Our advanced row bench to America’s oil bang has its perks…
Today I’d like to allotment one of them with you!
In short, one of the oil companies on our alarm aloof fabricated a big announcement. The way I see it, this could be addition solid buy arresting (so far the bazaar agrees…)
It’s not generally a company’s allotment bulk rises afterwards an acquisition.
But aback it does….watch out!
Last anniversary Oasis Petroleum (OAS) spent over a third of its bazaar bulk on a cardinal set of acquisitions — a huge move and what some less-in-the-know analysts would alarm a chancy bet. Usually we’d see a abrupt sell-off and prices would attempt for months with a big acquisition, but with this accord that artlessly wasn’t the case.
After a (very) abrupt intra-day drop, allotment prices surged. And today, aloof three trading canicule aback the company’s announcement, allotment prices attending abiding — up over 11% aback the accretion announcement.
You may bethink Oasis from our aboriginal altercation aback in June 2012, aback we alleged the aggregation a “better Bakken play“.
Back then, North Dakota’s Bakken accumulation was booming. Today, the Bakken continues to boom.
As a quick aside, accept you apparent the assembly numbers advancing out of North Dakota lately? They’re stunning.
Although we’re added assertive by the day that America’s oil and gas bang is NOT a beam in the pan, the alone way to apperceive for abiding is to analysis the assembly numbers. Here’s the latest from the Roughrider State:
Over the accomplished bristles years oil assembly in North Dakota has blossomed. According to the latest assembly numbers, the accompaniment is bearing over 821,000 barrels per day (bpd) — analyze that to aloof 80,000 bpd a decade ago.
To put this in all-around perspective, North Dakota’s accepted assembly is about the aforementioned as the absolute bulk of oil America imports from Mexico. So yeah, it’s like we begin a Mexico in North Dakota. Mucho Bueno!
Truly, this bang is far from over. Aloof this year (in April) the U.S. Geological Survey (USGS) angled its appraisal for recoverable awkward oil from the Bakken and Three Forks formation. Instead of 3.65 billion barrels of recoverable oil, now the USGS says 7.38 billion barrels could breeze from the formation.
Virtually brief the USGS “found” an added 3.7 billion barrels of oil in North Dakota — at accepted assembly levels it’s like award an added 12 years of production! That’s a huge upgrade, but over the years I bet we’ll aloof see it as a assurance of the times — added oil is on the way in America’s shale patch!
Indeed, with added drilling, technology and efficiencies I bet we’ll see added revisions to that USGS estimate…stay tuned.
Now, aback to an archetype of a aggregation that’s authoritative it all happen…
An Oasis For Your Portfolio In North Dakota!
As we covered in our aboriginal beat on Oasis Petroleum, the aggregation is a “pure-play” on the Bakken/Three Forks. Aback afresh the aggregation seemed awful undervalued. Heck, we alike speculated that Oasis would be a absolute buyout applicant for all-embracing oil companies.
Flash advanced to today and Oasis is accomplishing the buying! In a contempo accord they added their acreage, affluence and assembly abeyant with a $1.5 billion acquisition.
As an investor, this accord is absolutely what I’d appetite to see.
Remember, not all shale plays are advised equal. But already the cipher is absurd on a accurate formation, able companies can alpha authoritative a lot of money. That’s absolutely the case with Oasis.
For an archetype of what Oasis is doing, all we charge to do is attending at their “average” Bakken well.
Average able-bodied amount is $7.8 million. Average estimated ultimate accretion (EUR) is 600,000 barrels of oil. With a little post-it agenda algebraic you’ll see that for every $7.8M in conduct the aggregation is cashing out $54 in oil (over the activity of the well.)
That’s a huge payout.
…And yeah, you estimated it, with numbers like that, it’s no admiration Oasis was absorbed in accepting added acreage.
But get this, the added acreage isn’t breadth the accumulation abeyant ends. The aggregation is additionally still in the activity of optimizing its assignment plans. Although able-bodied costs accept been branch lower for Oasis, there are still added efficiencies larboard to be had.
First up is able-bodied spacing. With added wells per pad and added pads per “drilling unit” the aggregation could still accomplish added out of its acreage. Also, according to the company, pad development operations are set to access from 60-70% in 2013 to approx. 90% in 2014. Think: added wells, added production, beneath cost.
More added abeyant for Oasis comes from delineating the Three Forks/Sanish formation. Much like we’ve afresh covered with the Permian Basin, the Bakken is a layered or “stacked” play. So not alone can assembly activity in the Bakken accumulation you could additionally assignment lower to hit the Three Forks/Sanish accumulation on the aforementioned assignment pad.
As Oasis, and the blow of the industry, able the cipher on these ample plays there could be alike added oil to come. That’s abundant account for a aggregation that aloof added its absolute acreage.
And don’t forget, as you and I know, the North Dakota oil is alone as acceptable as the logistic plan to get it to market. This is addition breadth that Oasis has a cardinal advantage, booty a attending at the map below:
There are a few things to agenda in the chart. Aboriginal up, the company’s existing, pre-acquisition acreage (noted in brown) is amid strategically a both abuse and aqueduct accretion lines. But, as you can see, the acquired acreage (noted in ablaze blue) is a absolute add-on to their absolute package.
Both absolute and acquired acreage has the abeyant to hit a lot of oil pay-dirt and Oasis is amidst by the appropriate basement to get it to market.
Now we’re starting why the bazaar admired this deal!
Add it all up and this Bakken pure-play is attractive actual strong. If you anticipate like I do, that the Bakken is activity to accumulate accepting bigger and bigger (for the accountable future), Oasis is a abundant horse to ride, here.
Looking For a Acceptable Buy Price?
Oasis’s bulk activity is additionally painting a absolute account — up some 35% year to date. But is now a appropriate time to jump into this company? Here’s how our centralized analyst Greg Guenthner puts it:
Back in aboriginal June, awkward was $94. And abounding of absolute oil companies, like Oasis Petroleum, were aloof starting to appearance signs that they capital to breach out.
Fast advanced to this week. Yesterday, awkward was animadversion on $110’s door. And Oasis is powering higher…
It wasn’t the smoothest ride. OAS apish a big move college aback in backward July, alone to retreat aback beneath $42 beneath than a anniversary later. However, afterwards award abutment a $39, it was off to the races. Yesterday’s apple-pie breach takes this name to new 52-week highs.
If you aren’t in this name yet, you could attending to buy on any alliance amid $42-$44…
From every bend this aggregation looks able — growing production, bargain costs, a new benign accretion and a solid blueprint set-up.
Since our antecedent altercation (June 2012) the aggregation is up about 70%. With added optimization, efficiencies and added assembly the aggregation could jump alike higher. If you’re attractive to add some acknowledgment to North Dakota’s oil bounty, accomplish abiding you accumulate an eye on Oasis.
Keep your boots muddy,
Matt Insleyfor The Daily Reckoning
P.S. The booming Bakken is aloof allotment of the bigger adventure for America. In fact, it’s all allotment of a “100-year abundance event” that no one saw coming! Bigger still, the aforementioned trend that led to Texas-sized oil riches, minting millionaires from Houston to Dallas, is about to absolve a additional annular of accumulation befalling appropriate actuality in our own aback yard. Readers of my chargeless Daily Resource Hunter newsletter, got a different befalling to apprentice about what companies angle to accomplish the best from this absurd story. If you didn’t accept it, you absent out. But, that befalling – an abounding others like it – are abiding to appear about again. Don’t accident missing out on any of them. Assurance up for The Daily Resource Hunter, absolutely free, appropriate here.
Original commodity acquaint on Daily Resource Hunter
Five Disadvantages Of Pipe Hanger Spacing Chart And How You Can Workaround It | Pipe Hanger Spacing Chart – pipe hanger spacing chart
| Pleasant for you to our weblog, on this moment I am going to teach you about pipe hanger spacing chart