A good time to step in?

Posted by bakkenexpert

So oil has continued its descent to the mid 40’s but oil stocks have been fairly rangebound for the last 2 months with XLE bouncing between 40 and 50.     Bakken stocks have been particularly hit hard when compared to other oil stocks because of a number of investor concerns including recovery costs,  drilling costs and loss of any premium associated with growth in the Bakken region.     Of utmost concern is the recover costs per barrel in the bakken region.  There is no exact number, but there have been published reports that it costs upwards of 5 million to establish a productive well in the region and that production costs are anywhere from $30-50 per barrel.     If this is true,  some of the Bakken players can expect to see their margins squeezed in upcoming quarters but in terms of the pps,  it looks to be baked into the stocks as most are down over 75% year to date.     I’m content that CLR doesn’t have much down side from its current price around $15 and if so,  who cares at this point.    I’ll sell covered calls at a strike of 17.5 or 20 until I make a nice profit or the stock just “goes away”.    On another note, below we can tell that most of the short interest is out of these stocks by now and our bakken plays are really just tracking with the price of oil at this point.  In other words,  don’t expect any of these to gap on the upside on news specific to the company in the short term.    Supply and demand will account for 80% of the price movement for the forseeable future.

Fundamentals

Symbol	Last Trade		P/E	Pct from Yr High	Short Ratio
NOG	2:01PM ET	2.75	N/A	83.23%	9.5
WLL	2:01PM ET	29.46	4.16	73.79%	1.1
SM	2:01PM ET	17.56	4.46	73.22%	2.9
MDU	2:01PM ET	19.82	9.12	43.92%	1.1
GEOI	1:48PM ET	6.59	5.08	77.34%	3
BSIC.OB	12:01PM ET	0.75	3.93	75.33%	N/A
WSEG.OB	12:35PM ET	0.05	N/A	N/A%	-
CLR	2:01PM ET	15.74	7.12	81.22%	1.7
BEXP	2:01PM ET	2.77	6.35	84.86%	5.6
KDKN.OB	1:11PM ET	0.60	N/A	83.74%	-
KOG	1:57PM ET	0.4359	N/A	92.07%	1.6
EOG	2:01PM ET	71.70	7.69	50.55%	1.4

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Tags: CLR drilling costs investor concerns strike price supply and demand well