Approach Resources (AREX)

Jackcodak (94.14) Submitted: 10/16/2009 6:01:03 PM : Start Price: $9.45 AREX Score: -27.79

It is still undervalued. My only worry is the glut of natural gas and the opportunity cost of nat gas compared with coal. If I get this wrong, then I will exit early.

Caligiuri (98.57) Submitted: 7/2/2009 5:05:25 PM : Start Price: $6.52 AREX Score: -18.18

Considering Book value, earnings, and market cap...this should beat the market in 5 years.

jamasony2 (32.59) Submitted: 7/11/2008 11:32:03 AM : Start Price: $25.50 AREX Score: -65.51

Oil play. Riding 20 day MA, sell if drops below 50 day MA. Price target $35 with analysts, good risk/reward ratio, support around 24.

Sozialista (< 20) Submitted: 6/25/2008 11:30:28 AM : Start Price: $22.94 AREX Score: +55.89

I believe this stock is grossly overvalued. I estimate the true value of this company at around $11-12 per share.

likesmoney (< 20) Submitted: 6/24/2008 7:12:29 PM : Start Price: $23.55 AREX Score: -57.26

You can still ride this train for the next year, so climb aboard

ATXman38 (< 20) Submitted: 6/23/2008 5:57:19 PM : Start Price: $23.42 AREX Score: -57.46

still love the energy play, this appears to be falling through the cracks a bit.

cursed1 (26.66) Submitted: 6/3/2008 10:56:44 AM : Start Price: $19.82 AREX Score: -46.06

With all the talk of alternative energy, there’re still prolific profits to be made for companies whose modus operandi is sniffing the four corners of the earth for a scent of black gold. Be it offshore, onshore, coal bed, fields and the very depths of the earth, literally striking it rich is an appealing prospect to even the little guys, which is where AREX comes in.

AREX seeks natural gas and oil properties onshore in the United States and British Columbia, hunting mainly for natural gas reserves in known tight sands and shale gas areas. The Fort Worth, Texas company operates substantially all of its proven reserves, giving it control over capital expenditures and other operating matters. Its interests are in West Texas, East Texas, Northeast British Columbia, North New Mexico and Southwest Kentucky; total leasehold interests are a net 191,182 acres, or nearly 300 square miles.

By concentrating on properties already producing, Approach in 2008 expects to increase natural gas production to 7,400 to 7,700 million cubic feet (MMcf), up from 4,900 MMcf in 2007. Oil production is expected at 120 to 125 thousand barrels up from 80 in 2007.

Those are great expectations. But then there are costs. One study by the Ziff Energy Group early this year said unit operating costs in the Permian Basin, located mostly in west Texas, have increased significantly. For oil fields, the average operating cost increased 34% in the 12 months from mid 2006 to mid 2007 — in line with the rise in oil prices — to $10.42 per barrel. For gas fields, the average rose 45% to nearly $1.35 per thousand cubic feet.

Big operators in the Ziff study had much lower operating costs than the averages, so the smaller guys have been carrying the burden: industry research points out the impact on explorers and developers, who must hustle for acreage and pay steeply for reserves that will produce in the future, when the price of energy may be quite different that that of today.

So far, Approach has beared the burden well. For the quarter ended March 31, 2008, net income for the first quarter of 2008 was $2.8 million, or $0.13 per diluted share, on revenues of $19 million, compared with a net loss of $581,000, or $0.06 per diluted share, on revenues of $9.4 million for the first quarter of 2007. EBITDAX increased 75% to $15.2 million from $8.7 million for the first quarter of 2007. Production for the first quarter of 2008 totaled 2 Bcfe, compared with 1.4 Bcfe produced in the first quarter of 2007, an increase of 46%. First quarter 2008 production was 84% natural gas and 16% oil and NGLs, compared with 91% natural gas and 9% oil and NGLs in the first quarter of 2007.

When sifting through potential investments, don’t ignore Approach before it slips through your fingers in pursuit of a higher stock price.