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A Long Term Play that Should be on Your Radar

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Posted on Fri, 20 September 2013 22:18 | 0

Since my last column pointing out the vast value I saw in back month crude futures, I wanted to try to translate that opportunity into stock ideas.  I invited subscribers to email me with their thoughts using these criteria – Liquids potential over dry gas, direct investment in the ‘hot’ plays in shale but probably excluding the Bakken (mostly overpriced and overhyped); and underperforming, most likely because of a less than stellar balance sheet.  All of these would benefit marvelously from a crude barrel price that was under $90 less than two years from now, but could be hoped to be projected at closer to $110 a barrel or more as they arrived as the “spot” (current) month.  

You have impressed me – and humbled me.  First, I must be very careful what I write:  I see that I have an extremely engaged audience that enjoys scoping out energy ideas almost as much as I do – and your ideas are not coming without homework and knowledge:  I got some fantastic stock ideas, so many in fact that I’m going to defer my own ideas for another column and work with just a few of yours – they’re terrific.

My friend Cynthia suggests Resolute Energy (REN), a $600M market cap company engaged in the Areth region of Utah as well as holding potential acreage in the Permian basin.  Resolute’s had a tough time, and the chart shows their stress, having been as high as $11.50 as recently as…

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