Sanchez Energy Corp (NYSE:SN) and Oasis Petroleum Inc. (NYSE:OAS) are two of the best energy plays to consider with Brent Crude oil sinking to two year lows on fears of weakening demand and mounting supplies. Lamar Villere of Villere & Co discussed on CNBC yesterday what each of the two companies is doing right in the midst of the upheaval, beginning with Sanchez Energy Corp (NYSE:SN).
“We’ve got Sanchez for a number of reasons. First of all we like the management team, these guys have done a good job. Earlier this summer they bought, they paid $500 million for 100,000 acres in Eagle Ford Shale. The bulk of their operations are there in the Eagle Ford Shale, which we think is a great place to be. And they’ve also got some upside with their holdings in the Tuscaloosa Marine Shale, where they’re not as focused on, but we think that’s where some real upside is,” Villere said.
Sanchez Energy Corp (NYSE:SN)’s growth has marginally cooled over the past year since a torrid start that saw the company’s market cap quadruple in size to $2 billion in the span of three years. However Sanchez Energy Corp (NYSE:SN)’s stock is down 17% over the past three months as earnings estimates have dipped below consensus levels, and long term debt has more than doubled, making it a good entry point on a stock that shows a lot of growth potential still.
Like Sanchez Energy Corp (NYSE:SN), Oasis Petroleum Inc. (NYSE:OAS) is also down over the past three months, 11%, partly on declining earnings per share. However the company is showing numerous positive trends in other data points including widening profit margins and strong revenue growth.
“We like Oasis Petroleum, and one of the reasons we really like it is they’ve done a good job of putting together, all their drilling is in a pretty tight band in the Williston there, both in the Three Forks as well as the Bakken, and they’re able to get their costs down significantly. In fact their payback is now almost a little over a year they’re able to get payback on a well, they’re getting 80% returns on new drills, so we think it’s important really focus not just on where they are and what they’re doing, but on how they’re doing it and saving money,” Villere said.
Both Sanchez Energy Corp (NYSE:SN) and Oasis Petroleum Inc. (NYSE:OAS) are down sharply in morning trading today, along with many other energy stocks, giving potential investors a great opportunity to take advantage of broader energy fears and get in on solid growth stocks at reduced rates as they approach their floors.