Stability continues in oil

Posted by bakkenexpert

Oil is hovering around $58 per barrel and our stocks mentioned in our last post, WLL and CLR are both up roughly 50%.    The strategy of writing covered calls still appears to be valid and we don’t expect another implosion in oil prices in the next few months as the summer driving season is around the corner.  We are steering clear of BEXP in the short term due to the large hedging losses of over $100 million that they reported today as well as share dilution with a public offering of 30 million shares.   The shares are going to be under pressure in the short term.    Goldman Sachs expects oil to drift to $45-50 per barrel in the short term and then reverse course and hit $65 in the medium term.    This is somewhat in line with my thinking as I expect oil to be rangebound between $50 and $70 for the remainder of this year.    We are seeing trends with some of the smaller players issuing stock to raise capital and I think that will probably continue and provide some downward pressure going forward.

NOG	10:17AM ET	5.91	0.10	1.72%	62,296	227,463
WLL	10:22AM ET	37.64	0.74	1.93%	243,728	1,601,390
SM	10:22AM ET	19.86	0.01	0.05%	64,633	1,315,190
EOG	10:22AM ET	70.35	0.03	0.04%	415,862	4,344,980
CLR	10:23AM ET	25.45	0.42	1.62%	247,788	1,359,710
MDU	10:22AM ET	16.84	0.16	0.94%	217,253	1,283,750
GEOI	10:18AM ET	7.57	0.03	0.39%	2,612	45,954.8
BSIC.OB	May 13	0.79	0.00	0.00%	0	38,635.9
WSEG.OB	9:30AM ET	0.038	0.001	2.70%	17,000	55,187.1
KDKN.OB	9:43AM ET	0.225	0.00	0.00%	31,300	100,577
BEXP	10:22AM ET	2.87	0.62	17.77%	800,613	677,027
KOG	10:23AM ET	0.93	0.15	13.89%	1,031,881	1,195,120

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Goldman sees the potential of Bakken

Posted by bakken

Goldman Sachs analyst Brian Singer recently added EOG as a top pick in the Exploration and Production (E&P) sector as well as adding it to “Americas Conviction Buy List”. “Our coverage view on E&Ps is attractive,” the analyst said, adding that he viewed EOG as a “bellwether” E&P stock as the company has a superior combination of production growth, returns and free cash flow. “EOG can continue to extend horizontal technology into both new oil and North American/international natural gas plays. The shares do not assume enough value for this or recent success in the Bakken/Barnett Shale,” he said.

It is significant that Goldman is outlining the potential of its 320,000 net acres in Bakken when EOG has more than 25 other significant areas that they are actively exploring or producing in (see map below).

With a forward PE of approx 14, EOG could have lots of room to run. It has formed a base in the $125-$130 range and is currently trading under its 20 and 50 day moving averages closing at $130.31 on June 13th.

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