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

By Travis Johnson, Stock Gumshoe, October 14, 2013

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:

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