With a share price below $3 and a market capitalization near $200 million, Samson Oil and Gas
Founded in 1980, based in Australia, and operating out of Colorado, Samson is involved in acquiring, exploring, developing, and producing oil and gas properties in the United States.
The company main assets include projects in Wyoming's Hawk Springs and the Bakken shale field. It recently acquired 20,000 more acres in Bakken, with an option to grab 70,000 more. In some of its projects, it has partnered with Halliburton
Bakken's potential has many investors and companies excited. Samson's six producing Bakken wells generate most of its production. Continental Resources
Samson's balance sheet looks promising, too, with negligible debt and ample cash. That was partly achieved by selling its Greater Green River Basin properties to Chesapeake Energy
Over the past few years, Samson's revenue has grown strongly, while its cost of sales has fallen considerably. Net losses in 2007, 2008, and 2009 turned into positive earnings in 2010 and 2011.
Some have suggested that Samson may be a good acquisition target, as well. That's not a crazy idea, as many in the industry have been consolidating. Statoil, for example, bought Brigham Exploration for its Bakken properties, and recently sported 375,000 acres there.
Risks for the company include its ability to consume its cash quickly. It's expecting to spend $22 million in the fourth quarter alone.
As with other companies focused on exploring for oil and gas, Samson's future is tied to how successful it is at that. If its assets ultimately disappoint, so will its earnings and stock performance.
Another concern is fracking, as Samson does engage in this controversial practice. If public outcry leads to regulations restricting fracking, Samson's production might suffer.
Before jumping into this company, you may want to wait for additional promising signs, such as rising production levels and corresponding revenue increases.
Samson is a promising company, but promises don't always deliver. If you're interested in it, take time to learn more before you invest. Or just add it to your watchlist and keep an eye on it. At this point in its life, it's more of a speculative portfolio candidate than a proven performer.
Looking for a promising energy stock? Click here for the Motley Fool's special free report on the energy sector and one company that's poised to take advantage of all of its positive trends.
Longtime Fool contributor Selena Maranjian owns shares of Chesapeake Energy, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Statoil A and Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.