Brigham Exploration (BEXP)
By Brendan Coffey, Editor of Cabot Global Energy Investor
From Cabot Wealth Advisory 7/18/11 Sign up for free Cabot Wealth Advisory e-newsletter
Brigham Exploration (BEXP) was a small wildcatting firm that began buying up leases in the Williston Basin in 2005. Brigham already held 302,000 acres by the time the U.S. Geological Survey began revising its older and much smaller estimates of the region's oil reserves. Now the company has 378,100 acres in the region, primarily in North Dakota and Montana, placing it eighth for acreage holdings in the Williston behind oil majors including ExxonMobil (XOM), ConocoPhillips (COP) and Hess (HES).
So why not pick one of those companies instead? Because Brigham has been outperforming competitors in generating stronger-producing wells!
Over the past five quarters, the company's average well outproduced the average of 18 competitors in the area by 120%. Over that time only two competitors have had quarters where their average well outproduced Brigham's average. One of those, Denbury Resources (DNR), only drilled one well versus three by Brigham in the comparable period (the first quarter of 2011). The other, Newfield Exploration (NFX), drilled just two when Brigham drilled eight, in the first quarter of 2010. That production efficiency makes the company's motto, No Oil Left Behind, seem appropriate.
At 31 a share, Brigham is trading at a reasonable 21 times Wall Street consensus expected 2011 earnings of $1.44 a share (and that is well below what I project the company will generate in 2011). I told subscribers to Cabot Global Energy Investor, the newsletter of which I am chief analyst and editor, about Brigham in early June and we added shares under 28. Subscribers are up 12% on the position today, but at 31, BEXP still looks like a great buy, even if the Bakken won't enable us to leave OPEC behind us for good.
Editor's Note: You could buy BEXP and hope for the best, or you could check out Cabot Global Energy Investor to see Brendan's latest recommendations on this and other top picks in the energy sector. Learn more now!
Analyst and Editor of Cabot Green Investor
Brendan Coffey is a member of the Cabot investment team and editor of Cabot Green Investor. A veteran financial journalist, Brendan has spent more than a decade writing about investing for publications including Barron's, Forbes, The Wall Street Journal and a number of private-client brokerage newsletters.
By Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Weekly
From Cabot Wealth Advisory 3/31/11 Sign up for free Cabot Wealth Advisory e-newsletter
For my stock idea today, I’m going with one I’ve been recommending for many weeks. It came through the market correction in fine shape and is now testing new-high ground.
It’s Brigham Exploration (BEXP), possibly the leading mid-cap player in the Williston Basin, a huge area located in eastern Montana and North and South Dakota. It’s possibly the hottest new oil discovery in decades, at least in the U.S., and many companies are busy buying up acreage and drilling wells, which have been gushing with oil.
Brigham isn’t the biggest player in the area, but it might be the most successful; compared to other publicly traded companies, it’s getting more than 70% more oil per well than everyone else (on average). That’s thanks to management’s know-how and experience with newer drilling techniques like fracturing and horizontal drilling.
The company has drilled just 7% of its currently identified well inventory, and even that figure is likely high, as the firm is confident of listing hundreds of new wells as it more officially analyzes its acreage in Montana.
Thus, there’s a long runway ahead of Brigham, and when you combine that with extraordinary production growth rates (likely up 80% this year alone) and high oil prices, sales and earnings should continue to boom. As it stands now, analysts see earnings of about $1.20 per share in 2011 and $2.00 per share next year, up from 59 cents per share in 2010!
As for the chart, what catches my eye is that, even before this week, BEXP has advanced eight of the last nine weeks (this week will probably make it nine out of 10). And, impressively, all but one of those weeks came on above-average volume; even the one down week was really a sign of support, as shares dipped during the market correction, but found support at their 10-week moving average and closed the week mid-range.
Obviously, if oil prices slide 20 bucks, BEXP is going to head south; there’s no getting around the fact that this is an oil stock. But buying around here or on any weakness, with a looser stop around 32, makes sense to me.
Editor’s Note: Mike Cintolo is VP of Investments for Cabot, as well as editor of Cabot Market Letter, a Model Portfolio-based newsletter of the best leading growth stocks in the market. It’s been just over four years since Mike took over the Market Letter, and during that time, he’s beaten the market by 13.3% annually (up a total of 59% since then, compared to a loss of 7.5% for the S&P 500) thanks to top-notch stock picking and market timing. If you want to own the top leaders in every market cycle, be sure to give Cabot Market Letter a try by clicking HERE.
Vice President of Investments and Editor of Cabot Market Letter and Cabot Top Ten Weekly
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Weekly. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.
|Brigham Exploration (BEXP)
6300 Bridge Point Parkway
Building 2 Suite 500
Austin, Texas 78730
|Index Membership: N/A |
Sector: Basic Materials
Industry: Independent Oil & Gas
Full Time Employees: 87
3/31/11 Brigham Exploration (BEXP): New testing new high ground