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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (42212)4/19/2011 10:11:59 AM
From: Spekulatius  Read Replies (2) of 78662
 
E_K_S nice graphic about the Niobara shale. From those independents listed, i noticed BBG. This is an independent mostly working within the Rocky mountains area. I have it own my watchlist, because I believe it is a company with a stellar record of execution in terms of operating and finding cost.Their earnings don't reflect it but based on my metric for proved reserves in the ground over EV the stock is not expensive, although not very cheap either. Their operating metrics very much remind me of CXG, which was folded back into CNG eventually and was showing relatively little earnings but great reserve growth.

BBG market cap is about 1.9B$ and they usually operate virtually debt free. Their proved reserves at 1.1BMCFE, so a MCFE in the ground is valued at ~1.73$/MCFE. That is not super cheap but below the finding cost for most NG E&P meaning it is cheaper to buy reserves with BBG than drilling for them.

But the most interesting part is that BBG has been able to generate a reserve growth/share of about 15% annualized over quite some time.

The problem is that BBG is mostly gas without much oil - but still if you can buy reserves in the stock market cheaper than you can drill for them and then company is able to grow these reserves at a ~15% clip annualized, you are bound to make money.

I wonder what others think about my thesis - I just talk myself into buying this, it seems. This stock has been a quite, no interest whatsoever in boards and only a handful posts in the BBG thread, which is another big positive, imo.
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