Any one trying to capitalize on all the work in the Permian through investing in some stock plays? If so, what are some good picks? Thanks

Oxy and Apache are the two biggest producers in the Permian. I own Oxy, they seem pretty cheap right now.

SM energy

CDEV, Matador, WPX in that order. Still a disconnect between Midland Basin and Delaware Basin. It's going to evaporate and some (that's the thesis anyway).

I heard ORIG was a pretty good play

No love for PXD?

Thoughts on RSPP?

Aggie028,

What type of disconnect are you looking at between the Midland Basin and Delaware Basin? How do you see it evaporating?

Acreage values - delineation of various zones is happening across the basin. Best wells in Delaware better than best wells in Midland. Just a matter of having stacked zones everywhere. RSPP paid MB prices to enter Delaware but that hasn't been the norm to date.

FANG

PXD doesn't have bottomhole pressure like players in the Delaware do. They do have inventory for days though and rinse and repeat well.

Long laterals evolve first in plays that don't have BHP and or GOR. The long laterals are how you make the up front production in lower BHP/GOR plays. Longer laterals eventually evolve in all plays since they are better but first in plays where the return demands the innovation sooner.

If your company has BHP you are investing in that and obligation wells or going super long laterals in lower BHP/GOR plays.

HCLP, get on the frac sands

PBT?

LGCY?

OXY down another 3% today. I'm willing to dollar DCA into that one as a long term hold if you think the dividend is safe.

I don't invest in oil companies because I work for one and about 95% of my net worth is tied up in it. I am a small, private Permian operator and have dealt with most of the larger companies in the Permian.

Based on my experience, if I were going to buy stock in Permian Basin oil companies, I would buy CXO, XEC, and PE.

There are a couple of companies I wouldn't touch that are recommended in this thread, but they are not pure Permian companies.

PE

Excellent company and a solid long term hold.

giddings_ag_06 said:

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PE

Excellent company and a solid long term hold.

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Second PE

I got in LGCY last year and it finally made a run this year, currently at a 400% return. Do y'all think I should hold on to it or take the gain?

I'm not sure what the future holds for LGCY. Most thought they were just circling the drain, but they found someone to help them buy most of their debt so they could restructure to a C-corp. Rising oil price sure helped as well. I think it's likely the restructuring gains shareholder approval and they become another small-cap E&P co. At that point, they don't have much drilling inventory, so expect to see a lot of dilution to buy drilling inventory. Also, expect that drilling inventory to be expensive. Past their current drilling inventory, you're betting on their management being able to execute a good acquisition and development program. I know some of their management and they're good guys, but they don't have much experience with development beyond their 2 horizontal plays.

Concerning PE, Matt Gallagher is the sharpest guy I've met in the oil business. I believe he will make good decisions and run the company very well. Bryan Sheffield is the most risk tolerant person I've met in the oil business (I never met Aubrey McClendon). I like them both, but I think the more Matt takes over, the more successful they will be.

CXO is a very well run company. They're probably not quite the value buy that LGCY or PE could be, but they're very conservative and consistent. They're more like the BRK.A of the Permian.

This is very helpful, I decided to sell shares to cover my initial investment then keep an eye on the rest (stop sell possibly). Thank you!

Oxy knows what they are doing, and they've also focused all of their attention on the Permian. They've sold off a lot of the other assets that weren't as profitable. I worked for Vicki when I was there, and she's going to focus her attention and capital dollars on Permian because it's what she knows best. I wouldn't expect that to strategy to change anytime soon.

Oxy stock also seems to be less volatile, so if you're looking for steady growth and a dividend, it's a good choice.

HCLP

and probably PE

Any thoughts on CPE?

I consider CPE similar to SM. They have similar quality acreage and they've paid similar prices for it. SM had a more diverse position, but seem to be coring up to the Permian. I think they both would like to be eaten by a larger fish or grow, but neither is happening in the current environment. I think they'll continue to shore up their balance sheets and try to show capital discipline until the equity markets open back up.

I'll add on CPE, they're a little short on inventory compared to their peers. I think that makes them likely to make an acquisition sooner than others.

Does anyone have any input on CDEV? I thought it would take off after the qtr report, but it has hardly moved. Was it overpriced beforehand? I am not an oil expert but their acreage seems prime and Mark Papa has a proven track record of being able to grow a company.