Bookkeeping: New Natural Gas Stake in Encore Acquisition
In a post earlier this month I mentioned how all things being equal it might make more sense to hedge towards smaller players in both the oil/natural gas exploration and production. (
Jun 18: Will Encore Acquisition be Bought Out?)
So all things being equal, we might develop a thesis here, that it might be sensible to build in exposure in smaller E&P companies with the carrot of potential takeouts. The typical market cap of the names above is $1 to $3 Billion.Many of the (smaller) names mentioned in that post have been absolutely ripping it up the past few weeks, while their big brothers have been going upward slowly or sideways.
Potential takeover targets include Arena Resources (ARD), Brigham Exploration Co (BEXP), Berry Petroleum Co (BRY), Concho Resources Inc (CXO) and Rex Energy Corp (REXX), Tudor Pickering, said.However, I am going to focus on
Encore Acquisition (EAC) because after a tremendous run earlier this year, it has been consolidating this move and more importantly it literally has signaled it is willing to put itself up for sale since the market is not valuing it correctly.
Onshore oil and natural gas exploration company Encore Acquisition Co (EAC) said on Wednesday it was exploring strategic alternatives, including a possible sale.It is our belief that Encore's current share price is not reflective of our record operating results and our ability to efficiently fund these projects through our upstream master limited partnership, Encore Energy Partners," Encore Chief Executive Jon Brumley said in a statement.At just under $4 Billion in market capitalization (up from $2 Billion earlier this year) it's a good size fit for many companies.
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