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Involved in the oil and gas industry, active investor and realistic about the market. Avid follower of oil, natural gas, gold, and silver. I don't exactly always follow others' ideas and firmly believe you should be able to make your own decisions, but if I can help you or if you have some solid... More
  • 2011 Oil Plays: 10 Bakken Stocks You Should Watch This Year 1 comment
    Jan 5, 2011 2:35 PM | about stocks: KEEKF, ROAOF, AXAS, MRO, CLR, EOG, QEP, LSTMF, OAS, CHK, HES, STO, NFX, WLL
    Introduction: My job consists of having knowledge of all plays but my expertise is currently in the Bakken formation in North Dakota, Montana, and Canada (not the oil tar sands). These companies stand out to garner a higher market value and to command further investment through their quality of their programs. The order does not define 1-10 as the best just 10 that everyone should keep an eye on. The ones with significant upside are the primarily unkowns (ANFC.pk, PETEF.pk, ROAF.pk). You probably have not heard of these stocks but you will in the 12 month time frame this article is intended for. All targets are based on a 12 month time frame. Best of luck.

    1. Marathon Oil and Gas (NYSE:MRO)- Marathon Oil Corporation is engaged in the exploration, production and marketing of liquid hydrocarbons and natural gas; oil sands mining and bitumen upgrading in Canada; refining, marketing and transportation of crude oil and petroleum products, and marketing and transportation of products manufactured from natural gas. The Company’s operates in four segments: exploration and production (E&P), which explores for, produces and markets liquid hydrocarbons and natural gas worldwide; Oil Sands Mining (OSM), which is engaged in mining, extraction and transportation of bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil; integrated gas (NYSEMKT:IG), which markets and transports products manufactured from natural gas, such as liquefied natural gas (NYSEMKT:LNG) and methanol, and refining, marketing and transportation (RM&T), which refines, transports and markets crude oil and petroleum products.

    Status: Involved in multiple sectors of the oil and gas business, has revenue and property to support a price in the $50s. The lands on the Fort Berthold reservation (see Williams buy of Zenergy) are valuable and they have undrilled prime acreage throughout North Dakota. Undervalued.
    Current Price: $37.40.
    Target Price: $58.00

    2 Oasis Petroleum (NYSE:OAS)- Oasis Petroleum Inc. is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources. It has accumulated approximately 292,000 net leasehold acres in the Williston Basin. The Company is focused on exploiting resource potential from the Bakken and Three Forks formations, which are present across its acreage. In June 2009, the Company acquired approximately 40,000 net leasehold acres with net production of approximately 800 barrel of oil equivalent per day (Boe/d), approximately 83% of which was from the Williston Basin. In September 2009, the Company acquired an additional 46,000 net leasehold acres with net production of approximately 300 Boe/d. 

    Status: The best IPO of 2010 should continue climbing with a price target of $37 but has run up quickly so I expect a pullback short term. They have significant amount of unproven reserves and acreage that will be drilled in the future.
    Current Price: $27.41.
    Targert Price: $37.00

    3. Ante5 Inc.- (ANFC.pk) See NOG, VYOG, ANFC is another stock down the same line, they have 4,000 very good acres that are being drilled and have a 99% chance of producing oil. They also have raised $10 million. Current Price: $1.55.
    Target Price: $3.75


     QEP (NYSE:QEP)- QEP Resources Inc., formerly Questar Market Resources, Inc., is a natural gas and oil exploration and production company. The Company also gathers, compresses, treats and processes natural gas. The Company is a holding company operates through its three subsidiaries: QEP Energy Company, QEP Field Services Company and QEP Marketing Company. QEP Energy Company acquires, explores for, develops and produces natural gas, oil and natural gas liquids. QEP Field Services Company provides midstream field services, including natural gas gathering and processing services for affiliates and third parties. QEP Marketing Company markets equity and third-party natural gas and oil, provides risk-management services, and owns and operates an underground natural gas-storage reservoir. Effective June 30, 2010, Questar Corp. completed the spin-off of QEP Resources, Inc.

    Status: Formerly questar, this is the oil and gas side of the split and should see continued revenue increase with higher oil prices and support. They have undeveloped acreage in locations with proven reserves, also on Fort Berthold reservation. Current Price: $36.60
    Target Price: $47.00

    5. Primary Petroleum (PETEF)- Controls 197,000 acres of leasehold in Montana playing closer to a new developing play along the border. Has potential to be a $3-$4 stock and an obvious buyout candidate. Current Price: $0.77
    Target Price: $3.25

    6. Continental Resources (NYSE:CLR)- Continental Resources, Inc. is an independent crude oil and natural gas exploration and production company with operations in the North, South and East regions of the United States. As of December 31, 2009, approximately 76% of its estimated proved reserves were located in the North region. It focuses its exploration activities in new or developing plays that provide the Company the opportunity to acquire undeveloped acreage positions for future drilling operations. As of December 31, 2009, its estimated proved reserves were 257.3 million barrels of crude oil equivalent (MMBoe), with estimated proved developed reserves of 113.6 MMBoe, or 44% of its total estimated proved reserves. Crude oil consisted of 67% of its total estimated proved reserves.

    Status: Should be $75 a share, they hold the majority of wells producing in the coveted Parshall field. Continued growth in revenue should bode well for shareholders in the coming year. Their growth in production has been phenomenal and they will have higher reserves in the coming year. Current Price: $57.32
    Target Price: $75.00

    7. Petrobakken (PBKEF)- PetroBakken Energy Ltd. (PetroBakken) is a Canada-based company. PetroBakken is primarily a light oil-focused company with exit production of more than 37,000 barrels of oil equivalent per day (boepd), more than 95% light oil, more than 70% of which is from the Bakken. Its operations include the Western Canadian Sedimentary Basin, and Midale, Frobisher, Alida and Tilston formations of Southeast Saskatchewan. During the year ended December 31, 2009, the Company drilled 117.3 net wells.

    Status:Has 210,000 undeveloped acreage and will be driling many more wells in the coming year. Had a down year but is undervalued. Current Price: $22.06
    Target Price: $41.00

    8. Abraxas (NASDAQ:AXAS)- Abraxas Petroleum Corporation (Abraxas) is an independent energy company primarily engaged in the development and production of oil and gas. As of December 31, 2009, its properties were located in the Rocky Mountain, Mid-Continent, Permian Basin and Gulf Coast regions of the United States.

    Status:Continues to grow and pretty solid wells, more a buyout play than anything, upside might be limited considering the jump. Has acreage Current Price: $4.22
    Target Price: $6.00

    9. Bowood Energy (ROAOF.pk)-
    Bowood Energy Inc., formerly Roadrunner Oil & Gas Inc., is engaged in the exploration, acquisition, development and production of oil and natural gas reserves primarily in the province of Alberta. The Company has approximately 620 barrels of oil equivalent per day (BOE/d) of production, weighted 75% to natural gas and 25% to light oil and natural gas liquids, and a net interest in approximately 31,188 acres of undeveloped land in Canada, and approximately 36,652 net acres of undeveloped land in the United States. In June 2009, it acquired additional oil and gas interests in Colorado. In October 2009, it sold its interests in its North Dakota properties. The Company's Canadian properties are held through its wholly owned subsidiary, Bowood Energy Ltd. Its McIntyre/Magrath property consists primarily of an operated, 100% working interest in 37 producing gas wells. Production is primarily from the Bow Island formation. Total land holdings consist of 33,828 gross (32,403 net) acres.

    Status: Just completed a joint venture deal with legacy and has the acreage in a prime spot to benefit when the Alberta basin stocks start taking off. Worth a look at this price for major upside. Current Price: $0.658
    Target Price: $1.50

    10. Chesapeake Energy (NYSE:CHK)- They do have upside I just don't like the heavy debt load they carry. Current Price: $26.12
    Target Price: $35.00

    Others: EOG, HES, NFX, WLL 

    You might wonder why I did not mention Brigham Petroleum (BEXP) due to their heavy involvement in the play. They inflate their IPOs, open the choke (hindering the stabilization of long term production), and in general are more expensive on any drilling. Therefore I do not recommend buying their stock at this level.

    Extra Stock
    Ecosphere Technologies (OTCQB:ESPH)- Although this does not currently really apply to Bakken oil drilling this company should be watched. Due to regulation on fraccing in the future there will be a need for a company that can recycle the water used in the fraccing process to be reused. Ecosphere has accomplished this and should continue to see significant revenue growth with Marcellus shale deals (where they can't have water wells). If this technology really works they are worth quite a bit of money. They do have debt but the upside is there. Current Price: $0.60
    Upside Potential is huge, target could go to $5 or stay in the $1.50 range depending on the proof of the effectiveness of the technology.

    Oil prices should be higher in 2011 barring a complete economy failure. Inflation will play a part in that and I expect prices to remain above the $90 level for the year and even going higher than majority of people expect to $125 at some point. There are many other stocks that could of made it to this list and CHK is still iffy at #10 but considering their recent buying spree I chose to include them. KOG does not have as much upside as it once did, but EOG could replace them.


    Disclosure: I am long OAS, PETEF.PK, PBKEF.PK, MRO.

    Additional disclosure: I am also long ANFC.pk and ESPH.OB.
    Stocks: KEEKF, ROAOF, AXAS, MRO, CLR, EOG, QEP, LSTMF, OAS, CHK, HES, STO, NFX, WLL
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  • Silverbug2
    , contributor
    Comments (323) | Send Message
     
    Nice overview. I have been looking for an article like this one, and I totally agree on your view about $125/bbl oil. I would think that companies with the largest reserves and/or the ability to grow their reserves would get an especially hard look. That's a problem with the oil majors, the ability to grow their reserves given their actual annual oil production.

     

    I like MRO's diversified asset/production mix and will give them a really good look.

     

    Long PBKEF
    13 Feb 2011, 10:14 AM Reply Like
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