Checking in on those “Three Bakken Picks Under $10” from Keith Kohl

By Travis Johnson, Stock Gumshoe, October 14, 2013

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Keith Kohl and the folks at Energy Investor have been sending out similar “Bakken stocks to buy NOW” teaser ads for a few years now, with some of them certainly doing quite well over the years since I first heard of them — I don’t cover every version of this ad, but a lot of folks have been asking about this latest one so I thought we ought to jump in and see what the stocks are this time around.

The broader pitch about the Bakken is probably something you’ve heard many times, that this booming oil region in (mostly) North Dakota is creating millionaires by the minute, that hydraulic fracturing and horizontal drilling for shale oil have changed the economy so much that North Dakota is the only state with almost no unemployment and, probably, home to the highest-paid Walmart greeters and fry cooks in the world — all thanks to the Williston Basin oil fields.

And every ad of theirs calls attention to two of the barn-burner stocks of the first Bakken burst several years ago, Northern Oil and Gas (NOG), which was an early land grabber in the Bakken and had some huge run-ups, and Brigham Exploration, which was bought out at a large premium (after a big run-up) by Statoil (STO). And those were definitely good picks at the time — so what’s he picking now? In Keith’s words:

“I spend endless hours poring over companies’ field production reports, lease acquisitions, landholdings, SEC filings, and CEO interviews…

“I’ve been to the Bakken and Fort McMurray to get a firsthand look at the operations of some of my favorite oil and gas stocks…

“And all this hard work is about to pay off for you again.

“I have three more unknown stocks in the Bakken that I believe will give you EVEN BIGGER returns than Brigham or Northern Oil & Gas…”

So what are they? I can’t give an in-depth look at every one as we toil through on a holiday here in Massachusetts (here we’re more focused on Casimir Pulaski and giant cornfield mazes than on Christopher Columbus, but the end result — kids out of school and parades through town — is more or less the same), but I should at least be able to name some “secret” stocks for you so you can dig in on your own.

Clues for number one?

“My favorite Bakken stock trades for just $6 a share.

“It has a total of 86,000 prime acres in the Bakken… and just a couple months ago, one insider bought over 9 million shares of this company’s stock.

“There’s only one reason an insider would make a $55 million commitment like this: They know the share price is headed higher.

“What makes this insider so sure?

“This small-cap oil company has a current market valuation of just $300 million, but it has $428 million in cash and other assets. And that’s just for starters…

“In the last year, this company’s proved reserves have jumped a whopping 890%… to over 14 million barrels of oil. And revenues ramped up 646% — to $60 million.”

Sounds pretty exciting, right? Here’s more:

“it’s grown revenues from $8 million… to $60 million last year… to what will be $180 million this year.

“And next year, revenues are expected to hit $265 million.

“There’s only one place you can find growth — and profits — like this: the Bakken.

“There’s just no way this stock can stay this cheap for long. I’m convinced this will be at least a $19 stock in the next few months. That’s a 220% gain!”

This one, sez the Thinkolator, is Triangle Petroleum (TPLM), which also made Kohl’s list in 2011 at around $5.50 … but it’s not a $6 stock any more. The shares had bounced around between $5-7 for most of the past year, but it had a huge run over the last month after reporting an excellent quarter, so Kohl’s ad needs a bit of updating. It’s a $10 stock now. Still looks reasonable on its face, with a solid forward PE valuation of about 10 and pretty strong revenue growth from their growing oil production and what seems to be a pretty nice integrated strategy in the Bakken, but that’s about all I know about that one. You’ve missed an exciting “pick under $10”, I guess, but if you think Kohl’s right that it will hit $19 within a few months then perhaps the $10 share price will be a bit more appealing — your call.

Next? Clues from Kohl:

“My second blockbuster Bakken stock trades for just $8 a share. I think it will be bought out at a price between $19 and $24 pretty much any day now…

“Why?

“This company controls over 218,000 acres in the Bakken that hold 95 million barrels of oil.

“Net income skyrocketed 4,266% last year — and will jump 50% this year… and another 50% next year!

“It gets better: In the last couple months, they completed 15 new wells, and they have 7 rigs drilling 24 hours a day….

“… company insiders have already approved new compensation rules that will pay them handsomely if (or rather, when) the buyout comes…

“This $8 stock is the most attractive takeover target in the Bakken. Your gains could be 118% to 175%!”

Looks like the best match for this one is again a stock he has touted before, Kodiak Oil & Gas (KOG) — it made those 2011 “buy under $10” lists, too. And like Triangle it’s no longer “just $8 a share” after a nice run since the Summer lows, it’s now about $12.50. They do have roughly 218,000 gross acres in the Bakken, income did jump spectacularly in 2012 and drive the shares up with it (net income jumped from $2 million to $134 million, so it’s not a 4,266% gain but it’s pretty close — they also created a bunch of new stock, so the per-share numbers are not as impressive).

They do have a pretty aggressive drilling schedule and they are running seven rigs … and they did change their compensation rules back January to allow for bigger payouts to the five top officers in the case of a “change of control” transaction that resulted in them getting terminated. Though if they’re banking on a big premium takeover deal you’d think they’d be buying stock, and they aren’t — the insiders at Kodiak have been very active sellers of their own stock all year.

KOG has had a great run this year — it’s priced for growth, but analysts do think that growth will come with near-50% jumps in earnings both this year and next, so you can certainly justify paying the current price for the shares if those estimates are going to pan out. I know we’ve had a lot of readers on the KOG bandwagon here over the years, so perhaps some of them will chime in with a comment and let us know what the story is today.

And is the third of those “Bakken Picks Under $10” actually under $10? Let’s check out the clues:

“My third Bakken stock — at just $0.40 a share — has the most explosive upside potential. It has 10,000 prime Bakken acres. That may not sound like much, but remember… this is a 40-cent stock!

“By the end of 2013, it will be pumping nearly $3 million of oil every week.

“This a rare opportunity to get into a Bakken oil company at the ground floor — before huge jumps in production pushes the stock price higher, like we’ve seen so many times before…

“And because it’s brand new to the Bakken, there’s no telling how high the stock can go: $3…$5…$10…”

Well, dangit, it looks like this entire teaser ad is still focusing on exactly the same stocks he was touting in late 2011. So much for new ideas.

I did go back and check what I thought this one was back then, since the clues are not exactly overwhelming (there are a lot of tiny companies with small acreage in the Bakken), but we still can’t be 100% certain of this one given the relative paucity of clues. $3 million of oil every week would mean that they’re producing at a rate of about 4,000 barrels a day ($3 million at $100 a barrel would be 30,000 barrels a week, or a bit over 4,000 barrels a day). That’s actually a fair amount for a tiny company, since even wells that are on their first month of production, when Bakken wells typically peak, produce on average something like 500 barrels of oil per day if the estimates I’ve seen hold any water.

So all we can do is guess, still, on this one — and we might as well guess the same stock we guessed last time, Samson Oil & Gas (SSN), an Australian company that trades in the US and does trade around 40 cents (50 cents now) and could conceivably have close to 10,000 acres in the “prime” Bakken (depending on how you define “prime”) as well as some production this year — not a great match, but it’s pretty close. And their Bakken production estimates do indicate that they think they can hit a bit over 4,000 barrels of oil per day in 2013. Will it happen? Dunno. Really still a guess, though this company has made some nice progress in two years.

So … I thought we’d be looking at another set of “Bakken stocks below $10” from Keith Kohl today but from those clues it sounds like the same three stocks he touted similarly in the Fall of 2011. Two are no longer “below $10” but are growing nicely and look like decent growth stocks from a quick glance at their numbers (I’m no expert in evaluating shale oil reserves or land holdings, I’m afraid), and one is, well, still a guess.

Have any Bakken favorites you’d like to share with us today, or any opinion on Triangle or Petroleum or any of the teeny stocks in the Williston Basin? Let us know with a comment below.

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30 Comments on "Checking in on those “Three Bakken Picks Under $10” from Keith Kohl"

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Jay Kay
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0
Jay Kay
October 14, 2013 12:46 pm

Travis,

Who (or what) is Casimir Pulaski?

Louise
Guest
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Louise
October 14, 2013 3:10 pm

Casimir Pulaski led an army of Poles to fight for the American Revolution. Many of their descendants live on eastern Long Island and own large farms there.

Matt Elwell
Guest
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Matt Elwell
October 14, 2013 12:58 pm

I’ve been getting these emails for years. Keith Kohl obviously doesn’t like to do other research because these are apparently all he touts. I actually paid for energy investor for a while. I’m less than impressed. He calls out his gains in stocks as though he put out the “buy” order at their bottom. Very dishonest. I’m not saying these are bad stocks (I’ve traded in and out of KOG a couple times), I’m just saying its a mediocre service at best.

Ken
Guest
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Ken
October 14, 2013 1:27 pm

I have owned KOG and doubled my money and just sold my shares. However, the teases get tiresome!!

Dave
Guest
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Dave
October 14, 2013 1:58 pm

@Matt
What do you expect for $49 bucks?

hipockets
Irregular
998
October 14, 2013 4:55 pm

The one, the ONLY, marvelous StockGumshoe and his sidekick, the fabulous Thinkolator!

Slick Rick
Guest
0
Slick Rick
October 14, 2013 2:09 pm

Once again 3 “TIRED” stocks. Had you bought SSN on 10/28/11 at $2.23 , you would be disappointed to note that it is currently selling for around 51 CENTS! What a BEATING you would have taken. Now I can surmise that Keith makes more money from the suckers who subscribe than from his tips. I would also venture to say he probably does not even buy his own picks.

Dave
Guest
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Dave
October 14, 2013 7:24 pm

>>ow I can surmise that Keith makes more money from the suckers who subscribe than from his tips.<<
Pretty much a universal truth amongst the gurus, I suspect.

chuck
Guest
0
October 14, 2013 2:30 pm

The three ‘Keith’ Bakken stocks TPLM (working great), KOG (seems good), AEYID (not so good)
Overall, like the site and the price is right.

Dave
Guest
0
Dave
October 14, 2013 7:28 pm

Arsenal Energy? It flat-lined in early August.

http://chart.finance.yahoo.com/z?s=aeyid&t=2y&l=off&q=l&z=m&p=%2Cm100&a=&c=

Do charts show up here? Test:

stevemack70
Irregular
22
October 14, 2013 10:18 pm

Arsenal did a reverse split and has a new symbol, AEYIF. I’m up 7% on this one.

David J
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David J
October 14, 2013 2:43 pm
Short version General Casimir Pulaski (1745-1779) Casimir Pulaski, son of Count Joseph Pulaski, was born in Warsaw, Poland, on March 6, 1745. At the age of fifteen, he joined his father and other members of the Polish nobility in opposing the Russian and Prussian interference in Polish affairs. Outlawed by Russia for his actions on behalf of Polish liberty, he traveled to Paris where he met Benjamin Franklin, who induced him to support the colonies against England in the American Revolution. Pulaski, impressed with the ideals of a new nation struggling to be free, volunteered his services. Franklin wrote to… Read more »
Docsqq
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0
Docsqq
October 14, 2013 2:49 pm

KOG is in a bit of a short squeeze too.

Tramp
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0
Tramp
October 14, 2013 3:30 pm
Thanks for torturing yourself and listening to that video and wasting your time to tell us all they are the same 3 stocks; (I ‘ve been wondering for months, hoping you would do it but couldn’t imagine actually asking you to do such); .. You must have at least 100 million people reading your writings everyday and that video must have been at least 5 hours long (or so I assumed).. so You saved the world 500 million man hours and if we all made half your going rate that must be $500 billion of savings for planet earth.. Since… Read more »
Cutting
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Cutting
October 14, 2013 4:54 pm

LOLZ… 🙂

dick
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dick
October 14, 2013 5:27 pm

LOL, 500 millions man/hours. It sums it up pretty well.

Dave
Guest
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Dave
October 14, 2013 7:39 pm

Gummy only rarely watches/listens to a vid, and only when he has to.

Hint: after the vid starts, try to close the window. You will be given the opportunity to read the transcript.

frankw17
Irregular
564
October 14, 2013 6:03 pm

Love that P/E on TPLM,i.e., 268.75!

Clint
Guest
0
Clint
October 14, 2013 6:47 pm

I have bought and sold and rebought( SSN) . Their luck is similar to mine but they are persistent . I think if a person is patient they will do well . I bought some shares of (ARW) aroway energy a few months ago on Keith Schaefer recommendation . any one else looking at this one ?

chuck
Guest
0
October 14, 2013 7:16 pm

Oh, are they supposed to make money too?

bosley
Irregular
66
October 14, 2013 8:54 pm

I have done well with KOG. I just sold it to get out of the way of the BS in DC. I will buy it again as soon as the coast is clear. It has a real upside with very little risk. Many great articles available at Seeking Alpha.

stevemack70
Irregular
22
October 14, 2013 10:27 pm

TPLM-TRIANGLE PETE CORP COM has been good for me so far. Up 57% since March. I can’t remember where I got the info on this one but I’m pretty sure it was not Keith Kohl. Today I was actually thinking about taking back my original investment and playing with their money. Now that I read this I’m not so sure.

who noze
Guest
0
October 14, 2013 11:03 pm

any comments on USEG or/and axas abraxiso or thoughts all welcome

Jim Mitchell
Guest
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Jim Mitchell
May 20, 2014 6:40 pm

Bought both stocks axas and useg. Doubled in axas. Just bought useg. Kog was good to me and sold twice for a double. No buying by Management and the Board as they are given many shares of stock for 0 $ that convinced me to sell all.

Myron Martin
Author
197
October 15, 2013 9:44 am
Count me in as an annoyed recipient of the “3 must buy Bakken stocks under $10” touted by Keith Kohl, it is just too much hype and repetition. That being said, I had considered Samson a few times but never bought, Triangle has done well for me and I have Kodiak on my watch list, and in fairness it has done relatively well if you bought at the right time. If it gets taken over or otherwise goes to $26. as Keith has predicted then it would certainly be a good buy even at current $12. + prices. Personally I… Read more »
Charles T Corwin
Guest
0
October 15, 2013 11:41 am

.What about MHR? A texas company with holdings in ND, Ohio and WV

Jim Mitchell
Guest
0
Jim Mitchell
May 20, 2014 6:45 pm

Holding MHR for the long haul. Bought a bunch @ $2.59 pp/s during the accounting audit mix up. Their pipeline (Eureka) is a winner.

arch1
Irregular
4338
October 23, 2013 3:15 am

I bought ssn for $1 and sold for $2 $ rebought for $1 and is now $.51. Have made a little more than I have am not buying.lost. I plan on holding but

arch1
Irregular
4338
October 23, 2013 3:17 am

correcting; I have made a little more than I lost & am holding but not buying

Dan
Guest
0
Dan
December 30, 2013 10:15 pm

I’m late to this conversation but maybe you are going to the Pulaski club on Broadway in South Boston. Not all the Poles are on long Island. Also don’t forget Pulaski Tenn.

I’m going to look @ Triangle again.

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