Seeking Alpha: Unit Corp. Will Likely Struggle To Get Its Full Due

Diversification can reduce the operating risk of a company, but it comes at a cost. Analysts rarely have the skillset to properly evaluate all of the components, investors will punish a perceived "lack of focus", and the companies themselves are rarely equally good at all of the businesses.

I think that's a relevant risk factor for Unit Corp (NYSE:UNT), as this company has rarely traded at multiples similar to what blended peer comps would suggest as fair. While I think Unit has some interesting oil and gas assets in southwest Oklahoma and southeast Texas, I continue to think the company's suboptimal drilling operation is more of an anchor than an asset and I don't believe the company is likely to have the resources to really maximize its midstream assets. The shares do seem undervalued and would do well if energy prices accelerate again, but investors attracted by the apparent value here need to be prepared for a longer wait.

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Unit Corp. Will Likely Struggle To Get Its Full Due

Seeking Alpha: Can Newfield Exploration Make Another Major Move?

I did think that Newfield Exploration (NYSE:NFX) was undervalued by the Street back in mid-Feburary, but more on the order of 40% and not the nearly 75% move the stock has delivered since then. Selling the Granite Wash assets for nearly $600 million was a nice development and the company has posted good results from recent wells drilled in Oklahoma and the Uinta. Looking ahead, the company is prioritizing the de-risking of the Oklahoma SCOOP and STACK plays and looking to sell its Chinese assets. I may yet be underestimating the potential here, but a 75% move in six and a half months seems like plenty for now.

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Can Newfield Exploration Make Another Major Move?

Seeking Alpha: Oasis Petroleum Getting Less Than Its Full Due

As one of the large operators in the Bakken (in terms of leased acres), Oasis Petroleum (NYSE:OAS) certainly isn't immune to the various concerns investors have about the space, including price differentials and the threat that well returns will decline as less promising formations are targeted. Oasis also has to deal with some concerns that are more company-specific like the question of whether their acreage is of lower quality and whether the company will overpay for acquisitions.

Despite these concerns, Oasis has done okay since my last write-up - rising almost 16% while the EPX Index has risen about 11%. On the other hand, when compared to the performance of other Bakken operators like Continental Resources (NYSE:CLR), Whiting (NYSE:WLL), or Triangle Petroleum (NYSEMKT:TPLM) that comparison becomes much less favorable, as these producers have seen their shares rise more than 40% and more than 50% (WLL, TPLM) over that same time period. Although I think there are reasons for Oasis to trade at some discount to these other names, the results over the last half-year or so seem a little extreme and Oasis is starting to look more interesting again on a relative basis.

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Oasis Petroleum Getting Less Than Its Full Due

Seeking Alpha: Whiting's Buy Shows How The Bakken Is Changing

Whiting Petroleum's (NYSE:WLL) announcement that it had reached an agreement to acquire Kodiak Oil & Gas (NYSE:KOG) was surprising on several levels. First, Whiting isn't offering much of a premium to Kodiak's standalone net asset value. Second, a lot of investors have been assuming (or perhaps hoping) that consolidation in the Bakken would take the form of large energy companies coming in to buy large operators like Continental Resources (NYSE:CLR), Whiting, and Oasis (NYSE:OAS), not peer-to-peer consolidation. Third, this is a deal that is more about execution and efficiency than exploration growth, perhaps marking a recognition of real change.

All told, assuming the deal gets done on the announced terms, it's a good deal for Whiting and not a bad deal for Kodiak. Whereas Whiting has generally gotten good marks for its execution and operating performance (albeit with some concerns about capital efficiency), execution has been a recurrent issue and concern for Kodiak. In buying Kodiak, Whiting has an opportunity to address concerns about its drilling inventory, an opportunity to improve Kodiak's costs, and an opportunity to leverage its newly enlarged position to drive further efficiencies and optimization across a large acreage position.

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Whiting's Buy Shows How The Bakken Is Changing

Seeking Alpha: Triangle Petroleum Building To Bigger Things

"It takes money to make money" is an all-time great cliché, but it happens to be very true in the energy sector, where acreage and wells both cost money. Triangle Petroleum (TPLM) hasn't been shy about spending money, whether it is to drill wells in its core Williston Basin acreage, build up its RockPile services business, or acquire additional acreage. Although I do have some concerns about the pace at which Triangle is adding debt and the real quality of recently acquired acreage (not to mention the ever-present risks that go with operating a still largely prospective energy company), I believe the shares are still undervalued to a meaningful degree.

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Triangle Petroleum Building To Bigger Things

Seeking Alpha: Whiting Petroleum Working On The Second Act

Whiting Petroleum (WLL) has built itself over the years into one of the largest landholders in the Bakken, but instead of giving the company a victory lap, the Street is worried about whether that acreage is now too mature. Not only does Whiting's Williston acreage still have more than a little life left in it, this isn't a one-play story, and the company's potential in the Niobrara is definitely worthwhile. Investors have more than a few good investing options in the oil and gas sector today, but Whiting is worth a closer look.

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Whiting Petroleum Working On The Second Act

Seeking Alpha: Can Newfield Exploration Get Some Newfound Respect?

Oil prices appear to have put in a bottom in the low $90s, but investors have yet to come back to names like Newfield Exploration (NFX). Issues like the oil/gas mix, production and drilling costs, and debt-adjusted growth seem to be weighing on sentiment, even though Newfield has an enviable geographic diversity to its operations. While this is not my favorite name in the E&P space, I do believe it is trading below fair value and should do well when institution investors rediscover the independent E&P space.

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Can Newfield Exploration Get Some Newfound Respect?

Seeking Alpha: Oasis Petroleum Offers A Familiar Story In The Bakken

ith concerns about oil prices, wider differentials, and rising costs pushing down many oil and gas developers in high-growth areas like the Bakken and Niobrara, Oasis Petroleum (OAS) isn't exactly a unique situation. Relative to companies like Whiting (WLL) or Continental (CLR) I suppose you could call Oasis a "fast follower", but whatever you call it, the company has more than half a million acres in the Bakken. Oasis's acreage is company-operated to a very significant degree and a significant amount of that property is in the attractive McKenzie County in North Dakota.

Valuation is always an inexact science, and even moreso in the case of oil and gas companies. If you assume that double-digit differentials are temporary and that WTI oil prices won't drop back below $80/barrel, Oasis looks attractive on a NAV basis. Likewise, an EV/EBITDA approach would support the notion that a price in the mid-to-high $50's is reasonable today.

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Oasis Petroleum Offers A Familiar Story In The Bakken

Seeking Alpha: Higher Costs And Differentials Create A Second Chance In Triangle Petroleum

Investment writers will talk about buying good companies/stocks on dips or pullbacks, but often it seems that the fear that surrounds each particular pullback leads many investors to forget about buying then … only to chase the stock on the way back up. I mention this in the context of Triangle Petroleum (TPLM) as I believe higher expenses in the recent fiscal third quarter are more on the order of "growing pains", and I continue to believe this fast-growing Bakken driller has undervalued assets and opportunity.

I'm not a huge fan of EV/EBITDA as an evaluation metric for oil and gas companies, and particularly in cases like Triangle where the next twelve months' results really don't reflect the development potential. In any case, both EV/EBITDA and NAV suggest that these shares are undervalued and worth consideration today from more aggressive risk-tolerant investors.

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Higher Costs And Differentials Create A Second Chance In Triangle Petroleum

Seeking Alpha: Down For The Year, Baytex Energy Not Exactly Cheap Yet

This has been an interesting year for Baytex Energy (BTE). This Canadian heavy oil specialist has been doing well with production and drilling, and the company's capital spending guidance for 2014 suggests more profitable growth on the way. At the same time, differentials have been fairly benign and could get better, while increasing use of rail offers a good hedge.

The only real issue is one of valuation. Baytex's qualities are well-known, from its above-average dividend payout (a legacy of its days as a CanRoy) to its high-quality Peace River asset. Even though the shares are down about 10% year-to-date, the shares still aren't all that cheap on an EV/EBITDA basis. Looking at a long-term NAV, though, I think the investment case is stronger for Baytex and that suggests to me that patient investors may yet want to consider this name.

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Down For The Year, Baytex Energy Not Exactly Cheap Yet

Investopedia: ONEOK Backs Off The Bakken

A strange thing has happened in the ongoing development of the Bakken oil producing region of the United States. While more than a few writers and analysts have talked about producers in the Bakken region suffering from too little takeaway capacity, a large pipeline operator has canceled plans to build a pipeline that would have carried crude from the Bakken region down to the Cushing, Oklahoma hub. 

No Thanks, We're Fine

ONEOK Partners (NYSE:OKS) had planned to build the Bakken Crude Express Pipeline to connect multiple points in the Williston Basin (part of the Bakken formation) in Montana and North Dakota, a top oil producing state, to Cushing. The pipeline would have been about 1,300 miles long, carried about 200,000 barrels per day and covered much of the same territory as the Bakken NGL Pipeline project that is underway at a cost of around $1.7 billion.

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Investopedia: GeoResources - A More Obscure Play On Well-Known Formations

Almost anyone who pays attention to the oil and gas space is familiar with the robust growth in activity in the Eagle Ford and Bakken regions of the U.S. Companies like Chesapeake Energy (NYSE:CHK), Anadarko (NYSE:APC) and EOG (NYSE:EOG) are major names in the Eagle Ford, while Continental (NYSE:CLR) and Kodiak Oil & Gas (NYSE:KOG) attract a lot of attention for their Bakken assets.

Amidst this, GeoResources (Nasdaq:GEOI) is a relatively lesser known name. Although it's not exactly undiscovered (about 14 sell side analysts cover it and over 75% of shares are owned by institutions), the relative valuation of other smaller Bakken/Eagle Ford plays suggests investors are not fully onboard the story just yet.

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Investopedia: Triangle Petroleum Almost A Ground-Level Bakken Play

If there are any investors fretting that they have missed the story in the Bakken, a name like Triangle Petroleum (AMEX:TPLM) may be an answer to those worries. While Triangle is still a very risky story, the company is only just starting to develop its acreage in the Bakken region. If Triangle follows the same path carved out by others like Whiting (NYSE:WLL), Continental (NYSE:CLR), Kodiak (NYSE:KOG) and Oasis (NYSE:OAS), investors may be able to look forward to considerable growth in reserves, production, and market valuation over the coming years.

Still (Mostly) A Land Story 
For all of the talk about the Bakken, it's still a new energy-producing region in North America and there is plenty of growth yet to come from the area. While activity in the Bakken is largely dominated by larger, well-established companies for whom the Bakken is just another operating region, Triangle is a different story altogether.

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Investopedia: Denbury Resources Turns Leftovers Into Haute Cuisine

The world of energy exploration and production (E&P) is a large one, with ample room for many different business models. Taking a page from Apache's (NYSE:APA) successful book, Denbury Resources (NYSE:DNR) focuses on acquiring oil fields that other operates consider played out and then actively works them to squeeze out even more oil. While this is a challenging approach, it can work well when properly executed, and investors may want to add this name to their list of energy companies to follow.

Tertiary Recovery
To be clear, Denbury and Apache do not follow identical operating plans. Although Apache has and does take on mature fields, it is more broadly focused on efficient execution in environments that other operators find challenging and less economical.

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Investopedia: Oasis Petroleum Still Worth A Look

It's pretty much a given that investing in individual exploration and production (E&P) companies is tantamount to buying a ticket for the roller-coaster. While the long-term thesis that oil and gas prices are destined to rise might be directionally correct, the incredible drop in crude oil prices from mid-2008 to the end of the year, and the spike from late 2011 to today, shows that plenty of volatility remains in the meantime.

Oasis Petroleum (NYSE:OAS) is by no means immune to the variability of oil prices, but this growth play in the Bakken could still be worth a look for more aggressive investors.

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http://stocks.investopedia.com/stock-analysis/2012/Oasis-Petroleum-Still-Worth-A-Look-OAS-CLR-WLL-UNP0402.aspx.

Investopedia: Statoil Buys Into Bakken

By most standards, Norway's Statoil (NYSE:STO) is a quality name in the world of major energy companies. Unfortunately for its shareholders, the company's stock price has been bedeviled by worries regarding the company's production volumes, reserve growth and dependence on Norway's offshore energy fields. With Monday's announcement that the company is acquiring Bakken specialist Brigham Exploration (Nasdaq:BEXP), Statoil management is making a solid argument that the company is not sleeping on opportunities to leverage its balance sheet into solid reserve growth.


The Terms
Statoil and Brigham announced that the companies had reached an agreement whereby Statoil will acquire Brigham for $36.50 per share in cash, for a total enterprise deal value of $4.7 billion. That price translates into a roughly 20% premium to Friday's close.


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Investopedia: Are The Rails Starting To Spin Their Wheels?

Economies don't turn on a dime, so "more of the same" is usually the order of the day. The uncertainty that really become apparent early in the summer is still the dominant theme of the U.S. economy. Given that demand for railroad carriage is a derivative of economic activity, it is not so surprising to see that the trend in rail car traffic has likewise become uncertain. Investors should note, though, that while growth is no longer unequivocal, there are still positive trends at work. 

August Rail Numbers  
In the latest Rail Time Indicators from the Association of American Railroads, August carload traffic in the United States fell 0.3% from the year-ago level and remained flat with the prior month. Intermodal traffic climbed 0.4% and 0.3% for the same time periods. Of the 20 reporting categories of traffic, 12 showed gains in the month of August - consistent with July, but down from 16 in the year-ago period.

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Investopedia: Whiting Petroleum - Right Place, Right Time, Right Type

Everybody watches, talks about and makes predictions about oil prices. And like the weather, the reality of what actually happens often puzzles if not outright embarrasses the experts and their elaborate models. Whiting Petroleum (NYSE:WLL) offers a relatively simple equation for investors - if investors think oil prices will rise, or at least stay consistently high, this is a good stock to own for its production growth and undeveloped resource base. 


A Disappointing First Quarter
Investors may get a chance to buy Whiting shares a little cheaper now after the first quarter, as the Street seems relatively unimpressed with the results. Revenue growth was solid at 23%, but the company's price realizations, production details and exploration costs delivered a below-expectation bottom line result.

Production was mixed in the first quarter, up 10% (on a barrels per day basis) from last year, but down 3% sequentially. Bad weather in North Dakota hurt production, while a higher percentage of natural gas liquids (NGL) impacted the overall price realizations in an unfavorable way. (For more, see Oil And Gas Industry Primer.)

Costs were also higher this time around. Whiting engages in some relatively sophisticated operations with service providers like Baker Hughes (NYSE:BHI) and those technologies don't come for free. Per-barrel cash costs rose about 13%, though depreciation and depletion (DDA) costs were relatively flat on the same basis. 



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Investopedia: High Oil Prices Should Make For A Healthy Halliburton

Building models and calculating price targets for energy service companies like Halliburton (NYSE:HAL) almost feels like an exercise in futility. Not only is the business maddeningly inconsistent, but there is only scant evidence that investors pay much attention to valuation. More often, energy services are simply a trading vehicle for attitudes about near-term exploration and production in oil and gas. 

That said, Halliburton is seeing stronger business conditions and with oil prices as high as they are, the near-term outlook for exploration and production should be quite healthy. (For more, see Unearth Profits In Oil Exploration And Production.)

North America Drives the Quarter 

Halliburton delivered strong revenue performance to start the year, driven in large part by momentum in the North American business. Overall revenue jumped 40% from last year and rose more than 2% on a sequential basis. Completion and production saw better than 6% growth (and made up about 60% of total revenue), while the drilling and evaluation segment saw a 3% contraction. North American revenue jumped 13% sequentially, while business in regions like Africa, Europe, Russia, Asia and the Mideast dropped by double-digit amounts.

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Investopedia: Rail Traffic Data Still Largely Good News

Another month has gone by, but the data concerning rail traffic in the U.S. is still positive. That, in turn, is another positive read for the economy overall, as well as industrial and material companies. And of course, let us not forget the rail companies - so long as rail traffic continues to climb, that is a tailwind for the sector as well. 

January's Data Mostly Positive 

For January of 2011, the Association of American Railroads reported that U.S. train carload traffic rose 8% from the year-ago level. The level of traffic seen in January also represented a 1.5% sequential increase from December's levels. Of the 20 categories tracked by the AAR, 15 saw carload growth in the month, with coal (always the biggest commodity for railroads) posting above-average growth of 8.8%. Grain traffic was also notably higher (up 10%), while sand, gravel, and aggregate shipments climbed 16%. The biggest laggards, waste/nonferrous scrap and nonmetallic minerals, were both down by double digits, but represent less than 3% of normal rail traffic anyway. (For more, see Rail Traffic Points To An Ongoing Recovery.)

Investors may want to pay attention to the "mostly positive" part of this news, though. For although U.S. rail traffic was again strong, U.S. intermodal traffic may be softening up. For January, intermodal traffic was up 7.4% on a year-on-year basis and 1.8% on a sequential basis. That is still quite good, but I believe this is the first quarter in quite some time where the year-on-year increase in rail traffic exceeded the increase in intermodal. It may mean nothing at all, or it may be a sign that international trade activity is lightening up a bit.

Also of note is the performance in Canada: Canadian traffic was down in January on an annual (-1.6%) and sequential (-5.9%) basis and although intermodal volumes were positive, they were not terribly strong. Seeing as how a lot of Canada's rail traffic is part of the "stuff trade" - mostly moving commodities to shipyards for export - this is worth watching as it pertains to commodity demand growth. If China and India are cutting down on the coal, lumber and metal they buy from Canada, that would not be positive for Canadian Pacific (NYSE:CPI) or Canadian National (NYSE:CNI), though both also have operators in the United States.

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