Oil is up this morning along with other energy sources, thus continuing the recent winning streak. Gold has also been performing quite well lately and appears ready for another breakout as it appears the gold bugs are back in force and ready to flex their muscles. With that said, we have to once again be bullish of silver as we think that silver always provides a better bang for the buck during rallies, although admittedly it pays to be invested in gold first and then rotate out into silver as it generally lags behind moves in gold as it waits for confirmation that the move is real.
This morning we are once again bullish all things Utica, as it appears many of our plays continue to de-risk their acreage and thus remove some of the risk out of our positions in the shares. We have done well to invest here, and our portfolio is healthier for it, as well as our readers' portfolio should. We still think that we are in the early stages of this bull market story as most exploration has thus far focused on the wet gas window, but the oil window will have results out over the next 6 months and we expect to see some joint ventures and potentially some M&A activity. This is an area where investors must allocate a portion of their energy holdings as the play further develops.
Today we will focus solely on our oil and natural gas plays.
Oil & Natural Gas
Last night, and well after the market had closed, EV Energy Partners, LP (EVEP) announced the results from a new well (the Cairns 5H) as well as an update on the production from the Frank 2H well which was discussed during the company's conference call for the most recent quarter. The new well is in the wet gas window and "flow tested at a 24-hour rate of 1,690 barrels of oil equivalent per day." The breakdown of that production was 2.2 MMCF of dry natural gas, 587 barrels of natural gas liquids and 729 barrels of condensate. The Frank 2H increased production to 870 barrels of oil equivalent per day, which was up from the 515 BOEPD previously announced. That puts the well on par with what we were expecting as a base case for the Utica oil window and we must admit that we are quite pleased as this was the company's first oil window well drilled. Look for shares to rise following last night's press release. We continue to like the risk/reward scenario here with the company's impending monetization of its Utica assets.
With this release we have to be bullish of Chesapeake Energy (CHK), Gulfport Energy (GPOR) and Rex Energy (REXX) - all of whom are players in the Utica play with assets in the immediate area. It should also be noted that Chesapeake has not drilled in the oil window, as the company has left that to EV Energy and Enervest to prove up that acreage and focus instead on the wet gas window. These two wells by EV Energy proved two things, first it proved that the oil window can produce and second it displayed that the far western side of the wet gas play can be quite lucrative as well.
The press release can be found here.
An update for our readers who trade, one of our Bakken stocks, Kodiak Oil & Gas (KOG), fell yesterday (Monday) but bounced off of an important level and finished above it having never broken below it. The $9/share level is quite important as we have explained before and as shares fell yesterday we watched closely to see if they would tick below that level which supplied resistance on the way up and has previously supplied support on the way down. The price action was just as we would have hoped for with shares trading down to that point before buyers came in. If the stock can hold this level as oil continues higher, so too shall the shares.