Game-Changing Move for This Oil Company

The Eagle Ford shale play is quickly becoming the most substantial new oil play in North America -- and conversely, the cost to lease acreage is skyrocketing. The high price tag has some analysts worried about Devon Energy's (NYSE: DVN  ) $6 billion deal for 82 thousand net acres in the budding shale play. The economics of the deal look beneficial, with Devon estimating the price tag will cost 2.5 times 2015's EBITDA. In addition, this real-estate deal is all about location, and the Dewitt and Lavaca counties, which the vast majority of the newly purchased acreage lays, offers high oil content and low break-even costs. 

In my opinion, EOG Resources (NYSE: EOG  )  is the best run independent E&P company in North America, and the best operator in the Eagle Ford. But Devon is now on its heels as the transformation from a natural-gas player to a diversified oil-and-gas producer continues to develop. In fact, if you missed the EOG stock appreciation the past few years, Devon Energy might be your redemption as it appears to be making similar strides. 

Great investments in our shale plays 
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

This segment is from Thursday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.


Read/Post Comments (0) | Recommend This Article (3)

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.

Be the first one to comment on this article.

DocumentId: 2740130, ~/Articles/ArticleHandler.aspx, 4/19/2014 4:17:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...