CONDOTOPLA FPO (CPD), Energy XXI (Bermuda) Limited (EXXI): This Undervalued Energy Stock Is ‘As Close As It Gets To A Sure Thing’

The company recently started widespread horizontal drilling at its properties in the Gulf of Mexico. The program was so successful that production swelled quickly.

The thing with “horizontals” is they pump hard when they start production, but then decline relatively quickly (albeit from a much higher initial level than for conventional wells). This is the drop the market is fretting over.

But once horizontals stabilize (as Energy XXI (Bermuda) Limited (NASDAQ:EXXI)’s crop is now doing — based on three consecutive quarters without a major decline), they pump stronger for longer. That’s the hidden story in Energy XXI (Bermuda) Limited (NASDAQ:EXXI)’s surging reserves growth — the company’s horizontal wells are going to be steadily tapping a lot of valuable oil, for a long time.

Looking below the ground, it’s clear this is a company growing in value — the kind of growth that’s the real driver for share-price appreciation.

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– Bob Bogda

The article This Undervalued Energy Stock Is ‘As Close As It Gets To A Sure Thing’ originally appeared on StreetAuthority and is written by Bob Bogda.

Bob Bogda does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.