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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: hoyasaxa who wrote (47660)	4/29/2012 10:38:52 AM
From: E_K_S	Read Replies (1) \| Respond to of 78712

Hi hoyasaxa Re: Voyager Oil & Gas, Inc. (VOG) I have been selling off my high priced shares in VOG taking some small losses and have gotten my average cost down in the low $3's. I eventually plan to add to these and my other E&P shares (of my 8 surviving companies in my E&P basket). I decided to keep this one as they still have good land holdings in several of the U.S. shale producing regions including the Bakken area. Here is the most recent (April 2012) investor presentation: a.eqcdn.com Pg-13- 2012 Production Forecast – Accelerating Growth; company is in their accelerated growth curve phase. Translation- spending lots of money to bring more wells on line. My take away from their most recent presentation is they own lots of mineral rights on a lot of acres with an average per acre cost at $7K/acre. Management states that compared to the other companies that have operational wells in the areas where they own property, their land is worth a lot more 2x or 3x. To drill those wells, the company must start spending big bucks which either dilutes the share base (ie selling more equity) or taps their $150M credit facility (more long term debt). (Note: That credit facility could finance 18-20 new wells max which is a big bet on their success and/or failure) Management claims they are a low cost driller at $7M/well which for me is average but a lot depends on access to their land and Bakken has several areas with difficult access. When I started buying shares in the company, they were essentially raising lots of capital and buying all sorts of land interests with very little well development. As time went on and money was being spent down, shares were diluted even more and drilling results were just average to poor (which is the nature of the business). Therefore the stock has dropped in price accordingly. That's why I take the basket approach to buying shares in these small E&P companies. It's hard to pick just one that hits a home run and then determine when it's time to get out. My plan is to fill my E&P basket up by 25% over the next 6-9 months with shares from the list below. goo.gl I still think some of these companies can fall further in price but VOG below $3.00/share and AXAS at current levels would be where I might start nibbling if I had no current position. For me it's really a time issue as I think the lows in Oil prices will be in the Sept-Oct period (similar to last year), so I am just waiting before I add any more shares. If you can get in at a good value price Bakken is definitely an area you want exposure in. If you look at pg-6- of their presentation, they list the larger companies (less risky) w/ exposure in Bakken. HES is one I like a lot and have bought shares in last week. HES could be a 30% winner while VOG could be a multi bagger (on the upside and/or downside if their wells come up dry). EKS