What the group thought on the Sweet 16 shares with the best sale price?
Bob
Best Buys
Re: Best Buys
Bob;
IMO the entire group is grossly oversold.
EPS for the Sweet 16 (just adding them all up)
> 2010 Actual EPS = $18.42
> 2011 Forecast EPS = $30.39 < based on my forecast models with half the year already "in the barn"
> 2012 Forecast EPS = $46.98 < Assuming current strip prices for oil and gas
CRZO looks very good to me. CFPS this year s/b $4.35, jumping to over $10 in 2012.
ROSE is a SCREAMING BUY up to $50. Read our new profile on the company.
None of the E&P companies that I track have reduced capital spending and I doubt they will if oil stays over $70/bbl. Therefore, the onshore drillers and oilfield service companies are in great shape. Demand for pressure pumping still exceeds supply. PTEN looks rock sold right now. They are going to have strong 3rd quarter results.
MIND also looks very attractive, as I think they will report strong 2nd quarter results, probably above my forecast.
IMO the entire group is grossly oversold.
EPS for the Sweet 16 (just adding them all up)
> 2010 Actual EPS = $18.42
> 2011 Forecast EPS = $30.39 < based on my forecast models with half the year already "in the barn"
> 2012 Forecast EPS = $46.98 < Assuming current strip prices for oil and gas
CRZO looks very good to me. CFPS this year s/b $4.35, jumping to over $10 in 2012.
ROSE is a SCREAMING BUY up to $50. Read our new profile on the company.
None of the E&P companies that I track have reduced capital spending and I doubt they will if oil stays over $70/bbl. Therefore, the onshore drillers and oilfield service companies are in great shape. Demand for pressure pumping still exceeds supply. PTEN looks rock sold right now. They are going to have strong 3rd quarter results.
MIND also looks very attractive, as I think they will report strong 2nd quarter results, probably above my forecast.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Best Buys
Carrizo Oil & Gas, Inc. (NASDAQ: CRZO) is a Houston based mid-cap E&P. Their current production is primarily natural gas from the Barnett Shale area in North Texas. The company’s liquids production is now expected to grow significantly during the second half of 2011 and continue in 2012, primarily from their Eagle Ford Shale and Niobrara drilling programs.
Development drilling operations are well underway in the Eagle Ford Shale in South Texas, the Niobrara Shale in Northern Colorado and Marcellus Shale in Appalachia. The Company also holds an interest in the U.K. North Sea where two significant Carrizo generated discoveries were made in the 2nd quarter of 2007.
Second quarter production was up 20% from second quarter 2010. The company is on-track to meet their guidance of more than 30% production growth in 2011. More important is Carrizo’s focus on increasing their liquids production. Oil production from the Eagle Ford Shale and Niobrara is ramping up.
First half 2011 operations highlights:
• Drilled 16 Eagle Ford horizontal wells; three rigs drilling now, eight wells on production, eight wells waiting on completion
• Drilled six Niobrara horizontal wells; currently drilling with one rig, five wells on production, sixth well to be completed this month
• Continued successful execution in the Eagle Ford and Niobrara Plays could build net oil production rate to over 6,000 Bopd by YE 2011
• Resulting oil revenues would exceed 50% of total production revenue
Carrizo entered into an agreement to monetize a substantial portion of their non-core Barnett Shale acreage at the end of April. At closing, they received approximately $104 million in cash that was used to fund 8,000 net new Eagle Ford Shale acres and shore up the Balance Sheet.
Carrizo controls a significant amount of prospective acreage in some of the most promising resource shale plays in North America.
Carrizo Resource Shale Acreage
• Fort Worth Basin Barnett Shale North Texas 32,000
• Marcellus Shale NY, PA & WV 118,000
• Fayetteville Shale Arkansas 20,000
• Eagle Ford Shale South Texas 33,000
• Niobrara Shale No. Colorado 62,000
The production performance from their Eagle Ford wells has been exceeding expectations. They currently have three rigs drilling in the Eagle Ford.
In the Niobrara play, Carrizo has now completed five wells in Weld County, Colorado. Each well has tested at more than 600 BOPD. They plan to drill continuously on their acreage through year-end.
In the Marcellus Shale, the company is operating two horizontal rigs that are currently drilling in NE Pennsylvania as part of the joint venture with Reliance. They expect to be selling gas into the Laser Pipeline when it becomes operational around September 1st. The Marcellus will be a significant area of production growth in 2012.
North Sea Project adds additional upside in 2012
Carrizo holds a 15% working interest in the largest North Sea discovery since 2001. The Huntington Prospect was drilled late in 2007 and two zones are considered to hold commercial reserves. The Forties zone tested at 7,940 Boe/d and the Fuimar zone tested at 4,891 Boe/d. Development plans are in progress with first production anticipated in mid-2012. The company has indicated they would like to sell their interest in the North Sea and use the money to accelerate their drilling programs in the Eagle Ford and Niobrara.
CRZO is a “Gasser” but it is their oil potential we are focused on.
I am now convinced that the Company’s oil production will ramping up sharply into year-end. The ramp up started last December. Their drilling programs in the Eagle Ford and the Niobrara have the potential to push their net oil production to over 6,000 Bopd by year-end.
The Company should also have success in their two joint ventures in the Marcellus Shale. These deals allow them to leverage their Barnett experience. By selling down their working interest in the bulk of their acreage, less capital is needed to hold a lot of acreage. It has the potential to be another “Barnett Like” core area for them. I’m forecasting just 7 MMcfepd from the Marcellus by the end of 2011 with a significant jump to over 40 MMcfepd by mid-2012.
It is Carrizo’s potential to rapidly increase their liquids production and cash flow from operations that makes them very attractive long-term investment.
Development drilling operations are well underway in the Eagle Ford Shale in South Texas, the Niobrara Shale in Northern Colorado and Marcellus Shale in Appalachia. The Company also holds an interest in the U.K. North Sea where two significant Carrizo generated discoveries were made in the 2nd quarter of 2007.
Second quarter production was up 20% from second quarter 2010. The company is on-track to meet their guidance of more than 30% production growth in 2011. More important is Carrizo’s focus on increasing their liquids production. Oil production from the Eagle Ford Shale and Niobrara is ramping up.
First half 2011 operations highlights:
• Drilled 16 Eagle Ford horizontal wells; three rigs drilling now, eight wells on production, eight wells waiting on completion
• Drilled six Niobrara horizontal wells; currently drilling with one rig, five wells on production, sixth well to be completed this month
• Continued successful execution in the Eagle Ford and Niobrara Plays could build net oil production rate to over 6,000 Bopd by YE 2011
• Resulting oil revenues would exceed 50% of total production revenue
Carrizo entered into an agreement to monetize a substantial portion of their non-core Barnett Shale acreage at the end of April. At closing, they received approximately $104 million in cash that was used to fund 8,000 net new Eagle Ford Shale acres and shore up the Balance Sheet.
Carrizo controls a significant amount of prospective acreage in some of the most promising resource shale plays in North America.
Carrizo Resource Shale Acreage
• Fort Worth Basin Barnett Shale North Texas 32,000
• Marcellus Shale NY, PA & WV 118,000
• Fayetteville Shale Arkansas 20,000
• Eagle Ford Shale South Texas 33,000
• Niobrara Shale No. Colorado 62,000
The production performance from their Eagle Ford wells has been exceeding expectations. They currently have three rigs drilling in the Eagle Ford.
In the Niobrara play, Carrizo has now completed five wells in Weld County, Colorado. Each well has tested at more than 600 BOPD. They plan to drill continuously on their acreage through year-end.
In the Marcellus Shale, the company is operating two horizontal rigs that are currently drilling in NE Pennsylvania as part of the joint venture with Reliance. They expect to be selling gas into the Laser Pipeline when it becomes operational around September 1st. The Marcellus will be a significant area of production growth in 2012.
North Sea Project adds additional upside in 2012
Carrizo holds a 15% working interest in the largest North Sea discovery since 2001. The Huntington Prospect was drilled late in 2007 and two zones are considered to hold commercial reserves. The Forties zone tested at 7,940 Boe/d and the Fuimar zone tested at 4,891 Boe/d. Development plans are in progress with first production anticipated in mid-2012. The company has indicated they would like to sell their interest in the North Sea and use the money to accelerate their drilling programs in the Eagle Ford and Niobrara.
CRZO is a “Gasser” but it is their oil potential we are focused on.
I am now convinced that the Company’s oil production will ramping up sharply into year-end. The ramp up started last December. Their drilling programs in the Eagle Ford and the Niobrara have the potential to push their net oil production to over 6,000 Bopd by year-end.
The Company should also have success in their two joint ventures in the Marcellus Shale. These deals allow them to leverage their Barnett experience. By selling down their working interest in the bulk of their acreage, less capital is needed to hold a lot of acreage. It has the potential to be another “Barnett Like” core area for them. I’m forecasting just 7 MMcfepd from the Marcellus by the end of 2011 with a significant jump to over 40 MMcfepd by mid-2012.
It is Carrizo’s potential to rapidly increase their liquids production and cash flow from operations that makes them very attractive long-term investment.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Best Buys
Talking of drillers, HP looks attractive too after its one third haircut in just a month.
Adam
Adam
Re: Best Buys
There is nothing wrong with HP or any of the onshore drillers on our Watch List. The active rig count has continued to move higher. The recent dip in oil prices has not slowed the demand for quality drilling equipment. - Dan
Patterson-UTI Energy, Inc. (PTEN) joined the Sweet 16 on February 10. Based on my Net Income and Cash Flow Forecast I now believe the company has a Fair Value of $42/share.
Second quarter results were strong ($0.52 EPS and $1.41 CFPS), EPS beat my forecast by 3 cents per share. Earnings will now accelerate as the number of active rigs will move up sharply this quarter, primarily in Texas and Canada.
I now have a high level of confidence in my forecast model. At the current share price, the stock is trading at about 4X estimated cash flow per share. That is extremely low for a company of this quality. Since PTEN is getting a lot more rigs under long-term contracts, thus improving visibility of forward earnings, a multiple of 8X CFPS is a realistic target price.
After looking closely at six onshore drillers, I choose PTEN for the Sweet 16 for the following three reasons:
• Patterson has a large fleet of idle rigs that are perfectly suited for the Mississippi Lime play in northern Oklahoma and southern Kansas. Take a look at my report on SandRidge Energy (SD) to get more information on this emerging oil play that I believe will get a lot more attention in the months ahead.
• As the oil price goes higher, the demand for rigs in the U.S. oil plays, especially the Eagle Ford, Permian Basin and Niobrara, the demand for quality onshore rigs will increase. So will the contract day rates. PTEN is one of the top drilling contractors in all three areas.
• PTEN’s subsidiary, Universal Well Services has a lot of upside. I don’t think the Wall Street crowd sees this potential and how it differentiates PTEN from the pack. Pressure pumping services now generate almost 40% of PTEN total revenues and the profit margins are very good.
Patterson-UTI Energy, Inc. (PTEN) joined the Sweet 16 on February 10. Based on my Net Income and Cash Flow Forecast I now believe the company has a Fair Value of $42/share.
Second quarter results were strong ($0.52 EPS and $1.41 CFPS), EPS beat my forecast by 3 cents per share. Earnings will now accelerate as the number of active rigs will move up sharply this quarter, primarily in Texas and Canada.
I now have a high level of confidence in my forecast model. At the current share price, the stock is trading at about 4X estimated cash flow per share. That is extremely low for a company of this quality. Since PTEN is getting a lot more rigs under long-term contracts, thus improving visibility of forward earnings, a multiple of 8X CFPS is a realistic target price.
After looking closely at six onshore drillers, I choose PTEN for the Sweet 16 for the following three reasons:
• Patterson has a large fleet of idle rigs that are perfectly suited for the Mississippi Lime play in northern Oklahoma and southern Kansas. Take a look at my report on SandRidge Energy (SD) to get more information on this emerging oil play that I believe will get a lot more attention in the months ahead.
• As the oil price goes higher, the demand for rigs in the U.S. oil plays, especially the Eagle Ford, Permian Basin and Niobrara, the demand for quality onshore rigs will increase. So will the contract day rates. PTEN is one of the top drilling contractors in all three areas.
• PTEN’s subsidiary, Universal Well Services has a lot of upside. I don’t think the Wall Street crowd sees this potential and how it differentiates PTEN from the pack. Pressure pumping services now generate almost 40% of PTEN total revenues and the profit margins are very good.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Best Buys
Article on point:
http://seekingalpha.com/article/290738- ... urce=yahoo
http://seekingalpha.com/article/290738- ... urce=yahoo
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group