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EnvestorFirst (< 20)

Kodiak Undervalued and Ready to Buy



May 23, 2012 – Comments (0) | RELATED TICKERS: KOG.DL

Kodiak is a major oil company that we like to follow on a regular basis. Currently, they are a bit undervalued, and are ready to be bought up. What is their current status? Where are they going?Cris Fangold had the deatils on this stock.

"The company with a large exposure to Bakken crude oil as a percentage of overall production is Kodiak. Kodiak has 263.5 million shares outstanding. Most of the oil production for the company comes from the Bakken, due to its recent rapid growth in production. Although it has some legacy oil and gas assets, they are no longer the main focus of the company. To hedge its exposure to wide swings in oil prices, the company has been using swaps. Kodiak is solidly hedged for 2012 against any major price dive.

I believe this is a strong buy recommendation for Kodiak. A prudent long-term investor should definitely take advantage of this sudden closing of the gap between Bakken crude spot prices and West Texas Intermediate crude prices. In February, this gap was a deficit of over $25 and is now at a $1 premium. This spread has been volatile and this favorable pricing may or may not last. However, the takeaway capacity is finally running much faster than the growth in production."


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