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: 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

Investopedia: Crimson Exploration Looks Undervalued, But Mind The Well Economics

Energy is a cyclical market that seems to inspire despair in the worst of times and frenzied elation in the best - and that's true for both investors and companies alike. When an area gets hot, many companies scramble in and pay almost whatever it takes to establish acreage, but the economics don't always support this. I think this is worth remembering in the case of Crimson Exploration (Nasdaq:CXPO) - while the company's shift toward liquids is logical and the its Texas acreage may well be undervalued, the ultimate profitability of these operations gives some reason for pause.

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http://www.investopedia.com/stock-analysis/2013/Crimson-Exploration-Looks-Undervalued-But-Mind-The-Well-Economics-CXPO-COP-EOG-MRO0122.aspx

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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http://stocks.investopedia.com/stock-analysis/2012/Triangle-Petroleum-Almost-A-Ground-Level-Bakken-Play-TPLM-WLL-CLR-KOG-MRO-STO-EOG0410.aspx

Investopedia: Sunoco's Radical Reformation

These are strange days in the refining industry, as more and more companies decide that it's time to go big, go independent, or go home. Several major integrated oil companies have started talking about dis-integrating their refining and marketing operations from their oil and gas exploration activities, and Marathon recently did so - splitting itself into Marathon Oil (NYSE: MRO) (an oil and gas exploration company) and Marathon Petroleum (NYSE: MPC) (a refining and marketing company).


Now it's Sunoco's (NYSE:SUN) turn. The company has been quite active already; selling refining facilities in Oklahoma and Ohio, selling its chemicals business, and spinning out its coke operations. Now the company is taking a larger step further - announcing that it intends to sell its two remaining refineries (both in Pennsylvania) and exit the refining business altogether.

A Logical Step Aside
Apart from Sunoco's long history as a refiner, this decision to exit the refining industry makes a lot of sense. This is a tough business all around - environmental worries make new construction difficult, efficiency requires high ongoing capex, and margins are cutthroat. Making matters worse for Sunoco, the company's Pennsylvania refineries use light sweet crude and have high costs all around because of the feedstock it uses and how it is transported to the refineries. With practically no pricing power, Sunoco has been forced to accept years of losses from this business.



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http://stocks.investopedia.com/stock-analysis/2011/Sunocos-Radical-Reformation-SUN-MRO-MPC-VLO-TSO-XOM-PTRY0907.aspx