“The Safe Way to Play the Bakken Gushers” (and a few updates)

Friday File look at a Roger Conrad Bakken teaser, plus some thoughts on a few of our favorites that have been making news this week.

Before I jump on today’s teaser unveiling, a few notes:

There’s been some news and movement this week in a few of the stocks that I follow closely and that I know a lot of my readers find interesting — the Sandstorm Gold (SSL.V SNDXF) share consolidation went through as expected, and it did end up being a 5:1 consolidation, so the stock now is trading in the $8+ neighborhood and, I think, will get some additional investor attention when they list on the Amex later this year (that’s not been announced yet and it could take longer, but I think it is clearly a goal of theirs). If the consolidation results in any weakness in the shares or warrants (which haven’t been consolidated, but did have their terms altered to make them still effectively the same — so it’s five warrants to buy a share now, at a price five times higher than the old strike), I think there might be a lovely little buying opportunity. We’ll see — the stock is certainly down considerably from its highs already, as are most of the gold names with gold prices declining, but I still like Sandstorm very much at these prices and it’s still, if you include both warrants and equity, my largest holding. As long as gold stays about $1,300 or so an ounce, Sandstorm is going to make a lot of money for many years.

My largest pure equity holding now is Africa Oil (AOI.V AOIFF), which I mention only because it announced yet more oil found in that first hole they’re drilling with Tullow (well, Tullow’s really drilling it — but they share ownership 50/50) in Kenya, and the stock went on yet another 30% one-day tear. A reader asked me about that and about how valuation might change earlier in the week, and while it’s still very much a guessing game (and the “real” payoff of producing oil at a meaningful level is many years off), clearly the chances of finding confirmed commercial deposits and developing a real producing oil field are improving. My response to that reader is here (and for the rest of you, I do try to answer questions posed in comments when I can, but I also pay special attention to postings in the Discussion area if I can provide a worthwhile response that might benefit other folks, and I’ve seen ...

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