Seeking Alpha: Abraxas Petroleum Running All-Out

Although the EPX Index has had a so-so run since late December of 2013 (up around 6%), plenty of individual plays have outperformed, but few have done so to the same extent as Abraxas Petroleum (NASDAQ:AXAS). Back in late December, I thought Abraxas was a good candidate to pick up if it traded down closer to $3, which it did within the next month or so, but I didn't think that it was going to shoot through $4.50, $5, and eventually $6. Granted, a lot happened between then and now to help the shares along the way and management has been active in selling non-core assets and picking up new acreage to enhance value.

The acreage Abraxas holds in the Williston Basin (the Bakken) is pretty mature, but there is quite a bit of growth potential via the drill bit in the Eagle Ford acreage, not to mention the possibility that the company will continue to acquire when and where it can. Strong production growth and a pretty clean balance sheet support a fair value range around $6 to $7 per share and I wouldn't underestimate management's ability to execute more value-creating transactions.

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Abraxas Petroleum Running All-Out

Seeking Alpha: Bill Barrett: High-Return Oil Plays, But Capital Needs Could Pinch

Oil and gas companies are definitely not all the same, and those differences (be they adjusted production growth, well-level ROEs, capital structures, or what have you) eventually show up in valuations. Bill Barrett (BBG), PDC Energy (PDCE), and Bonanza Creek (BCEI) are all interesting E&P companies in the $2B to $3B enterprise value range, but their performance since my October 4, 2013 piece on Bill Barrett has diverged pretty significantly - with PDCE down almost 7%, Bonanza Creek up almost 18%, and Bill Barrett up about 2%.

Looking ahead, I'm encouraged by the company's production and return potential in the DJ Basin and Uinta (or Uintah) Basin and eager to see whether initial tests in the Chalk Bluffs area will match up to the results reported by EOG (EOG) and further expand its resource potential. On the other hand, the company's capital needs are considerable and I'm concerned about the debt/balance sheet-adjusted production growth prospects.

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Bill Barrett: High-Return Oil Plays, But Capital Needs Could Pinch

Seeking Alpha: Devon Has Come A Long Way, But Doesn't Seem Done Yet

Simplification and improvement has done some good for Devon Energy (DVN). Devon was once a diverse E&P with an unwieldy collection of assets, but a multiyear program of sales and purchases has created a focused onshore North American player with quality assets in the Permian, Barnett, Eagle Ford, Anadarko, Woodford, and Rockies, as well as underrated Canadian oil sands operations. As the shares have risen more than 50% over the past year, it is hard to say these improvements have gone unnoticed, but Devon still has some upside on an "as is" basis, as well as further self-improvement potential.

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Devon Has Come A Long Way, But Doesn't Seem Done Yet

Seeking Alpha: Penn Virginia Offers Near-Term Risk, But Long-Term Reward

When a stock goes from about $4.50 to almost $13 in the space of a year, and analyst price targets have more than doubled in the trailing six months, something pretty dramatic is going on. That seems like a fair summary of Penn Virginia (PVA) as this once gas-heavy small-cap E&P has transitioned to an oil-oriented company with exceptional real estate in the Eagle Ford.

It's not all Beverly Hillbillies yet, though. As the last couple of quarters have shown, hitting production and earnings targets is still a challenge. The company also has a significant amount of debt on the balance sheet and ambitious spending goals for 2014 and beyond. I do believe that further drilling in the Eagle Ford can unlock significant value from here, but investors have to be able to withstand the quarter-to-quarter turbulence that will accompany this name.

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Penn Virginia Offers Near-Term Risk, But Long-Term Reward

Seeking Alpha: Forest Oil Trying To Make A Go Of It With Second-Rate Assets

Getting smaller can be a good way of cleaning up a balance sheet and improving a company's growth prospects. In the case of Forest Oil (FST), though, I have some real concerns about whether management hocked the family silver and kept the stainless steel instead. I do believe that Forest shares trade below their current NAV and that more experience could lead to better results (which in turn would lead to a meaningfully better NAV), but that upside has to be set against the reality that Forest Oil may be on the outside looking in when it comes to the Eagle Ford and may not have the capital or technical expertise to maximize the Permian assets anytime soon.

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Forest Oil Trying To Make A Go Of It With Second-Rate Assets

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: Bonanza Creek Another Interesting Second-Chance Story

Investors are getting a little spoiled for choice when it comes to E&P companies with impressive production growth outlooks, attractive internal economics, and discounted valuations. The same sector-wide pullback that has hit names like PDC Energy (PDCE) and Noble (NBL) has also taken Bonanza Creek (BCEI) with it. While the possibility of lower oil prices or regulations that impact fracking are a sector-wide risk, Bonanza looks pretty appealing at today's prices.

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Bonanza Creek Another Interesting Second-Chance Story

Seeking Alpha: Bill Barrett's Transformation Can Fuel Further Gains

Timing is everything in the market; had I written what I'm about to write in February of this year, I'd have come off looking pretty good. Be that as it may, while missing the 60% move in Bill Barrett (BBG) stings a bit, I have confidence that the company can continue to deliver the sort of results that will move the stock even higher in the coming years. More to the point, the company's ongoing transformation from a high-cost producer of natural gas to a competitive producer of oil with a deep drilling inventory makes this a name to watch.

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Bill Barrett's Transformation Can Fuel Further Gains

Investopedia: Noble Energy Looks Great, But Is The Valuation Too Filling?

In what has been an extremely iffy year for the E&P sector, Noble Energy (NYSE:NBL) is an outlier in many respects. Not only has the stock done quite well over the past year, but that's even with a gas-heavy reserve base and exposure to the Gulf of Mexico – two things that the market has really soured on in general.

Clearly this is a situation where digging a little deeper is warranted. Noble Energy is doing so well in part because of its very successful drilling program in northern Colorado, it's large gas discoveries off the coast of Israel, and a very compelling outlook for debt-adjusted production growth over the next three to five years. Honestly, the question today doesn't seem to be so much about whether Noble is a top-notch emerging mid-tier energy company, but rather what to pay for all of that.

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http://www.investopedia.com/stock-analysis/071113/noble-energy-looks-great-valuation-too-filling-nbl-apc-apa-eog.aspx

Investopedia: Can Apache Regain Its Reputation?

It feels like it wasn't all that long ago when Apache (NYSE:APA) was one of the most well-regarded energy companies in the game. Management had a knack for acquiring assets from larger companies at attractive prices and driving a surprising amount of productivity out of them. Along the way, the company developed a very broad portfolio that was well-balanced between oil/gas, individual basins, and near-term/long-term productivity.

Unfortunately, there's a blurry line “diversified” and “unfocused”, and Wall Street has come to the conclusion that Apache is too much of the latter these days. What's more, there are now substantial questions about the company's asset mix and its ability to generate good returns from those assets. Management is responding to these concerns with an asset sale program, and while Egypt is going to loom large in investors' minds for a while yet, I believe these shares are meaningfully undervalued today.

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Investopedia: Bakken Booming

How many folks in the Midwest scrambled to find ways to play ethanol during its mini-boom (and then bust) in the first decade of this century, only to see reality come up well short of the hype? What makes that rush all the more regrettable is that there was a huge pool of oil waiting beneath their feet. As the news from the Bakken formation in North Dakota continues to suggest, the best move investors could have made was buying loads of acreage in western North Dakota and waiting for the energy companies to come calling. 

Good, Moving to Great?
In a report that came out over the holiday weekend, North Dakota officials talked of oil production estimates from the Bakken that could vault North Dakota into the #2 spot in oil production in the United States. Operators in North Dakota are currently producing about 350,000 barrels per day, and indications suggest that number could double in the next five years or so. While that number sounds impressive, and would make North Dakota second only to Texas in domestic production, 700,000 barrels per day would cover only about 3% of the U.S.'s daily consumption. So, even with these rosy predictions, North Dakota will only have us all covered from about 8am to 8:45am. (For related reading, check out Oil And Gas Plays You've Never Heard Of.)

The Danger Of Predictions
Some of the statistics underlying the success of the Bakken play should interest not only energy investors, but those who follow energy policy. More to the point, what is going on in North Dakota (and Montana, as well as Saskatchewan) would not have been practical only a decade ago, and probably not even thought possible two or three decades ago. The oil in the Bakken is not easy to access - it is certainly not a matter of just drilling a hole and seeing oil come gushing out of it. Rather, it requires more advanced techniques like horizontal drilling and hydraulic fracturing.

This is where energy skeptics (and "peak oil" buffs) often get it wrong - what energy service companies like CGG Veritas (NYSE:CGV), Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI) have done is basically revolutionize how companies can access oil and gas. By improving seismic and electromagnetic surveying to find and define reservoirs, and developing technologies and techniques to exploit those reservoirs (like horizontal drilling), these companies have turned nonviable energy fields into major producers.


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http://stocks.investopedia.com/stock-analysis/2011/Bakken-Booming-HES-WMB-CLR-WLL-EOG-BEXP-XOM0107.aspx

Weak Prices Gassing Energy Producers

The United States has still not embraced natural gas anywhere to the extent it should as part of its energy infrastructure, and yet the major gas producers keep drilling and pumping away. The exploitation of shale gas reserves has been a resounding success, but the impact on prices has been severe - from peak prices in the mid-teens in 2005 and 2008 (and talk of possible "peak gas" and gas shortages), natural gas prices for December now languish below $4. That makes it tough to make a buck in the gas business. 

A Mixed Bag In Calendar Q3
At first glance, there does not seem to be much cause for worry in the gas patch. Netting out the impact of derivatives and other hedges, Ultra Petroleum (NYSE:UPL) reported revenue growth of 15%, Chesapeake (NYSE:CHK) posted 23% growth, Devon (NYSE:DVN) delivered 13% growth and EOG (NYSE:EOG) saw revenue rise about 9%. In the cases of Ultra and Chesapeake, output was likewise strong, with growth of 21% and 23%, respectively.

Profitability was also relatively solid on the whole. Ultra saw operating income more than double (up about 120%), while Chesapeake logged 11% EBITDA growth and Devon saw EBITDA grow 22%. EOG was admittedly a laggard here, though, as EBITDA fell almost 9%.

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http://stocks.investopedia.com/stock-analysis/2010/Weak-Prices-Gassing-Energy-Producers-CHK-EOG-DVN-UPL-HAL-BHI1108.aspx

Will The EPA Crack Down On Fracking

With everyone's attention focused on the Gulf oil spill clean-up efforts, there is another environmental controversy brewing in the energy sector. While hydraulic fracturing and pressure pumping have been hailed for their ability to open up new reservoirs of oil and gas in the United States, there is growing concern about the environmental impact of these activities. Although I do not think these worries are ever going to shut down operations in areas like the Marcellus Shale, energy investors need to keep an eye on this issue. 

What the Frack? 
In simple terms, hydraulic fracturing, or "fracking", is a process by which drilling companies force fluids down a bore hole and use that pressure to crack the rock. Those cracks are then kept open with additional additives called proppants (sometimes sand, but increasingly purpose-built ceramic particles). Oil and gas that was previously trapped within the pores of that rock can then migrate out through those cracks and up the well.  
 

To read the full piece, please go to: 
http://stocks.investopedia.com/stock-analysis/2010/Will-The-EPA-Crack-Down-On-Fracking-HAL-APC-NBL-COG-EOG-CHK-UPL-XOM0712.aspx

A quick note on spelling conventions ... I realize a lot of industry insiders spell it as "fracing" or "fraccing", but there are just as many sources out there that use "fracking". I have no dog in the hunt. 

Penn Virginia Turning Coal Into Cash

Penn Virginia has been one of my favorite companies for a while, and it's a company that I have written about a lot over the years. Oddly enough, I've never actually pulled the trigger and owned it in my own portfolio. Maybe soon, though...

Say you want to invest a portion of your portfolio in coal, America's dominant energy source for electricity, but you also want to get a hefty stream of income from that investment. Unfortunately for dividend-seeking investors, the leading names in the coal industry like Peabody Energy (NYSE:BTU), Arch Coal (NYSE:ACI) and  Massey Energy Co. (NYSE:MEE) do not pay especially large dividends. What do you do?  

Well, you could try to buy a share in a coal mine lease, but that is quite frankly not an option for most regular people. You could also pursue a covered call writing strategy, but that may be a bit too much work for some investors. Or, you could also just buy the shares of a royalty partnership like Penn Virginia Resources (NYSE:PVR). 

http://stocks.investopedia.com/stock-analysis/2010/Penn-Virginia-Turning-Coal-Into-Cash-PVR-BTU-ACI-MEE-RRC-EOG-ARLP-NRP0512.aspx  

Learn From Apache's Success

Here is a second piece this morning:
http://stocks.investopedia.com/stock-analysis/2010/Learn-From-Apaches-Success-APA-DVN-SU-UPL-XOM0503.aspx

Mid-major energy company Apache (NYSE:APA) is a curious case of collective amnesia in the professional investment world. Even though Apache has more than proven itself as among the best of the best, it seems as though the company is often questioned, doubted and discounted by analysts and investors.

I mean, if you look at stock performance over the last 15 years, Apache is well ahead of rivals like Anadarko (NYSE:APC), Devon (NYSE:DVN) and Canadian Natural (NYSE:CNQ), and trails only Suncor (NYSE:SU) and EOG (NYSE:EOG) among those in its "weight class". Maybe you would think that that sort of record would earn management the benefit of the doubt.

For the rest of the story:
http://stocks.investopedia.com/stock-analysis/2010/Learn-From-Apaches-Success-APA-DVN-SU-UPL-XOM0503.aspx