EOG’s Mark Papa – Oil Companies Are Undervalued

If you are a stockholder in oil and gas companies, you are hoping everything lands where Mark Papa sees it. He believes unconventional gas and oil companies have been undervalued long enough.

EOG has reported recoverable reserves up to 900 mmboe in the Eagle Ford Shale, but Papa mentions that the company estimates there is as much as 21 Billion barrels of oil in place across EOG’s acreage. The 900 mmboe equates to a recovery factor of less than 5%. Grow the recovery to 10, 15, 0r 20% and it could mean billions of dollars for stockholders.

…Papa is pretty well known as a straight shooter in the oil and gas industry so when he says something it is worth listening to. This comment caught my attention:

“The true impact of unconventional drilling in unconventional rock formations is the most underreported event in the mainstream press today”

As did this one:

“It’s a new paradigm. Unconventional drilling has dramatically changed the U.S. natural gas and crude oil picture in the U.S. and is probably the biggest change in the last 40 years in the industry. Everybody in the world is chasing these shale plays.”

And I think this unconventional revolution makes for in interesting opportunity.

This is a technological step change that has made millions of acres of land extremely valuable. The oil and gas industry obviously knows this, you can tell by the way the industry is snapping up the land and shifting capital in that direction.

The stock market however, seems a little slow on the uptake.

From what I can tell there are dozens of smaller oil and gas companies that hold large acreage positions in these emerging unconventional plays. And the stock market is valuing that land as being virtually worthless…

Read the full news release at seekingalpha.com

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Kenneth E. DuBose

Kenneth E. DuBose

Kenneth DuBose is the past President of Cheyenne Minerals Inc., an independent oil and gas operator. He began his energy industry career with ARCO Oil & Gas. Mr. DuBose then directed development of natural gas storage projects with Tejas Power Corp. He was a founding member of U.S. Minerals, (acquired by Torch Energy in 1999) a provider of internet based education for America’s mineral owners. Mr. DuBose holds a BS in Petroleum Engineering from Mississippi State University. He has served on various industry steering committees, non-profit boards, and is an active member of the Society of Petroleum Engineers, the National Association of Royalty Owners, the American Association of Professional Landmen, as well as being a Registered Investment Advisor. He writes on topics of oil and gas investing, wealth management and personal finance, having appeared in the Wall Street Journal, Kiplinger’s, Kiplinger’s Personal Finance, Houston Business Journal, Financial Advisor and various radio and TV outlets.

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