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4 Little Oil Plays With Tremendous Growth

As more and more wells come on line in the Bakken shale, there is a window of opportunity for investors looking to cash in on the growth of small oil companies. We'll look at four such companies today, beginning with a snapshot of their current market statistics.


Market Cap

Current Price

P/E Ratio

Core Assets

Kodiak Oil & Gas
$2.39 $9.09 153.7 Bakken, Niobrara
Triangle Petroleum
$0.26 $5.94 N/A Bakken
Northern Oil & Gas
$1.17 $18.78 28.9 Bakken
Samson Oil & Gas
  (AMEX: SSN  )
$0.15 $1.76 N/A Bakken, Niobrara,
Eagle Ford, Permian Basin

Source: Yahoo! Finance and company statements.

The companies range in size and market value, but they all share one very important characteristic: Bakken shale acreage. The Bakken is booming, and assets in North Dakota and Montana have triggered recent growth at all of these companies.

Kodiak Oil & Gas
Kodiak had a blazing first quarter in 2012. Oil and gas sales were up 499% over last year, growing from $13.3 million to $79.9 million. The company averaged sales of 10,578 barrels of oil equivalent per day compared to 1,864 BOE per day over the same period last year.

Perhaps the most important number for Kodiak this quarter is net income: For the first quarter, the Bear was in the black. Last year, Kodiak reported a loss $7.2 million, but it has since moved out of the red, reporting earnings of $1.7 million, or $0.01 per share. Admittedly, these are not mind-blowing numbers -- they also missed analyst estimates -- but overall they are an excellent sign of progress for this small producer.

Triangle Petroleum
Triangle is one of the smallest Bakken players, owning approximately 83,000 acres containing 1.5 million barrels of oil equivalent. The company's Bakken operation is essentially brand new. Total production for fiscal 2012 (ending Jan. 31) was 111,836 barrels of oil equivalent. But things are looking up.

Triangle drilled its first operated well in October 2011, and as of April, had nearly completed drilling its fourth. The company expects to bring all four wells on line by the end of May. Further out, Triangle expects to have completed 15 operated wells by the end of next January.

Like Kodiak, Triangle is slowly improving its bottom line. The company reported a loss of $0.78 per share at the end of fiscal 2012, an improvement over the $1.63 loss per share in 2011.

Northern Oil & Gas
Production is up significantly at Northern Oil & Gas, for both year-over-year and quarter-over-quarter comparisons. The company reported production of 775,089 barrels of oil equivalent in the first quarter, up 117% from 356,622 BOE a year ago. Northern's net income is also in much better shape than it was a year ago, coming in at $8.8 million, compared to 2011's loss of $7.1 million in the first quarter.

The company spent about $17.2 million on acreage acquisitions in the first quarter, and plans to spend a total of $60 million to $80 million as the year progresses. Northern completed 13.9 net wells in the first quarter, and will spend $360 million on drilling expenditures over the course of the year to keep up the pace.

Samson Oil & Gas
Oil production for the Australian-based Samson Oil & Gas was up 25% over the last quarter of 2011. Gas production increased 6% over the same period, and revenue from combined sales of the two commodities increased 25% to $2.4 million.

The company is steadily working to increase oil production over gas, and it has come quite a ways since the first quarter of 2010 when gas made up 85% of production. Oil accounted for approximately 70% of production in the first quarter of this year.

Though Samson has assets in the hottest oil plays right now, the company is dedicating most of 2012's $28 million capital expenditure budget at drilling in its Bakken assets in North Dakota and Montana.

Foolish takeaway
Production is the key to the success for these small companies, but the price of oil will be a factor as well. For a closer look at how high oil prices lead to success, you should check out this free report that shows three great stocks that thrive when oil is over $100 barrel.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.

The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 08, 2012, at 12:48 PM, reedeb wrote:

    You keep saying good things about Samson Oil & Gas-ssn the stock keeps falling in its price. Why do you like this stock?

  • Report this Comment On May 08, 2012, at 12:57 PM, EnigmaDude wrote:

    I like VOG for the same reasons mentioned - Bakken and Eagle Ford acreage. Like the others on this list, the stock has been falling even though production is steadily rising.

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