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Buy These 5 Small-Cap Oil Stocks With Low Debt Levels
- The substantial sell-off in oil has created a route in small-cap oil stocks.
- The market is rightfully concerned with companies with very high relative debt levels. Some of these companies may wind up in bankruptcy if oil stays in the $50 price range.
- The sell-off has created an opportunity to find small-cap oil stocks with relatively low debt levels that will survive and ultimately thrive in the current environment. Five are presented here.
Falling Rig Count Could Cause Natural Gas Production Decline
- EIA data suggests a 25% reduction in the U.S. rig count is required for natural gas production growth to flatten.
- U.S. rig count could fall significantly with recent collapse in oil prices.
- Demand for natural gas is expected to grow due to EPA mandated coal plant retirements.
Whiting Petroleum Should Walk Away From Kodiak Acquisition
- When Whiting Petroleum offered to buy Kodiak Oil & Gas in July, West Texas Intermediate light crude oil was trading for over $100 per barrel, now its $68 per barrel.
- Kodiak Oil & Gas has $2.4 billion in long term debt.
- Whiting sought out Kodiak to accelerate its Bakken rig count and grow faster. Current crude prices call for cutting rigs in the Bakken and reducing debt.
- Whiting can walk away from Kodiak for a penalty of only $140 million in cash.
EXCO Resources Plans To Tap Oil In Buda Formation
- Nearby operators like Contango (MCF) in south Texas have demonstrated rapid growth potential from oil in the Buda formation just below the Eagle Ford.
- Buda oil wells do not require expensive fracture stimulation completion techniques and cost only $2 million to $3.5 million to drill and complete.
- Many Buda wells drilled in the sweet spot have returned 100% of the capital invested in two to three months with $90 plus WTI oil prices.
Contango And U.S. Energy Are In Austin Chalk Sweet Spot
- The Booth-Tortuga lease in the Buda sweet spot is also in an Austin Chalk sweet spot.
- There are an additional 20 to 30 Austin Chalk drilling locations left based on 320 acre spacing with Buda like average EUR's of 300,000 BOE to 400,000 BOE per well.
- The Buda wells are averaging $2.6 million to drill and complete. The shallower Austin Chalk wells should cost a little less to drill and complete.
- With infill drilling based on 160 acre spacing there is the potential for over 130 additional drilling locations in the Buda and the Austin Chalk.
Buda Oil Well Rates Of Return Better Than Eagle Ford
- The Internal Rates of Return for Buda oil wells are outperforming Eagle Ford Wells.
- In the Buda Sweet Spot on the Zavala/Dimmit border some wells reach payout in 30 to 60 days.
- The biggest publicly traded beneficiaries are U.S. Energy (USEG), Contango (MCF), and EXCO Resources (XCO).
Chesapeake Joining Buda Oil Rush In South Texas
- Chesapeake Energy has applied for its first permit in the Buda in Dimmit County, Texas.
- The latest home run Buda well is the Jessica drilled by CML Exploration, LLC. This well was spud on March 2 and produced 29,071 barrels of oil by May 31.
- The best Buda oil wells have natural fractures and cost much less to drill and complete than Eagle Ford wells.
Natural Gas Production Growth Is Slowing
- The natural gas market appears to be overestimating upcoming natural gas production growth.
- According to the EIA, only 1.5 Bcf of new natural gas pipeline capacity will be added in the Marcellus and Utica between now and the end of 2015.
- Several States and the Gulf of Mexico are already experiencing declining natural gas production.
U.S. Energy Is The Way To Play The Buda Oil Discovery
- Several oil wells drilled in the Buda sweet spot in South Texas have achieved 100% return of invested capital in weeks.
- Drilling and completion costs on Buda oil wells in the sweet spot are now down to less than $2.5 million.
- U.S. Energy has recently doubled its acreage position to almost 9,000 net acres in the Buda sweet spot.
- 4 Stocks Profiting From The Buda Oil Sweet Spot
- Natural Gas Futures May Super Spike If Cold Persists
- Real Chance Natural Gas Storage Dips Under 1 Trillion Cubic Feet
- Cold January Setting Up Potential Natural Gas Storage Crisis
- 4 Oil Stocks Set To Benefit From The January Effect
- Cold Winter Could Lead To Massive Natural Gas Futures Price Spike
- EXCO Resources Could Be Sitting In The Buda Sweet Spot
- Contango Is Sitting On A Buda Oil Bonanza In South Texas
- This Could Be The Winter Natural Gas Bulls Have Been Waiting For
- Buda Oil Discovery In South Texas Sparks Oil Patch Interest
- Buda Oil Discovery May Spark Bidding War For Crimson Exploration
- Some Buda Wells In South Texas Outperforming Eagle Ford Wells
- U.S. Forest Service Bumps Up The Value Of The Mt. Emmons Molybdenum Mine
- 3 Stocks With Lots Of Upside From A New Oil Discovery Under The Eagle Ford
- Why Natural Gas Could Make A Run Towards $5 This Spring
- Cold Forecasts Could Lead To Bullish Reports For The Next 4 Weekly Natural Gas Storage Reports
- Producing Region Storage Withdrawals Bullish For Natural Gas Prices
- Natural Gas Price Direction Depends On Producing Region Storage Withdrawals
- Natural Gas Weekly Storage Reports Could Become Bullish Through The End Of March
- Japan's Big Keynesian Plans Could Push Gold Prices Higher In 2013
- Vivus, Dendreon Set To Rally From The January Effect
- Weather Could Drive Natural Gas Prices Over $4 Before Year End
- Bakken And Eagle Ford Stocks Set To Benefit From The January Effect: Part VI