Yesterday, small cap Energy XXI (Bermuda) Limited (NASDAQ: EXXI) announced a deal to acquire EPL Oil & Gas Inc (NYSE: EPL) to create the largest publicly held independent oil producer on the Gulf of Mexico shelf, meaning it might be a good idea to look at other small cap Gulf oil stocks like W&T Offshore, Inc (NYSE: WTI), Stone Energy Corporation (NYSE: SGY) and Contango Oil & Gas Company (NYSEMKT: MCF). Energy XXI's CEO John Schiller has talked about the details of the acquisition with Jim Cramer on CNBC's "Mad Money" and he noted that EPL Oil & Gas offers areas of expertise that EXXI currently lacks. However, investors who missed out on yesterday's 29% surge for EPL Oil & Gas may want to check out these other small cap Gulf Oil stocks:
W&T Offshore, Inc. An independent oil and natural gas producer with operations offshore in the Gulf of Mexico and onshore in both the Permian Basin of West Texas and in East Texas, W&T Offshore has grown through acquisitions, exploration and development and currently holds working interests in approximately 71 offshore fields in federal and state waters (65 producing and six fields capable of producing). More specifically, W&T Offshore has under lease over 1.4 million gross acres including over 710,000 gross acres on the Gulf of Mexico Shelf, over 480,000 gross acres in the deepwater and over 220,000 gross acres onshore in Texas with a substantial majority of daily production derived from wells operated offshore. Last Thursday, W&T Offshore reported earnings with the Chairman/CEO saying:
"Our success rate with the drill bit in 2013 was well above 90% with two high impact deepwater discoveries at Dantzler and Troubadour which complement our late 2012 deepwater exploration discovery at Big Bend. The benefit of these significant discoveries, in terms of reserve additions and production, should begin to become visible in the beginning of 2015. In 2014, we will continue working towards the company's goal of expanding through organic growth and acquisitions."
Otherwise and back in November, it should be noted that W&T Offshore disclosed that it was facing being blocked from federal contracts due to pollution issues from 2009. In December 2012, W&T Offshore had reached a plea agreement where it agreed to plead guilty to one felony count under the Clean Water Act for altering water samples from one of its drilling platforms and one misdemeanor count for negligently discharging a small amount of oil from the same platform. It also agreed to pay $1 million and was put on three-year probation. However and in January, Capital One upgraded W&T Offshore given relative underperformance along with increased confidence the federal government's regulatory notices issued in November will have a limited impact. They gave the stock a $19 price target. On Wednesday, W&T Offshore rose 1.80% to $14.69 (WTI has a 52 week trading range of $10.68 to $20.43 a share) for a market cap of $1.11 billion plus the stock is down 5% over the past year and up 179.3% over the past five years.
Stone Energy Corporation. An independent oil and natural gas exploration and production company, Stone Energy Corporation focuses on the acquisition, exploration and development of properties in the Deep Water Gulf of Mexico, Appalachia, and the onshore and offshore Gulf Coast. In late February, Stone Energy Corporation's earnings fell a bit short of expectations. Besides noting that production from the Marcellus shale nearly tripled in the fourth quarter of 2013 from two years ago, he commented:
"…we drilled the first two Stone operated deep water wells with a successful exploration discovery at the Amethyst prospect and a development success at Cardona, and drilled another successful exploration discovery in our liquids rich deep gas Tomcat prospect. These wells are expected to be on production within a relatively short period of time and tied back to our existing infrastructure. We look forward to building on these accomplishments with a continuing deep water and deep gas program in the Gulf of Mexico."
In mid February, Stone Energy Corporation announced exploration discoveries at its deep water Amethyst and deep gas Tomcat prospects while call trading action was particularly bullish. On Wednesday, Stone Energy Corporation rose 2.23% to $34.9 (SGY has a 52 week trading range of $17.34 to $37.96 a share) for a market cap of $1.74 billion plus the stock is down 4.4% over the past year and up 1,301.6% over the past five years.
Contango Oil & Gas Company. An independent oil and gas company focused on the exploration, development, production and acquisition of natural gas and oil properties both onshore and offshore in the shallow waters of the Gulf of Mexico, Contango Oil & Gas Company's onshore operations are concentrated in the US Gulf Coast Region with over 400 producing wells located in the Woodbine formation in Southeast Texas, the Eagle Ford and Buda formations in South Texas, the Haynesville Shale, Mid-Bossier and James Lime Plays in East Texas, the Denver Julesburg Basin in Colorado, and in various conventional fields located primarily along the Texas Gulf Coast. In addition, the company owns approximately 24,000 undeveloped acres in the developing Tuscaloosa Marine Shale play in Louisiana and Mississippi while offshore operations are concentrated in the shallow waters of the Gulf of Mexico and consist of 13 company-operated wells and four production platforms. At the beginning of last October, Contango Oil & Gas Company closed a merger with Crimson Exploration Inc to create an entity that "will be a well-positioned Houston-based independent oil and gas company with a balanced offshore Gulf of Mexico and onshore Texas production profile." In early March, Contango Oil & Gas Company reported earnings and the CEO commented:
"The Company now possesses the financial capacity, and opportunity set, to initiate an aggressive drilling program for the foreseeable future. We are off to a good start as we spud seven wells in the recently completed quarter, and completed five of them, with one in progress at year-end. With at least one continuous rig program planned for each of our Buda and Woodbine areas, initial wells in the James Lime formation in East Texas, new concept wells on existing and newly acquired acreage, and one or two exploratory wells in the shallow waters of the Gulf of Mexico, we are excited about the possibilities for 2014 and beyond."
On Wednesday, Contango Oil & Gas Company rose 0.19% to $47.33 (MCF has a 52 week trading range of $33.22 to $50.44 a share) for a market cap of $916.66 million plus the stock is up 19.5% over the past year and up 42.2% over the past five years.
Finally, here is a look at the share performance of all five small cap gulf oil stocks:
As you can see from the above performance chart, Energy XXI, EPL Oil & Gas and Stone Energy Corporation have all bee solid performers since the financial crisis albeit some of that performance seems to have leveled off in 2011 while W&T Offshore and Contango Oil & Gas Company have a more mixed performance record.
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