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: From Russia With No Love, Lukoil Trading At A Very Low Multiple

It's easy to come up with good reasons to steer clear of Russian equities. The Russian government has shown itself perfectly willing to play fast and loose with the rule of law, corruption is still an endemic problem, and the notion of shareholder rights can be pretty iffy.

Even so, I find that some of best investment returns have come from places where the "conventional thinking" was much too bearish, and so I think it may be with Russia and its second-largest oil producer Lukoil (LUKOY.PK). Although Lukoil does need to bring new fields into production to offset declines in its Western Siberia fields, those developments are underway and the company could surprise to the upside with long-term oil production. With only a 3.5x multiple to 2014 EBITDA supporting a price target 30% above today's price and a 5%+ dividend, Lukoil appears to be meaningfully undervalued even relative to the "Russia discount".

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From Russia With No Love, Lukoil Trading At A Very Low Multiple

Investopedia: Good Profitability And Relative Valuation Make Chevron Interesting

If Exxon Mobil (NYSE:XOM) had the wrong kind of earnings beat, it would seem that Chevron (NYSE:CVX) had the right sort of miss. More to the point, Chevron continues to operate one of the most profitable upstream businesses among the oil majors, and the company has a rich pipeline of growth projects to maintain higher production levels across the next five years. Coupled with an undemanding valuation, Chevron looks like a solid name to consider for broad international energy exposure.

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Investopedia: Hess Has Good Assets, But What About Management?

Everybody loves a bargain, but it's always important to ask why a potential bargain is as cheap as it is. In the case of Hess (NYSE:HES), a diverse set of high-quality assets and a hefty weighting toward U.S. liquids and overseas natural gas would normally seem to be a very good thing. Management has seemed disturbingly lackadaisical about economic returns and capital allocation, though, and investors need to have a strong cause for believing that management can deliver growth in production and shareholder value before entering a position here.

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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: Rail Traffic Perks Up A Bit

The August edition of Rail Time Indicators from the American Association of Railroads once again offers investors an interesting read on several trends in the North American economy. Although the ongoing declines in coal traffic are still a revenue risk for Class 1 operators like Union Pacific (NYSE:UNP) and Norfolk Southern (NYSE:NSC), the underlying improvements in industrial traffic are encouraging for the economy as a whole.

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Seeking Alpha: Is Chevron Following The Exxon Game Plan?

Investors have ample choice in the oil and gas sector these days, with plenty of high-quality names like Apache (APA) and Petrobras (PBR) trading at discounts for one reason or another. Add Chevron (CVX) to that list, for while it's not the cheapest energy stock out (nor the cheapest major), the company's valuation seems to give it only marginal credit for following a game plan that looks more than passingly similar to the one successfully put into place at Exxon Mobil (XOM).

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Is Chevron Following The Exxon Game Plan?

Seeking Alpha: Exxon Mobil And The Jam Today/Jam Tomorrow Dilemma

Exxon Mobil (XOM) knows a good thing when they see it - a pristine balance sheet, nearly 20 billion barrels of reserves, and the largest refining system in the world produces almost bond-like cash flow that makes Exxon Mobil a favored place to park cash and capture decent dividends. If management really has anything to worry about, it may be as to whether it's worth risking the wrath of Wall Street to build an even better long-term asset base.

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Exxon Mobil And The Jam Today/Jam Tomorrow Dilemma

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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http://stocks.investopedia.com/stock-analysis/2012/Denbury-Resources-Turns-Leftovers-Into-Haute-Cuisine-DNR-APA-CLR-HES0405.aspx

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: Industry At A Glance - Large Oil and Gas Producers

Anyone who drives is well aware of the general trajectory of oil prices over the past decade; and likewise, anyone who uses natural gas to heat their home has some sense of the volatility in that market. Oil and natural gas are vital to the global economy. Simply put, without energy there is much less commerce, and oil and natural gas represent some of the most portable energy-dense options available today.

When it comes to big-time oil and gas, investors must consider a lot of trade-offs. Some companies see themselves almost as trusts - focusing on paying out large dividends and keeping risky development investment to a minimum. Others try to find more balance in the growth/income equation. At the bottom line, though, major oil and gas companies offer investors an opportunity to ride along for further gains in energy prices, without some of the risk of smaller names.

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http://stocks.investopedia.com/stock-analysis/2011/Industry-At-A-Glance---Large-Oil-And-Gas-Producers-BP-CVX-COP-XOM-TOT-HES-RDS-PBR0829.aspx

Investopedia: Libya Adds Some Good News To Energy Names

With word coming out this weekend that the rebel forces had begun to enter Libya's capital of Tripoli, it looks as though the Arab Spring may be winding down. Although investors should never fully discount the risk of further turbulence - citizens are getting restless in Egypt, Syria is still spasming with protests and crackdowns and further troubles could always emerge in nations like Iran or Iraq - it looks like many Western names may be soon getting back to the business of exploiting sizable untapped foreign reserves. (Dividend capture strategies provide an alternative investment approach to income seeking investors. See How To Use The Dividend Capture Strategy.)

Back to Business as Usual?  
With a few exceptions here and there, major international oil companies pulled their employees out of Libya when armed insurrection against Qaddafi's regime began earlier this year. Now that it appears that the rebels are closing in on victory, it may be time to reconsider some of the names that had sizable partnerships with the Libyan government in developing oil and gas reserves that had gone largely underutilized during Libya's long period of isolation.

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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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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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