Companies with Eagle Ford exposure may prove to be good investments as the overall economy recovers. The economics of the play look promising, which in turn means companies will benefit from a better worldwide economy or in industry terms “better oil and gas demand”. A few companies with Bakken and Eagle Ford assets are detailed below.
The world economy has come under pressure recently. The market has fallen as a result. Many of the small, high Beta, Bakken / Eagle Ford E & P oil companies have been hit hard. If the economy continues to go south, they could be hit some more. However, if they are, they will likely bounce back quickly as soon as the overall market begins to bounce. Small companies with good holdings in these prolific fields seem likely to be highly successful. How the EU credit crisis will resolve itself is anyone’s guess. It seems unlikely that everything will be allowed to fail. The European Commission President Jose Barroso is supposed to present options on Euro bonds soon. Perhaps that will help. The US equities markets have already taken into account a lot of the possible trouble. Yes, the situation could worsen to beyond even that, but it might also slowly resolve itself without a huge negative impact on the U.S. If you are a long-term investor, you can still make reasonable investments now. In fact you may make great ones.
Some of the stocks that have been unfairly beaten down during this time of crisis are the relatively young oil E & P companies. Their financial health is easily called into question in trying times. However, a number of the companies developing the prolific Bakken and Eagle Ford shale fields are almost certainly going to be successful. In the Bakken, 99% of the wells drilled find oil, and 90% are commercially viable. With good seismic and these odds, even small companies are going to eventually be highly successful. A few of the best looking candidates are Northern Oil and Gas Inc. (NOG), Goodrich Petroleum Corp. (GDP), Triangle Petroleum Corp. (TPLM), and Magnum Hunter Resources Corp. (MHR).
Read the full news release at seekingalpha.com
Kenneth E. DuBose
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