Truly Undervalued Energy Stocks
There has been a lot of action in the oil and gas industry in the past week. Between Conoco’s split and the buyout of PetroHawk, what about other energy stocks? There are a number of similar stocks that are going unnoticed and undervalued. Michael Filloon has chosen six stocks that are currently undervalued, and worth your attention.
Whiting (WLL) looks to have value, and would give access to several resource locations. It currently trades for 10 times next year’s earnings. Whiting has 1.3 million net acres in the United States. It is a top oil producer in three states.
- #2 Producer in North Dakota
- #3 Producer in Oklahoma
- #17 Producer in Texas
Whiting has a very good inventory of work. Its Bakken holdings are by far its best asset.
Continental (CLR) almost didn’t make this list as it is a very large oil company and is the largest oil producer in the Williston Basin. It has 868900 net acres here. More importantly, it has 270000 net acres in the Anadarko Woodford. Marathon Oil Corporation (MRO) estimates its Anadarko Woodford locations will have EURs of 750 to 1000 Mboe/well. This is better than the Bakken and Eagle Ford. Continental provides a leading position in two of the best unconventional resource plays in the country.
SM Energy (SM) could get some interest, and I believe has the greatest chance of being taken over. It has 250000 net acres in the Eagle Ford. This Eagle Ford position is in some of the best areas, with virtually all in liquids dominant acres. It also has 120000 net legacy acres in the Bakken.
Sandridge (SD) was recently added to T. Boone Picken’s portfolio. Sandridge is a play on the Permian in Texas and the Horizontal Mississippian in Oklahoma. Even with an active drilling program, it will take years to complete the inventory. The Mississippian has a potential 3400 locations. Its Permian acres contain 7700 possible locations. Sandridge also has gassy assets with a possible 8000+ locations.
Oasis (OAS) has 303000 net acres in the Bakken/Three Forks. Oasis tends to be the forgotten pure Bakken player. Its acreage is not as good as Brigham’s (BEXP), but the buyer would pay less of a premium. At fifteen times next year’s earnings and an estimated growth of 37% per year for the next five years, makes it an appealing target.
PDC Energy (PETD) was a pure natural gas company that now is converting to liquids. This small company has interesting acreage that provides upside. Because of the upside to these areas, I believe PETD has value. Oil production is up 34% since 2010. Oil and liquids sales revenue will increase an estimated 50% to 80% in 2011.
There a number of solid energy stocks to choose from in this list. Many of them are quite affordable and also have great potential. Consider some additional due diligence, and then consider these stocks.
Quotes taken from report by Michael Filloon, Read the entire article here.
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