Whiting Petroleum Corp (WLL), Continental Resources, Inc.(CLR) Looking for Growth? Don’t Ignore North Dakota Oil

The firm’s total debt-to-equity ratio of 1.12 is significantly more than the other two firms mentioned here, but that figure’s acceptable, as long as growth continues. Continental Resources, Inc.(NYSE:CLR) looks better on paper than Whiting Petroleum Corp (NYSE:WLL). With a gross margin of 89.5% and a profit margin of 30.6%, Continental Resources, Inc.(NYSE:CLR) has a significant lead. The increased inefficiencies from pad drilling will only increase this lead. A major drawback to Continental is its debt load, but as long as oil prices don’t collapse, the company should be fine.

Invest in Oil-Service Firms

Halliburton Company (NYSE:HAL) is larger than either of these producers. It has worldwide operations and uses its experience and capital base to help develop complex wells and formations. In the modern day, drilling for oil is not simply taking a shovel and digging a hole. A complex network of seismic research and horizontal drilling is used to get more oil out of harder-to-reach spaces.

Halliburton has a number of profitable case studies and early experience within the Bakken formation. Still, low natural gas prices impact the firm. Low prices decrease demand for wells and Halliburton’s services.

With a total debt-to-equity ratio of 0.31, the firm has room to grow. Its profit margin of 9.3% and gross margin of 21.3% show that even with the natural gas downturn, the company is profitable and run effectively.

Where to Invest?

Continental Resources, Inc.(NYSE:CLR) is the higher-margin opportunity, but this comes at the cost of a higher debt load. Whiting offers exposure to similar areas with less debt and lower valuations, but its margins are lower. Halliburton is a third way to take part in the Bakken formation. The downside to Halliburton is that its variety of services and clients makes it a play on global capital expenditure. Whiting Petroleum Corp (NYSE:WLL) and Continental Resources, Inc.(NYSE:CLR) are the better options to directly invest in the Bakken formation.

The article Looking for Growth? Don’t Ignore North Dakota Oil originally appeared on Fool.com and is written by Joshua Bondy.

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