I got a PM from someone (not a regular here as far as I can recall) asking if I could share some microcap ideas that would be good investments at $12 gas. I figured I would put up the response publicly.
First off, by taking up this question I don't mean to imply that I think gas is going to $12 -- I believe that price is a preposterous dream at this point. But I know folks like to focus on commodity price plays so I'll mention a few microcaps that I own, which have a pretty significant exposure to natty prices (and thus, in the unlikely event that we get $12 gas, would see their stock prices go idiotic).
Petrosearch Energy (PTSG) -- their Barnett Shale project, with XOM as operator, is likely to triple or quadruple their reserves over the next few years. They are smack in the middle of the "core" area, in an area that could not be drilled before due to the fact that there was no pipeline to take out the gas (and its impossible to build a new one because the surface is an urban area). XOM had an old jet fuel pipeline going through the area that they didn't even know about (I kid you not!), and, long story short, Petrosearch is drilling holes with XOM in the Barnett Shale and owns a piece of the integrated project (i.e. pipeline, etc.).
Crimson Exploration (CXPO) -- this company is very near putting into production 2 very prolific sour gas wells. The production from these wells will double the company's overall production. Sour gas costs a lot to produce (I believe their LOE on this lease is expected to be around $2.50/mcf) so you need to have high gas prices for this sort of operation to be profitable. This company trades by appointment only, so don't expect to be able to buy much without affecting the price.
Primenergy Corp (PNRG) -- this company has a great offshore GOM play going in the far southwest part of the GOM, off the Texas coast. These blocks were passed over by others due to the lack of infrastructure but Primenergy has gone in there and proved up a huge amount of gas and built out the necessary infrastructure. This company also trades by appointment only, so you need to use patience in buying in. |
