Weekly Roundup

The number of  “Black Swan” events in the market are on the rise this year to the point that hedge funds are spinning up black swan funds to cash in on future disasters. The good news is that the events are becoming so common place that the markets are growing somewhat immune to the bad news and have held their ground. In the last 45 days we have had a major uprising in the Middle East with civil strife in Egypt, Libya and a host of other countries. Japan has faced its biggest crisis since WWII with a major earthquake and tsunami that some experts say will cost over $300 billion to recover from. Oh, did we fail to mention the accompanying nuclear disaster in Japan that now ranks up with Chernobyl and has no end in site? Through it all US markets held its ground and so did Bakken stocks as oil (WTI crude) prices hovered above $110. Oil has receded since its high as Goldman Sachs made a call that a short term peak may be in place for crude.   Bakken stocks are down 5-8% in the last week but based on price performance and resiliency over the last 12 months,  this appears to be a buying opportunity.    Bakken energy plays may continue to be in favor as overseas instability persists and investors look at domestic producers that can scale their production.  Both NOG and BEXP are off more than 15% from their 52 week highs and may present opportunities for investment at these levels (Both are trading about 10x-12x 2013 earnings).    The news from the region should continue to excite investors as there is no shortage of activity and expansion from a host of smaller players looking to strike Bakken gold.    A few tidbits are listed below:

  • American Eagle Energy  (OTCBB: AMZG)  has begun work to obtain approval from state regulators for up to six 1280 acre spacing units with the objective of getting two operated Bakken or Three Forks Formation wells drilled prior to the end of 2011.  These will be the first American Eagle operated wells in the 8,600 acre Spyglass Project.
  • American Standard Energy Corp. (ASEN), announces the acquisition of approximately 2,780 acres located in Mountrail County of North Dakota’s Williston Basin, “the Bakken”.  The Company paid an average of $669 per acre for a total transaction price of $1,860,858.
  • Blackstone Group (BX: 32.17 -0.28%) is investing in the lucrative area of shale.   Blackstone said on Tuesday it teamed up with shale gas developer Alta Resources to form Alta Energy Partners and they are committing to invest up to $1 billion via this entity to acquire and develop unconventional oil and gas assets in North America.
  • Primary Petroleum Corporation (TSX Venture: PIE) commenced its exploration phase on its 242,000 net acre Pondera-Teton prospect located in the southern Alberta Basin Bakken fairway in Western Montana. The Company intends to commence its $14 million CAPEX exploration program with a proprietary 3D seismic program of up to 100 sq. miles covering four prospect areas over its’ 242,000 net acres, followed up with six vertical wells and one horizontal test well to analyze and test the Lodgepole, Bakken and Three Forks Formations for exploitation and development.

Look for our next article which should be posted later this week!

Company name Price Chg % P/E ratio Mkt Cap
BEXP Brigham Exploration Co. 32.41 -4.17% 84.73 3.79B
SM SM Energy Co. 68.77 -4.21% 22.54 4.36B
CLR Continental Resources,… 65.73 -3.18% 66.44 11.81B
HES Hess Corp. 80.31 -1.80% 12.38 27.25B
NOG Northern Oil & Gas, Inc. 23.54 -3.96% 164.00 1.49B
EOG EOG Resources, Inc. 109.23 -3.05% 171.31 29.29B