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The Top 3 Oil and Gas Stocks This Week

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Oil prices were on the move this week after a pipeline shutdown in the North Sea. At the oil market's close on Tuesday, Brent crude was up 1.1% to $111.61 and WTI crude was up 0.3% to $90.86. Later in the evening, it was announced that Venezuela's Hugo Chavez had died. Venezuela is OPEC's fourth largest member in terms of production, but it's unclear how Chavez's death will affect the oil market. U.S. natural gas, meanwhile, remains stuck in the doldrums, down 0.3% this week to $3.53.

The top oil and gas stocks this week
1. This week's leader is Endeavour International (NASDAQOTH: ENDRQ  ) , up 58% this week to $3.97. Endeavour has had a self-inflicted rough year and an even rougher month. Last summer, with the stock around $12, Endeavour announced a dilutive share offering and took on additional debt to purchase oilfield assets from ConocoPhillips in the North Sea. The stock dropped from a high of $12.82 to the share offering price of $7.50 and slowly continued falling.

On Feb. 14 at a price of $5, the company announced that a storm the previous week had damaged its well at East Rochelle and that it was halting operations there. At the same time, the company announced that it was hiring investment bank Tudor, Pickering, & Holt to pursue strategic alternatives. The stock immediately plummeted. You know it's bad when the brokerage that did the most recent stock offering downgrades the stock from "buy" to "neutral," which Global Hunter Securities did on Feb. 20.

Endeavour hit a low of $2.36 last week. The stock has since come back a bit, but with a large debt load, a $115 million credit facility due in October, and a damaged well, things don't look good for Endeavour. I'd pass on this one.

2. Second this week is InterOil (NYSE: IOC  ) , up 14% to $77.68. Interoil is the developer of the massive Elk and Antelope natural gas fields in Papua New Guinea and has an LNG export facility to go along with it. In November, the government of Papua New Guinea announced that it would take a 50% stake in each of the oil fields, which should derisk the project somewhat. The company has been searching for partners to build its facilities and set a firm deadline of Feb. 28 for proposals. If the company can find a partner, and if the company can get its facilities built, there are huge opportunities to export natural gas to Asia. That's a lot of "ifs" for everything to work out, and short sellers have taken notice, with 12 million shares are currently sold short, or roughly 25% of the float. Investors should be careful.

3. And in third place this week is RigNet (NASDAQ: RNET  ) , up 10% to $21.55. If you've never heard of RigNet, you aren't alone. The company had its IPO in 2010 and is a provider of remote communications services to the oil rig industry. Basically, RigNet provides the Internet to offshore oil rigs. The company has been growing somewhat steadily, with a CAGR of 16% since 2007. RigNet has also taken market share from industry leader Harris CapRock, a subsidiary of Harris (NYSE: HRS  ) . In the third quarter, the company announced the acquisition of Nessco, which should further boost growth. While RigNet doesn't look particularly cheap with a P/E of 33 and EV/EBITDA of 9, its growth opportunities could warrant the high price. This is definitely one for the watchlist at the very least.

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Read/Post Comments (4) | Recommend This Article (1)

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 March 09, 2013, at 8:56 AM, wallstpirate wrote:

    I am sure you wrote this before EDD announced their earnings and had their conference call this week.

    Cade in point all the debt has been pushed out to mid 2014, as a matter of fact Catherine END's new CFO has done a road show and had all the debt extended, increased the revolver and pre sold 200k barrels of oil for an up front payment of 22.5 million.

    They currently produce 11.5 k bopd and have three wells coming, they will be drilling an infill well on Bacchus and fixing Rochelle 1 and are currently drilling Rochelle 2.

    They even have great news on their US assets.

    When they announced the well had a problem the stoke dropped as if thy were going bk. They have the cash and now have lots of time to finish these


    The assets net of debt at cheap prices place the value at 7 to 8, when they have the 20k boepd by year end this could hit 12.

    Thy can sell their US assets if they need short term cash.

    Looking at generalities looks bad perk under the hood and I see a 3 bagger that's how you make money.

    Re husky them , read the. Cc on seeking alpha and then buy.


  • Report this Comment On March 09, 2013, at 9:17 AM, wallstpirate wrote:

    Writing on an iPad is exhaustive with its auto fix

  • Report this Comment On March 10, 2013, at 10:30 AM, ronaldstoneore wrote:

    Dan Dzombak,

    You need to sharpen up on your accuracies.

    Before you post, you should make sure you write correct information. Otherwise, you make yourself sound stupid and dumb.

    In your ignorant comment regarding Endeavour, you state that they have a $115 million credit facility due in October. Had you spent some time updating your facts (via the Wednesday conference call by the company) you would have learned that they extended this credit facility into 2014.

    So next time you decide to write negative spinning articles, you might want to make sure you do updated investigations. Otherwise, you will lose all credibility on everything your write.

    Learn and be positive.

  • Report this Comment On March 10, 2013, at 5:09 PM, wallstpirate wrote:

    Dan I decided to look at your other articles and am amazed at not only how many you wrote but hot many different industries the encompass.

    I follow two industries in great depth real estate and small / micro cap o&g co's.

    For the few that I follow I spend at least 20 hours per week on industry and stock analysis. I read 10k's listen to cc's.

    Can you explain to me what level of dd you do

    before you write an article or I'd it just simple scanning, the reason I say this is I could never write as many articles as you, by the way I have written five books used by a top fifty US University for teaching so I know what is involved.

    You must realize many people read these articles at face value and when they have serious factual errors money can be lost.

    I am long END, please correct your facts about their debt and their cash position.


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