota where the unemployment rate is only 3.2%. Fortunes are being made because of the Bakken, and I've identified 5 plays that are undervalued according to their PEG ratios and other financial metrics.

Continental Resources, Inc.

No company has benefited more from the growth in the Bakken than Continental Resources and its Billionaire Chairman Harold Hamm. The company is the largest leaseholder in the Bakken. Harold Hamm was one of the pioneers of horizontal drilling, and it is that technique which allows oil to be recovered in the Bakken. Prior to that, oil in the region could not be extracted in a cost-effective manner.

In looking at Continental's stock, we see that the PEG ratio is only 0.39. The company trades with a forward P/E of 11.25. Operating margins are 48.15%, profit margins 30.57%, and return on equity is 27.03%. On the balance sheet, there's $35.73 million in cash and total debt is $3.54 billion, but operating cash flow is $1.63 billion, more than enough to service the debt load.

Over the past year, the stock is down just over 13%. Now is a good time for investors to get in on a long-term position. Of the analysts that follow the stock, 8 have it rated as a Strong Buy, 10 a Buy, and 8 a Hold. Price targets on the stock range from $80 to $137 with $101.50 being the median target.

Whiting Petroleum Corp. (WLL)

Whiting Petroleum is the number two producer in North Dakota. The company also operates an enhanced oil recovery project at their North Ward Estes Field in the Permian Basin of Texas. At the end of last year, the company had estimated proven reserves of 378.8 million barrels of oil equivalent and had interests in 10,218 wells over 1,277,400 acres.

Whiting Petroleum has a PEG ratio of 0.95. The forward P/E on the stock is only 10.45. Operating margins are 33.57%, profit margins 19.38%, and return on equity is 12.78%. On the balance sheet there's $44.80 million in cash and $1.80 billion in debt. Operating cash flow is $1.40 billion.

Whiting is down even more than Continental, posting a decline of just over 20% in the past year. Of the analysts that follow the stock, 11 have it rated as a Strong Buy, 16 a Buy, and 6 a Hold. Price targets on the stock range from $50 to $78 with $60 being the median target.

Oasis Petroleum (OAS)

Oasis has over 335,000 acres in the Williston Basin. These acres hold an estimated proven reserves of 143.3 million barrels of oil equivalent. In the 4th quarter, Ken Griffin's Citadel Investments increased their holdings to 1.8 million shares. Billionaire Louis Bacon revealed that he held a stake in Oasis as well in his latest 13F filing.

Oasis has a PEG ratio of only 0.42 and a forward P/E of 10.20. Operating margins are 45.31% and the profit margin is 22.34%. Return on equity comes in at 21.46%. On the balance sheet there's $239.34 million in cash to $1.20 billion in debt. Operating cash flow is $392.39 million.

Over the last year, the stock is only up 2%. Of the analysts that follow the stock, 8 have it rated as a Strong Buy, 11 a Buy, and 6 a Hold. Price targets on the stock range from $35 to $60 with $44 being the median target.

Kodiak Oil & Gas Corp. (KOG)

Kodiak Oil & Gas has approximately 228,200 acres in the Williston Basin and also has operations in the Green River Basin of Wyoming and Colorado. At the end of last year, the company had estimated proven reserves of 80.9 million barrels of oil and 83.1 billion cubic feet of natural gas.

Kodiak has a low PEG ratio of only 0.21. The forward P/E is 7.56. Operating margins are 43.49% and current profit margin is 32.20%. The return on equity is 14.03%. On the balance sheet there's $24.06 million in cash to $1.10 billion in debt. Operating cash flow is $272.68 million.

Over the past year, Kodiak has bucked the trend of the other Bakken plays and is up over 84%. Of the analysts that follow the stock, 4 have it as a Strong Buy, 10 a Buy, and 8 a Hold. Price targets on the stock range from $9 to $13 with $10.75 being the median target.

Northern Oil & Gas, Inc. (NOG)

Northern Oil & Gas has properties in the Bakken and Three Forks formations in the Williston Basin in North Dakota and Montana. At the end of last year, the company had 1,222 wells targeting these formations and 5 exploratory wells targeting other formations. Proven reserves are 67.6 million barrels of oil equivalent.

Northern Oil & Gas has a PEG ratio of 0.27 and a forward P/E of 8.29. Current operating margin is 45.56% and the profit margin is 24.35%. Return on equity is 13.35%. On the balance sheet, there's $13.39 million in cash and $424 million in debt. Operating cash flow is $198.53 million.

Over the past year, Northern Oil & Gas is down the most of the bunch, posting a decline of over 34%. Of the analysts that follow the stock, 3 have it rated as a Strong Buy, 5 a Buy, 4 a Hold, and 1 an Underperform. Price targets on the stock range from $16 to $26 with $20 being the median target.

Assessment

All 5 companies are undervalued by looking at their PEG ratios and financials. All 5 are well-run companies in one of the most promising oil regions in the world. There is tremendous upside in all 5 as more production comes online.

Source: 5 Undervalued Bakken Plays