(April 4th, 2012) With crude sitting at $105 and change, oil & gas exploration companies with undervalued prospects have been all the rage. Therefore, its not often you find the stock of an oil company in the midst of an M&A transaction sitting squarely in the 50% off bin. Yet that is exactly the case with Harvest Natural Resources (NYSE: HNR).
(Feb 14th, 2012) Every so often it’s important to review one’s own biggest trading mistakes. My second worst trading error of the past six months occurred in January, when I got long an expensive, controversial oil name, Cobalt Energy (NYSE: CIE). Cobalt started out life as a Goldman Sachs’ backed driller in the Gulf of Mexico, and built a tidy portfolio of value-added offshore drilling. In late December of last year, Cobalt’s stock took off, moving from $10 a share to around $15, on word that its’ holdings in offshore Angola, where it was completing the Cameia-1 appraisal well, had potentially struck a a monstrous find.
Remember the 1980s oil & gas partnerships? Large E&P firms would pocket investor’s cash to shell out for leases, acrage, and the assorted equipment necessary to drill. The sky-high upfront leasing costs made sense only to investors with graphs prediction ever-rising energy prices. At the time, such pie-in-the-sky numbers looked like consensus. It was only when oil prices collapsed that in retrospect the O&G partnerships, as construed as an asset class, looked foolish. The losses were so steep, and the damage so widespread, that it took more than a decade before the Wall Street underwriting machine was able to lure the marks (er, clients) back into the business.
Little Bear Research is a firm that uncovers information for investors interested in reality over perception.
♦♦Link to Venezuela Central, our rolling ticker updated daily with links to stories that track the ongoing Venezuelan election and how that may impact the local oil & gas industry. ♦♦
Twitter Rumors : Rumor circulating on twitter that #Greece now requiring govt approval for>50k wire transfers
