Halcon Resources Corp (NYSE:HK) has been very active in acquiring acreage over the past year and will be investing heavily to develop that acreage this year. The current plan is to spend $1.2 billion this year, with 38% of that capital being spent in the Bakken, 32% on the Woodbine, and the rest of the capital split among the Utica, El Halcon, and its other acreage.
The company is taking a very balanced approach as it has acquired acreage to develop across several plays instead of sticking to just one key play. That approach helps mitigate some risk both in terms of developing these emerging liquids plays as well as in dealing with play-specific issues. For example, while it’s spending the most capital on the Bakken, it’s not putting all of its capital into the play like Kodiak Oil & Gas Corp (USA) (NYSE:KOG). Kodiak Oil & Gas Corp (USA) (NYSE:KOG) has been hurt by high well costs and has had to flare substantial natural gas due to lack of infrastructure. That’s crimped the company’s profits, which is why it hasn’t been the best-performing stock over the past year, though it still was able to grow production by triple digits. That being said, by operating in several basins, Halcon Resources Corp (NYSE:HK) can move capital around to its highest return plays if it runs into problems in one of its operating areas.
Foolish bottom line
Of the two, I like Nuverra Environmental Solutions Inc (NYSE:NES)’s stock best as it’s providing important solutions to mitigate key environmental issues surrounding fracking. Halcon Resources Corp (NYSE:HK) is just one of many companies that offer oil and NGL production growth and while it should do well over the long term, that same potential can be said of its competitors as well. That will make it tougher to stand out as a buyout candidate.
The article The 2 Best Stocks to Buy Anticipating a Future Buyout originally appeared on Fool.com and is written by Matt DiLallo.
Fool contributor Matt DiLallo owns shares of BHP Billiton Limited (ADR) and Nuverra Environmental Solutions . The Motley Fool owns shares of Nuverra Environmental Solutions and has the following options: long Jan. 2014 $4 calls and short Jan. 2014 $3 puts.
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