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.
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.
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.