Bad Press Equals Good Profits $BP $CHK $HES
Large well known companies no matter what the media says about them are in that position for a reason. Negative press can be useful for profiting if done right when you look at one of these companies share price dip on bad press alone and not because something in the company has changed. That is why they are the ones to watch when they end up on the national news.
If you are looking to get into the oil & gas sector, now is a great time to do so. Speculation over a macroeconomic double dip has largely died down while the prospects of entering a full recovery have yet to be appreciated. With greater industrial activity comes rising energy demand. I recommend betting on the overly beaten down stocks that are just as likely as the majors to profit off of this rising demand. I also recommend looking at stocks that will be selling off assets to secure stronger balance sheets.
It’s no secret that the media likes to pick on Chesapeake and BP. With all of the talk about hidden hedge funds, devastating oil spills, and conflict of interests, you may have forgotten that both of these companies actually have really, really good fundamentals.
For one, Chesapeake sits on leading natural gas plays. Unlike the largest natural gas producer (Exxon), Chesapeake is more leveraged towards the energy resource as a percent of business. The market has been overly negative about the prospects of cold weather, while failing to consider that rig effectiveness has gone up. Chesapeake is boosting its infrastructure to capitalize on improving margins and pricing.
While the company will have to sell several assets in order to shore up capital for upstream development, operations have been excellent where production is currently underway. It has been reported that the company will sell in excess of 28,000 net acres at Hogshooter Wash and Granite Wash. $6.9 billion of gas fields and pipelines were recently sold to Chevron and Royal Dutch. To put that into perspective, consider that Chesapeake is worth only around half that amount and still retains a diversified asset portfolio!
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