“The one U.S. energy stock I would buy if I were permitted only one pick right now.” (Elliott Gue)

Deciphering an Energy Strategist teaser of a Bakken/Three Forks stock

By Travis Johnson, Stock Gumshoe, October 27, 2011

The recent takeover offer for Brigham Exploration (BEXP) by Statoil (STO) has rekindled interest in oil companies who have large Bakken land holdings and growth potential — so, naturally, the teasers are out in force for just these kinds of companies.

One such tease comes from Elliott Gue for his Energy Strategist newsletter — and since he was one of those (there were several, to be fair) who touted Brigham well before the takeover offer (he pitched it last December in a teaser ad, when it was around $27 or so), and since that letter currently stands atop the rankings for energy-focused newsletters per reader reviews, I thought we’d have a look and see if he can pick another winner.

Gue gets us revved up with this intro:

“Urgent! It’s started—the acquisition of “smaller” independent oil explorers in America’s hottest oilfield—the millionaire-making Bakken Shale. Norway’s Statoil just bid $4.4 billion for Brigham Exploration—and lucky investors will pocket a windfall premium. Who might be next to line investor’s pockets with a cash takeover prize? Well, there’s a NEW oil discovery—Three Forks—that may be bigger than Bakken. Best of all, it’s also on (or under) our own U.S. soil. So far, most investors do not have a clue about this exciting new discovery. So, expect the oil majors to start circling over the oil outfits already working the Three Forks fields. Read on…

“Three Forks: The Unknown Oil Treasure Beneath the Bakken”

The “Three Forks” isn’t unknown to Gumshoe readers, of course (no surprise — you’re the smartest people around. And the best lookin’), the Three Forks field, also called Sanish or 3 Forks/Sanish sometimes, is the area underneath the Bakken. There’s been some debate about whether it’s really part of the Bakken Shale or is another distinct field below the Bakken, but it’s certainly a different and deeper drilling target and it has certainly produced oil. Brigham is one of the companies that pioneered the “Three forks” drilling, for whatever that’s worth.

But regardless of whether or not it’s unknown, we’d like to make some money … right? So what is Gue teasing?

“Hidden beneath the landmark Bakken oil field lies Three Forks, a vast, separate field my sources whisper will pump out even more light, sweet crude than the first Bakken discovery.

“You can pounce on this windfall with one single trade.

“My new top recommendation (see below) owns the lion’s share of wells aimed at Three Forks oil… plus an ingenious, trademarked “secret weapon” that taps oil from both the Bakken and Three Forks formations simultaneously… from one drill site.”

Sounds impressive, no? I don’t know whether it’s a big deal to run several drills from one site or not, but it does sound like a good idea. And it actually probably answers the teaser for us already — but what fun is that? Let’s see what other clues Gue sends us …

The folks at Investing Daily (Gue’s publisher) love spinning tales of company history and management adventures as a way to get us excited about a stock — we’ve seen it time and again, from Gue’s pitch about the “Irish accountant” and his falling-backwards discovery of West African oil to the stories from Yiannis Mostrous about an intrepid British sailor and his discovery of a deepwater port that led to a Singaporean fortune. I’m not complaining, mind you, I love a good tale as much as the next guy (probably more, actually … these things get boring otherwise), so it’s no surprise that today’s teaser pitch tells us about the hardscrabble beginnings of the oil industry pioneer who runs this teaser company …

“1945. The youngest of 13 children, the future founder of my top-secret recommendation, was born to Oklahoma sharecroppers living in a one-bedroom, unpainted rural home with no plumbing or electricity….

“The eager lad worked nights and weekends. In time, helped by a friend who co-signed a $1,000 loan, he bought a truck, an old fluid-hauler. With it, he hauled drilling mud and water to rigs—and never stopped asking questions.

“At night he studied maps, searching for potential oil plays. In a remote corner of northwest Oklahoma, he found his target—an abandoned play strung across three counties. He bought the leases and struck oil. He describes the day his well hit oil in typical Oklahoma fashion: “It came in nice.”

“As luck would have it, the young man’s timing proved fortuitous. It was the 1970s and oil prices began an upwar