Saint Marys Land & Exploration (SM) – Buying opportunity?

Posted by bakkenexpert

Today one of the 2nd (or possibly 3rd Tier) Analysts, Stanford Research downgraded Saint Mary’s Land & Exploration sending the stock down 3-5% in morning trading. The shaky rationale was as follows: Stanford Research downgrades SM to Hold from Buy on valuation saying that the co has not yet established an internal production growth outlook comparable to the 10% or so offered by several companies in the E&P peer group

This is somewhat embarrassing to use as an excuse to downgrade. In my humble opinion, this basically translates as “Stanford is not smart enough to project SM earnings and growth based on recent developments and needs and abundance of data points so that they don’t have to do any work” I think the next quarter will be solid for Saint Mary’s due to the following: 1) Oil and gas prices are over 20% higher than the previous quarter 2) SM has around 5 active wells in Bakken region and are evaluating up to 40 more sites (see confidential well list below) 3) Hedging comprises about 50% of their 2008 production but is expected to drop off in 2009 and even moreso in 2010. This can only impact their EPS positively as long as oil stays around $115-120 per bbl. 4) SM bought back over 2 million shares in Q1 and more is expected this quarter If some of the upcoming Bakken wells are decent producers and there is growth in other regions such as Rocky Mountain and ArkLaTex, there is no reason 2009 earnings are not north of $6.50 – 7 per share yielding a forward PE below 10.

ST MARY LAND & EXPLORATION COMPANY	LINDVIG 1-11HR	SESE 11-T153N-R101W
ST MARY LAND & EXPLORATION COMPANY	BEAR DEN FEDERAL 10-25HR	NWSE 25-T149N-R96W
ST MARY LAND & EXPLORATION COMPANY	WRRMU 21-33HR	NENW 33-T145N-R101W
ST MARY LAND & EXPLORATION COMPANY	ELLETSON 33-1HR	NWSE 1-T150N-R104W
ST MARY LAND & EXPLORATION COMPANY	JOSODEN 11-15HR	NWNW 15-T142N-R97W
ST MARY LAND & EXPLORATION COMPANY	GRESZ 11-33HR	NWNW 33-T143N-R98W
ST MARY LAND & EXPLORATION COMPANY	RYSTEDT 4-11H	NWNW 11-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	CLARK 16-27H	SESE 27-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	S.M. CLARK 4-6H	LOT 4 6-T158N-R91W
ST MARY LAND & EXPLORATION COMPANY	NICKOLS TRUST 16-28H	SESE 28-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	LEDENE 4-9H	NWNW 9-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	LEDENE 16-3H	SESE 3-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	HOLSTROM 16-4H	SESE 4-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	LUCY 4-12H	NWNW 12-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	MESKER 4-18H	LOT 1 18-T158N-R91W
ST MARY LAND & EXPLORATION COMPANY	ANDERSON 4-35H	NWNW 35-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	CLARK 16-15H	SESE 15-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	HEGSTAD 4-34H	NWNW 34-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	NICKOLS TRUST 4-19H	NWNW 19-T159N-R91W
ST MARY LAND & EXPLORATION COMPANY	LEDENE 16-22H	SESE 22-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	NICKOLS TRUST 16-24H	SESE 24-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	MESKER 4-7H	LOT 1 7-T158N-R91W
ST MARY LAND & EXPLORATION COMPANY	D. CLARK 4-23H	NWNW 23-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	KAPUSTA 16-30H	SESE 30-T158N-R91W
ST MARY LAND & EXPLORATION COMPANY	EDWARDS 4-15H	NWNW 15-T159N-R92W
ST MARY LAND & EXPLORATION COMPANY	DOUTS 4-7H	NWNW 7-T159N-R93W
ST MARY LAND & EXPLORATION COMPANY	S. M. CLARK 4-31H	LOT 1 31-T159N-R91W
ST MARY LAND & EXPLORATION COMPANY	FOOTH 4-13H	NWNW 13-T158N-R92W
ST MARY LAND & EXPLORATION COMPANY	RYSTEDT 16-13H	SESE 13-T159N-R94W
ST MARY LAND & EXPLORATION COMPANY	HOIBY 16-19H	SESE 19-T159N-R93W
ST MARY LAND & EXPLORATION COMPANY	BLOMQUIST 4-12H	NWNW 12-T159N-R94W
ST MARY LAND & EXPLORATION COMPANY	JENSEN 16-17H	SESE 17-T159N-R93W
ST MARY LAND & EXPLORATION COMPANY	ABRUZZI TRUST 16-5H	SESE 5-T159N-R93W
ST MARY LAND & EXPLORATION COMPANY	MOODY 16-1H	SESE 1-T159N-R94W

Current Operations Map of Saint Marys Land & Exploration (SM)

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Basic Earth Science (BSIC.ob) – Ready to break out?

Posted by bakken

Basic Earth Science Systems, Inc. (BSIC) is an independent oil and gas exploration company. Basic is involved in the exploration, acquisition, development, operation, production and sale of crude oil and natural gas. The Company’s activities are focused in the North Dakota, Montana portions of the Williston basin, the Denver-Julesburg basin of Colorado, the southern portions of Texas, and along the onshore portions of the Gulf Coast.

The Williston basin continues to be the Basic’s primary area of focus. From a drilling perspective, Basic has three areas within the Williston basin. The Company has acquired a 20% interest in 13,000 acres in its Banks prospect in McKenzie County, North Dakota. It has acquired leases on approximately 4,200 gross acres in northern Sheridan County near the Flat Lake Field. Basic has acquired a 1.075% working interest in the TR Madison Unit.

In the latest quarter, Basic Earth Sciences, (BSIC) reported net income of $562,000, nearly three and a half cents ($0.033) per share, on oil and gas sales revenue of $2,080,000 for the third quarter ended December 31, 2007. Most of their revenue comes from their other wells in Colorado at their Antenna

Federal Property as evident by a recent press release that outlined flow data below which shows the initial production rate reported to the Colorado Oil & Gas Conservation Commission for these five new wells:

Well Name Bbls. Oil/Day MCF/Day NRI
USA 2-36 51 350 0.52500
USA 21-36 0 638 0.16375
USA 24-36 22 109 0.16375
USA 25-36 73 348 0.16375
USA 41-36 67 358 0.02000

Recently, BSIC has acquired 2000 net acres in the Bakken region and have a small NRI (<10%) in some drilling efforts in the region. Basic has a 1.2469% working interest (0.9975% net revenue interest) in the well which is operated by Marathon Oil Company. In addition, the horizontal well drilling required in the Bakken region is quite expensive potentially running into the millions of dollars per well to bring it online. We are watching on the sidelines to see how BSIC does over the next few months as it is approaching 52 week highs and volume may dry up if oil pulls back after July 4th as is expected. Our price target for BSIC is $2.50 but that does not include any Bakken related revenue as that is marginal at this point. The positive thing this company has going is that it is conservative and well managed so the Bakken portion of their portfolio will probably grow, just not at the rate that short term investors would like.



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