Energy Prospectus

Bonanza Creek (BCEI):
> This stock is grossly oversold and management needs to get out and tell their story more
> Current share price equates to about $47/acre, which is ridiculously low.
> See our recent profile on the company under the Sweet 16 tab.
> Strong balance sheet and plenty of liquidity to survive an extended period of low oil prices.
> Most leasehold is HBP, so they can easily adjust their capital program
> Good hedges through year-end. Some oil hedged for 2016.

PDC Energy (PDCE) is worth a hard look for one of our growth portfolios.
> Outstanding hedge book
> 60% production growth locked in for 2015 and 35% growth forecast for 2016

Unit Corp. (UNT)
> Strong Balance Sheet, CFPS around $12.00 this year.
> 52 year old company that has survived much worse than this cycle
> 17% YOY production growth
> Only 32 of 94 drilling rigs working today, all 8 BOSS rigs are under contract
> Most LH is hbp

Northern Oil & Gas (NOG):
> VERY GOOD HEDGES
> Low overhead with only 23 employees
> 16,600 boepd of current production
> 200+ net well locations in Tier One area of Williston Basin.
> IMO this one is a streaming takeover target

Boulder Energy and Surge Energy are two Canadian upstream companies that made very impressive presentations. If you are looking for high yield dividend payer, take a hard look at Surge. It has a solid balance sheet and 17,000 boepd of current production. Big asset sale late in 2014 shores up the balance sheet and they have three very attractive oil plays with lots of running room. Management of both companies was impressive.

SM Energy (SM):

This Sweet 16 company made an impressive presentation. The breakout room was packed.
> Top Tier company by all financial measures
> 3 Core areas: Eagle Ford, Bakken/Three Forks and Permian
> Pulling back from 17 to 7 drilling rigs and not completing many wells until oil prices move higher.
> Focus on density pilots this year, so they can design most efficient development programs (smart move during this part of cycle)
> Good production mix, strong balance sheet and over $2 Billion in liquidity
> Break-up value near $80/share at current strip.

You should all read our recent profile on SM. It is under the Sweet 16 tab on the website.

Eclipse Resources (ECR):
>Utica Shale "gasser". If gas prices improve this winter it should draw a lot of attention.
> Perfect takeover target for GPOR, RRC or XTO

Eco-Stim Energy Solutions (ESES):
> Keep an eye on this small-cap service company
> Made a good impression on their first time at Enercom
> A start up that should be cash flow positive this year and earnings positive next year.

Aly Energy Services (ALYE)
> Good management team
> Oilfield Services company that should survive

With Q2 in the rearview mirror, presenters in the first few days of Enercom’s The Oil & Gas Conference® 20 were smiling and even optimistic about the future prospects for their companies. Completion formulas and directional drilling successes were discussed at length, as were balance sheets, liquidity, redeterminations, type curves, record well economics, reservoir analysis, CapEx allocation for the balance of 2015, and continued strong operating cost reductions.

On Wednesday morning, outside the presentation and breakout rooms, a large screen displayed a live CNBC feed with graphics announcing “WTI Hits Lowest Point in 6 ½ years.” In a room full of oil and gas CEOs, CFOs, COOs, energy analysts, portfolio managers and bankers, the headline seemed more like an old wallpaper pattern, something so familiar that you have gotten used to living with it.

Meantime company presentations were delivered, hundreds of one-on-one meetings were conducted and lunch speakers gave detailed talks about key energy issues. Cheniere Energy’s (ticker: LNG) CEO Charif Souki talked about Cheniere’s first-to-market LNG business and the scale of the LNG opportunity, Colorado Gov. John Hickenlooper talked about his strong support for proposed west coast LNG export facilities to move Colorado’s gas to non free trade agreement countries, and Ambassador Chris Hill discussed how key Middle Eastern countries are likely to affect the flow of oil going forward. Hickenlooper, who said he is the only governor who has ever started as a geologist, discussed the need to “find ways to get the resource out of the ground cleaner and more efficiently.”

The governor didn’t elaborate on how the shale developers like Range Resources (ticker: RRC), Cimarex Energy (ticker: XEC), PDC Energy (ticker: PDCE) and virtually every other E&P and oil service provider in the building have spent the past 6 months delivering increased efficiency at extracting more hydrocarbons at lower cost. Other presenters included innovative service and technology companies like Integrated Environmental Technologies (ticker: IEVM) that is coming at cost cutting by eliminating H2S from the equation.

Meanwhile deals were being discussed, a lot of acreage positions were looking to grow and companies have obviously learned how to keep things rolling forward, albeit at a slower pace than the past few years’ $90-$100+ WTI spurred.

The next period of accelerated development of North America’s vast reserves will be in a holding pattern till a commodities price recovery is in force. WTI closed north of $40 per barrel on Wednesday.

The EnerCom conference wraps on Thursday with presentations by many experts including James Constas, Jeb Armstrong, Will Fleckenstein, Ricardo Garcia-Moreno and Tom Petrie.

thx for the reports; so valuable. It looks like you may be juggling some of your faves in each investment category. By the way, you said bcei's price reflects a $47/acre property value, which is ridiculous. What would be a "reasonable" value with oil at $40?

Leasehold in the heart of the DJ Basin goes for $1,000s per acre.

I am traveling today.

I really appreciate all your great coverage of the conference. Did EOG make a presentation? Also which of those companies might be an acquisition target?

Great coverage, Dan. Thanks.