Keep an eye on AREX

dan_s · Post by **dan_s** » Tue Nov 12, 2013 10:11 am

http://seekingalpha.com/article/1828272 ... urce=yahoo

Read the article above.

IMO AREX is worth about $30/share, but it could have a lot more potential for us. First Call's price target is now $31.46 (up since last week's Q3 results came out). Their lowered production guidance for 2013 was a bit of a disappointment, but production will be lumpy for awhile as some wells need to be shut-in during completion of near-by wells. A couple cents one way or the other in earnings per share is not why I like it.

AREX has a very large and attractive acreage position in the Permian Basin. They have over 2,000 development drilling locations in a red hot area with stacked pays. I think it is a prime takeover target.

They are outspending operating cash flows now to prove up acreage. Reminds me of a company called Brigham Exploration (BEXP) a few years ago who did the same thing in the Bakken.