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From Barron's quoting Eugene Robin, an analyst at Cove Street Capital who I have had success following in the past:Approach owns 152,000 contiguous leasehold acres, mostly in the Wolfcamp shale, an emerging play. Wolfcamp's attraction stems from its ability to support multiple wells per drilling location, due to the thickness of its shale.Wall Street is giving Approach Resources little credit for its valuable Wolfcamp shale acreage in Texas' Permian Basis.Prices for Wolfcamp acreage have skyrocketed, especially since January, when China's Sinochem paid $17,000 an acre in a deal to buy 40% of Pioneer Natural Resources' (PXD) interest in the area. Approach's land cost averages about $500 an acre. Yet, "Approach gets no credit," says Eugene Robin, an analyst at Cove Street Capital, which owns the shares in its funds. The stock has fallen 16% in the past year, and short sellers, skeptical of Wolfcamp's drilling potential and Approach's production guidance, now account for 20% of the public float.Based on $85 oil and a conservative assumption that the company will drill 1,100 horizontal locations, Robin estimates Approach's net asset value at $42 a share. Approach estimates it can drill 2,100 sites."Deej
Lot of shares out there. Only risk that jumps out. I will ledt others get rich on this one.
Time to jump on board, good quarterly results and speculation is will help
Keeps adding to reserves and makes some money, but ... Can someone give me some insight as to what is driving this stock over the last 6 months at such a steep rate? I have owned it for 3-4 years and bought it again at $6.6 in Jul thinking it stood a good chance of rising to $10. Now at $32+. No reason to be upset of course -- just smiles. You almost never hear talk of it on shows like Cramer's etc. But there it is rising like gang-busters with advisors recomm buy. I just don't want to take a rollercoaster ride, like the CLR of 2006-2010 -- $20 --> $140 --> $40 --> $65 -- still made money on that too!
This one could easily fly high
Arex has to be one of my favorite stocks with a high oil percentage (50%) likely to go to 60%, a low book value, growing equity base, decent cash flow, and a solid financial sheet. Unlike most of the stocks I've been looking at recently with a Deep Value outlook, Arex is definitely a growth play. (look at their prospective earnings) Their size, location, and management couldn't be much better, and according to fama french they should out preform the economy. I'm getting a lot of good vibes and with the third quarter earnings report I think $10 could be a very real possibility. In the shorter term however I might advise getting in very slowly because moving averages and stochastics are suggesting a move down over the next month.CheersMarketSailor
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.
I believe this stock is grossly overvalued. I estimate the true value of this company at around $11-12 per share.
still love the energy play, this appears to be falling through the cracks a bit.
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.
I have no idea I am the monkey throwing darts
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