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In a previous article, I discussed three oddball Canadian oil companies that operate entirely within the United States. With Canadian oil prices plunging, these companies got beaten down with the rest of the Canadian E&P sector, even though they sell their oil at WTI prices (and sometimes more) -- a great example of babies being thrown out with the bathwater. The company which I identified as the "clear winner" -- Eagle Energy Trust (OTC:ENYTF) -- has done very nicely since then.

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One of the other companies, Argent Energy Trust (OTC:ANGYF), has dropped dramatically in the last few weeks to the point where it's an even better bargain than Eagle was back then. Here's a quick look at Argent's metrics:

Price/NAV (risked)68%
EV/BOEPD$76,000
Dividend Yield12.4%
2014 Payout ratio (with DRIP)80%
Reserve Life Index (2P)28

This valuation looks particularly compelling compared to some of Argent's Canadian peers. Using a measure that I describe here, Argent looks particularly cheap.

(EV/BOEPD)/Netback
Argent$1738
Penn West (NYSE:PWE)$2112
Pengrowth (NYSE:PGH)$2230
Baytex (NYSE:BTE)$3643

This is all the more compelling when you consider that Argent's Reserve Life Index is the biggest in its sector.

Why is Argent so Cheap?

Argent announced an acquisition and a production update on October 9. It acquired 1,000 BOEPD of low decline oil production (95% liquids) in Wyoming for $105 million and increased its 2013 exit production rate to 7000 BOEPD. The next day it announced a convertible debenture deal for $60 million. The debentures will yield 6.5% and will be convertible at $12.50/unit. The market over-reacted to these announcements, dropping 16% over the next few days.

Argent's management thinks the recent, dramatic price decline is irrational, issuing the following statement last week:

There has been unusually high trading volume and price volatility in Argent units over the past few days. Argent unitholders can be assured that there are no material operational or financial events impacting the Trust's business beyond what was disclosed last week. Argent remains on track to achieve its 2013 average annual production guidance of 5,700 boe/d and 2013 exit production guidance of approximately 7,000 boe/d... Furthermore, Argent's current distribution level remains intact and the Trust has no current plans to reduce the level of distribution throughout 2014.

Looking at the charts and order origins, there are indications of a large holder liquidating. The stock, which has a normal volume of 100,000 shares, has been averaging a half million over the last two weeks.

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Insider Buying

Argent management have put their money where their mouths are, actively buying the stock, with both the CEO and CFO acquiring even more shares just in the last week:

10/17/2013Bovingdon, Sean600$8.88
10/17/2013Bovingdon, Sean600$8.61
10/23/2013Prokop, Brian5000$9.08
10/23/2013Prokop, Brian2500$9.08
10/23/2013Prokop, Brian2500$9.08
10/21/2013Tremblay, Eric2500$8.97
10/21/2013Tremblay, Eric2500$9.04
10/17/2013Bovingdon, Sean700$9.04

The Business

Argent's production is roughly 72% oil and liquids. Production is weighted to the Eagle Ford, but the company has diversified its business in the mid-continent.

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Analyst Ratings
Five analysts rate Argent as a "Buy" and one as a "Hold." Their average price target of $11.75, implies a total return of 50.5% over the next year. Because of its recent activity acquiring properties and issuing debentures, several analysts are restricted. We expect they will resume buy ratings after the restrictions are lifted.

Summary

We think Argent has been beaten down primarily by a large seller liquidating. At the current level, it's an absurdly cheap way to own U.S. oil assets and collect a big dividend.

Source: Cheapest U.S. Oil With A Big Yield

Additional disclosure: I am also long AET.UN shares on the Canadian TMX exchange.