Included in a recent article, "New BreitBurn Investors To Benefit From OPEC And Russian Bravado" I analyzed BreitBurn Energy Partners (NASDAQ: BBEP) with 2008 comparisons. Their enterprise value ranks them at number two between LINE and VNR. A common focus for oil development has been the Permian Basin in Texas. The SEC FORM 10-K '14 for BBEP included information about M&A and one company stood out to my attention.
Antares Energy Ltd. (OTCPK:AZZEF) is an oil and gas exploration and production company. Their U.S. penny stock is trading with all the regular trepidation except the pattern follows established Master Limited Partners aka MLPs. The company is also traded on the Australian Securities Exchange.
Antares Energy has been around long enough to see a track record during the 2008 oil crisis. This is something rare to see for oil, penny stocks. In the aforementioned article on BreitBurn, I reviewed how I had screened out competitors: NSLP, MEMP and LGCY, for a lack of '08 resilience and low average trade volume.
This company passed the resilience test, but had very low volume that should be considered as part of the risk. At these prices, Antares and BreitBurn are trading just 25% and 20%, respectively, from TTM lows.
Antares does not file reports with the U.S. Securities Exchange Commission, but they produce their alternative documents and have mentioning in BreitBurn's SEC Forms.
According to the December 2014 release, Antares sold its Southern Star Project for cash and BBEP shares. Thus, tying its profitable outlook to BreitBurn's endeavors. I also use this transaction to further show Antares' operations are attractive amongst the industry. Their remaining projects include Northern Star and Big Star, each located in the Permian Basin. The Texas location is strategic due to the grade of crude and proximity to market. It trades at the lessor discount compared to other regions such as North Dakota or California.
According to BBEP's 2014 SEC Form 10-K the acquisition of Antares' Star Project is confirmed:
Both companies refer to "Wolfcamp"/"Wolfberry Trend." This is activity within the Permian Basin of Texas. Seeing how Antares' remaining operations are in this region shared by listed MLPs, I see them as continuing their path in stride with the industry.
I consider the investment in OTC markets to have a high risk. I wouldn't provide coverage for just any of these due to my interest in maintaining good a TipRank and preserving my own portfolio. That being said, Antares Energy Ltd. appeals to me and I'm picking this for a long-term buy. The plan is to hold onto it with other oil-stocks pending the future recovery of crude oil prices.
Disclosure: I am/we are long BBEP, AZZEF.
Additional disclosure: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.