Energy Prospectus

Premium Members can find my current thoughts on each of the S-16 companies in the "Sweet 16 Detailed Update" which is available on the website under the Sweet 16 tab. Page two has a table showing my Fair Value estimate for each stock.

Dan

Thanks for the Sweet 16 review, Dan - lots of useful information.

With all this talk about the shale plays, I wonder whether you follow Venoco (VQ) at all. The balance sheet is horrible, and it's not for widows or orphans. On the other hand the characteristics of their Monterey shales appear greatly superior to the Bakken/Niobrara etc (see slide 16 of the company's presentation), and you get a tremendous bang for the buck in terms of OOIP and EUR (even with very conservative RFs for the latter). I have owned it for a while as a pure speculation, and it's been rewarding.....so far! I'm quite surprised that Oxy hasn't used their petty cash to acquire it as they are in the same area. Any thoughts?

Thanks,
Adam

I have not looked at VQ in a long time but I will.

This is from a mid-November Seeking Alpha interview with Neal Dingmann, who is very well respected.

TER: At a slightly higher price is Venoco, Inc. (VQ) is trading at $17. Your prior price target was $25. Why the revision?

ND: Venoco's pretty interesting. In a sense, you are really betting on its core gas position in the Sacramento Basin. It provides nice baseline cash flow because it's gas and is well hedged for the next couple of years. One would say, "well that's not very exciting." But the really attractive upside is Venoco's Monterey Shale play. Venoco has a couple of thousand acres there, and it's just Venoco and Occidental Petroleum Corp. (OXY) in this play.

This Monterey Shale is a very interesting oil play on the coast of California. Estimates say there could be more than 100 million barrels in place, though the estimates could be extremely high. This play is almost like an offshore. You have a lot of upside, but you've got a lot of risk because we just don't know about the timing. The company's only going to drill four or five horizontal Monterey Shale wells this year and probably 15–20 next year; so, you're not going to see a ton of results. But as those results unfold, I think you're going to have a lot of people very excited.