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EOG Adds 700 Million Barrels Of Oil And Mr. Market Doesn't Care
Posted February 22, 2012
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By Devon Shire
For a long time I've known that my friend Mr. Market was a fellow who could not control his emotions. At times he is the life of the party and is outrageously optimistic. We saw that in the late 90s, when internet companies with no earnings, no revenue and even no business plan had stock market valuations in the hundreds of millions of dollars.
In recent years, Mr. Market has often been prone to fits of extreme pessimism, believing the end of the world to be near. The result has been valuations on some publicly traded companies that we were seldom offered in the 90s and pre-housing collapse 2000s.
Last week I began to wonder if Mr. Market had now also lost his common sense.
An Unconventional Plan
After looking for bargains in the oil industry for a considerable amount of time, last year I settled on a game plan for the next several years. I call it my unconventional plan, which involves a large portion of my portfolio being dedicated to oil companies that are focused on producing light oil from unconventional shale and tight oil plays.
The plan looks like this:
1) Find unconventional producers that appear reasonably (or cheaply) valued based on current reserves and production.
2) Look for unconventional producers that in addition to being inexpensive in relation to current production and reserves, also have large positions in undeveloped acreage in known resource plays. I believe Mr. Market greatly undervalues (often ignores) these undeveloped land positions, which often contain more recoverable oil than the company has in its booked reserves on developed land. READ FULL ARTICLE HERE
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