Seeking Alpha: Lukoil Not Out Of The Woods Yet

Like Gazprom (OTCPK:OGZPY), which I recently covered here, the shares of oil-focused Russian oil giant Lukoil (OTCPK:LUKOY) have struggled to make much headway amidst concerns about production growth, taxation, and geopolitical tensions. That the shares have done about as well as Gazprom and Tatneft (OTCPK:OAOFY) and better than Rosneft (OTC:OJSCY) isn't much comfort, as valuation multiples remain stubbornly low due in part to investors continue to avoid Russian equities.

A long-awaited production ramp in Iraq is now threatened by insurgency and while a partnership with Total (TOT) bodes well for the future, the company is still disadvantaged when it comes to growing production via exploration within Russia. I do continue to believe that the Street undervalues the cash flow streams that Lukoil is likely to produce, as well as the comparatively better shareholder policies here. Multiples can stay low for frustratingly long times, but I continue to believe that Lukoil is priced to generate above-average returns for long-term shareholders.

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Lukoil Not Out Of The Woods Yet

Seeking Alpha: Tullow Oil Battered And Bruised, But Not Finished

Not only is Tullow Oil (OTCPK:TUWOY) the largest independent oil and gas company, it is one of the most exploration-focused large energy companies out there. The good side of this heavy exploration focus is that success can bring in millions of barrels of reserves at low cost, spiking the estimated NAV. The bad side is that dry holes can quickly whittle away the value of the exploration NAV and send the stock skidding.

The latter has been the dominant part of the story since I wrote about Tullow as a Top Idea in the summer of 2013. At that time, Tullow had been looking back on an average drilling success rate of more than 70% since 2007, well above industry averages for frontier drilling. In 2013, though, that success rate dropped into the 20%s, and investors had to come to terms with disappointments in French Guiana, Mozambique, and Mauritania, among other locales. While recognizing that Tullow is in a tricky spot between independent and major, explorer and producer, I continue to believe that Tullow shares are undervalued at this level and can benefit from further drilling activities in West Africa, East Africa, and offshore Norway.

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Tullow Oil Battered And Bruised, But Not Finished

Seeking Alpha: OMV's Transformation Should Unlock Meaningful Value

One of the most rewarding things about writing about stocks is when you write a piece, make certain specific predictions, and then see those come to fruition. In contrast, one of the most frustrating things is to have a piece all lined up and ready to go and then see one of your big predictions come true before your piece gets published. That has happened to me now on OMV (OMVKY.PK), as the company announced Monday that the company had reached a potentially transformative $2.7 billion deal with Statoil (STO).

The good news is that my basic thesis on OMV still holds - OMV looks like a significantly undervalued European energy major with catalysts to drive better performance in the coming years. Not only does the acquisition of North Sea assets from Statoil significantly improve the odds that the company will meet its long-term production growth goals (something the Street was incredibly skeptical about), but OMV remains a strong free cash flow-generating major with a low breakeven price and capacity for additional farm-ins as circumstances allow. All told, I believe these shares should trade more than 30% higher than they do today.

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OMV's Transformation Should Unlock Meaningful Value

Seeking Alpha: Tullow Hasn't Forgotten How To Find Oil, And The Shares Look Too Cheap

Exploration-focused oil and gas companies can give investors a wild ride. That has definitely been the case at Britain's Tullow Oil (TUWOY.PK), as uncommon drilling success built the company into Europe's largest independent, only to see the shares fall more than 20% over the past year on multiple poor results of its exploration program.

I believe that while finding oil is a "win some, lose some" sort of game, Tullow has proven over the years that it will win more than its share. With a strong core expertise in petroleum geology and demonstrated discipline in license acquisition, coupled with a rich portfolio of exploration assets, I believe that Tullow can regain some of its luster and that the shares are 30% to 40% too cheap even if future drilling success rates can't match the company's past levels.

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Tullow Hasn't Forgotten How To Find Oil, And The Shares Look Too Cheap