U.S. domestic oil and gas production is higher than it's been in decades, but giant companies like ExxonMobil and Chevron aren't doing all the work. Across the country, hundreds of smaller exploration and production outfits are contributing as well. These small companies may be potential buyout targets destined for incredible growth, or about to go bust, and they are worth doing a little research on. With that in mind, today we begin to get to know three independent E&Ps.
Bonanza Creek Energy (NYSE: BCEI )
Bonanza Creek has only existed since 2006, going public this past December. Fortunately for a young company in our current commodity market, liquids and oil constitute 74% of its assets. It has operations in three regions: Colorado, California, and Arkansas. Proved reserves are about 43.7 million barrels of oil equivalent, up over 10 million boe compared to 2010.
Bonanza Creek is growing fast. Production in the month of November was up 78% year over year to 6,105 boe per day. The company's production goal for 2012 is 8,700 to 10,000 boe per day. As an aside, despite Bonanza's focus on oil and liquids, the company has one of the more attractive hedging prices for natural gas production I've seen -- $6.75 through the rest of this year.
Abraxas Petroleum (Nasdaq: AXAS )
Abraxas has assets in the Bakken, the Niobrara, the Permian Basin, and the Eagle Ford, but make no mistake, this is a small operation. The company's capital spending program for 2012 is $70 million, and that's a 17% increase over last year. Abraxas plans to drill 25 gross wells in 2012, 20 of them in the Bakken, where the company holds 20,835 net acres.
Debt is high, however. For the third quarter of 2011, Abraxas' debt-to-equity ratio was over 154%. It will be interesting to see if that percentage comes down when the company reports its full-year results on March 15, or if management has any update on possible divestiture opportunities for its Texas assets.
Triangle Petroleum (AMEX: TPLM )
Triangle Petroleum's main assets are in the Bakken, spread across North Dakota and Montana. It also has legacy assets of 410,000 net acres on Prince Edward Island in Canada that are not considered core to its portfolio.
The acreage in Montana is largely untested, and Triangle is taking the wait-and-see approach, as other E&Ps move in and de-risk the area. As a result, the 29,000 net acres in North Dakota will receive all of Triangle's focus in 2012. The company plans to drill 12 to 15 gross wells this year, completing them around June.
Triangle has a delightful balance sheet, with about $94 million in cash and zero debt. You read that right: There is such a thing as an E&P with no debt!
All three of these stocks are liquids-focused, but that is where the similarities end. Utilizing Internet tools like My Watchlist can help you stay informed and find the right fit for your portfolio.