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Emerald Oil Inc (EOX), Continental Resources, Inc. (CLR): Three Attractive Bakken Plays

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As West Texas Intermediate oil prices continue their upward march to $110 a barrel, its seems appropriate to look at some energy plays that should continue to benefit from higher oil prices as well as increasing production levels. Today let’s focus on some fast growing E & P concerns in the Bakken shale region which has gone from producing just over 100,000 barrels of oil/day to over 700,000 barrels of oil/day over the last five or six years.

Emerald Oil Inc (NYSEMKT:EOX)

Below are a large-cap, mid-cap and small-cap producer that are showing impressive production growth in the Bakken, and are priced at attractive valuations.

Continental

Continental Resources, Inc. (NYSE:CLR) is the largest producer and leaseholder in the Bakken. During its last earnings report, it revealed that production was growing more than 40% year over year, and that over 70% of overall production now consists of oil.

Analysts expect just under 50% revenue growth for all of FY2013. They also project approximately 30% sales increases in FY2014, which is the average annual revenue growth Continental Resources, Inc. (NYSE:CLR) has turned in over the past five years.

Just as importantly, the company grew proven reserves by more than 50% in 2012, which is a replacement rate oil majors like Exxon Mobil & ConocoPhillips would love to be able to achieve.

Despite this past, current and projected growth; the shares are trading for less than 14 times 2014’s projected earnings, and the stock has a five-year projected PEG of 0.52.

For investors who believe in the long-term production growth of the Bakken, the largest player in the region makes a logical proxy. The stock has had some negative sentiment recently due to the pending divorce of the company’s founder and CEO, but this is likely to be a temporary headwind and should be resolved in the near future.

With the stock selling in the bottom half of its five-year valuation range based on P/E, P/S, and P/CF, investors are being granted a good entry point to build a position.

Oasis

Oasis Petroleum Inc. (NYSE:OAS) is a mid-cap E&P concern with over 335,000 net acres in the middle of the Bakken. The reason a growth investor wants to own Oasis Petroleum Inc. (NYSE:OAS) is the huge increase in production the company has brought on line in the last few years. Production has grown at a better-than-70% annual rate over the last three years. Even better, proven reserves have increased at an even faster rate, and oil now composes over 90% of overall production.
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