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Tapping Into the Bighorn Basin Boom with Bison Petroleum (BISN)
When you think of domestic oil production in the United States, Wyoming probably isn?t the first area of the country that comes to mind as a major player. Texas has traditionally been a regional powerhouse in the industry, with South Dakota a rising force over the past decade. Right now, however, oil companies both big and small are setting their sites on exploiting the vast energy reserves in Wyoming?s Bighorn Basin, estimated to hold 2 billion barrels of recoverable oil and already home to eight of the 12 of the state?s largest oil fields.
In fact, Wyoming has a long and storied history as an oil heavyweight. Marathon Oil, formerly one of the largest producers in the United States, has been doing business in the state for over a century. And, in the early 1980?s, Davis Petroleum, led by legendary oil-man and billionaire Marvin Davis, uncovered what is known as ?the Muddy formation,? one of the largest and most significant oil and gas discoveries in the region. Bighorn Basin alone has already generated 3.1 billion barrels of oil.
Far from being ?tapped out,? however, estimates by the University of Wyoming put remaining recoverable Bighorn Basin oil reserves at over 2 billion barrels, with the potential for 3.5 million additional barrels waiting to be tapped. That?s in addition to the massive volume of Wyoming?s natural gas deposits, estimated to be a whopping 2 trillion cubic feet.
One intriguing young company that may be presenting a ground-floor opportunity for investors to capitalize on Bighorn Basin?s reemergence as a major energy-producing hub is Bison Petroleum, which just began trading on the OTC exchange under the symbol BISN. Bison has announced plans to first focus their attention on two of their longer-term lease blocks in the area, estimated by the company to hold approximately 20% of their overall potential resource holdings ? about 27 million barrels of recoverable crude.
Referred to by Bison as the ?Independence Prospect,? the company acquired these two leases in August. The first is a 100% Working Interest and 80% Net Revenue Interest in the 840-acre tract located in the heart of the Bighorn Basin. The Prospect?s two leases offset Marathon Oil?s 150 million barrel (MMBO) Spring Creek Field, and are less than 10 miles from the 475 MMBO Oregon Basin Field. An independent report on the Independence Prospect?s original acreage position estimates a potential of original oil in place (OOIP) of 135 MMBO.
In light of the prospect?s potential, the company announced on Wednesday that it is currently developing an exploration plan for these leases that includes 2D seismic acquisition, a Seep Study, and 3D seismic to define optimized drilling locations in the targeted Lower Cretaceous Muddy Formation. The company became aware of the Muddy?s potential by mapping fields nearby current production, with the Spring Creek Field showing possible hydrocarbons in the Muddy based upon well log characteristics. The Independence Prospect is located along several of the existing structures marbling the area, which are cut by numerous faults. Bison expects the Muddy accumulations to be between 2,000′ to 6,000′ drilling depths, with well-spacing potential at 10 acres per well.
These assets are located in close proximity to established industry infrastructure, allowing for rapid transition from discovery to production through the quick connection to the existing pipeline network, which contains spare capacity for potential crude production. The company is also employing a conventional drilling strategy, reducing both the technical complexity and cost of other approaches. Management believes that by focusing on historically proven basins and utilizing conventional drilling technology, it can achieve relatively low-cost production with substantially less capital risk than many of its industry peers.
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Tapping Into the Bighorn Basin Boom with Bison Petroleum (BISN)
When you think of domestic oil production in the United States, Wyoming probably isn?t the first area of the country that comes to mind as a major player. Texas has traditionally been a regional powerhouse in the industry, with South Dakota a rising force over the past decade. Right now, however, oil companies both big and small are setting their sites on exploiting the vast energy reserves in Wyoming?s Bighorn Basin, estimated to hold 2 billion barrels of recoverable oil and already home to eight of the 12 of the state?s largest oil fields.
In fact, Wyoming has a long and storied history as an oil heavyweight. Marathon Oil, formerly one of the largest producers in the United States, has been doing business in the state for over a century. And, in the early 1980?s, Davis Petroleum, led by legendary oil-man and billionaire Marvin Davis, uncovered what is known as ?the Muddy formation,? one of the largest and most significant oil and gas discoveries in the region. Bighorn Basin alone has already generated 3.1 billion barrels of oil.
Far from being ?tapped out,? however, estimates by the University of Wyoming put remaining recoverable Bighorn Basin oil reserves at over 2 billion barrels, with the potential for 3.5 million additional barrels waiting to be tapped. That?s in addition to the massive volume of Wyoming?s natural gas deposits, estimated to be a whopping 2 trillion cubic feet.
One intriguing young company that may be presenting a ground-floor opportunity for investors to capitalize on Bighorn Basin?s reemergence as a major energy-producing hub is Bison Petroleum, which just began trading on the OTC exchange under the symbol BISN. Bison has announced plans to first focus their attention on two of their longer-term lease blocks in the area, estimated by the company to hold approximately 20% of their overall potential resource holdings ? about 27 million barrels of recoverable crude.
Referred to by Bison as the ?Independence Prospect,? the company acquired these two leases in August. The first is a 100% Working Interest and 80% Net Revenue Interest in the 840-acre tract located in the heart of the Bighorn Basin. The Prospect?s two leases offset Marathon Oil?s 150 million barrel (MMBO) Spring Creek Field, and are less than 10 miles from the 475 MMBO Oregon Basin Field. An independent report on the Independence Prospect?s original acreage position estimates a potential of original oil in place (OOIP) of 135 MMBO.
In light of the prospect?s potential, the company announced on Wednesday that it is currently developing an exploration plan for these leases that includes 2D seismic acquisition, a Seep Study, and 3D seismic to define optimized drilling locations in the targeted Lower Cretaceous Muddy Formation. The company became aware of the Muddy?s potential by mapping fields nearby current production, with the Spring Creek Field showing possible hydrocarbons in the Muddy based upon well log characteristics. The Independence Prospect is located along several of the existing structures marbling the area, which are cut by numerous faults. Bison expects the Muddy accumulations to be between 2,000′ to 6,000′ drilling depths, with well-spacing potential at 10 acres per well.
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Wednesday links: market mimics
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Quote of the day
David Merkel, ?Most market players don?t think; they mimic.? (Aleph Blog)
Chart of the day
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This Options Play Could Make You 123%
Over the long term, value stocks tend to be winners. There are a number of ways to define value.
My preferred approach is to use the PEG ratio, which compares the price-to-earnings (P/E) ratio with the earnings growth rate. A PEG ratio of 1 indicates the P/E ratio is equal to the earnings growth rate and the stock is fairly valued. Value stocks have PEG ratios less than 1.
Value investors generally need patience to succeed. It can take time for the stock to deliver gains for a variety of reasons, but within a few years, value investing usually delivers results.
Options are usually thought of as short-term trading tools, but there are some options that expire in years rather than weeks or months. These options are called LEAPS, which stands for Long-Term Equity Anticipation Securities. Currently, there are now LEAPS available that will expire in January 2015 and January 2016.
Although they are long-term investments, LEAPS are the same as traditional options in every other way. Buying LEAPS allows you to participate in market gains with limited risk.
A call option gives the buyer the right to buy 100 shares of stock at a predetermined price (the strike price) at any time before expiration. The value of a call option increases as the price of the underlying stock increases. One advantage of call options is that they cost less than the stock. This means traders can capture a larger percentage gain when the stock trades higher.
However, many investors point out that options carry a greater degree of risk. And some traders avoid buying options because they do not receive any dividends.
To maximize the potential gains of options, we could limit our buying to non-dividend-paying stocks. We could also limit risk by only buying call options on large-cap stocks, which have demonstrated that they can survive the ups and downs of a business cycle. Another risk management tool is to buy call options on value stocks, which I define as stocks trading with a PEG ratio under 1.
Micron Technology (Nasdaq: MU) looks like a good candidate for this call option strategy. The computer memory maker lost more than 95% of its value after the 2000 market top. Unlike many stocks from that era, Micron has survived.
On the monthly chart, we can see that MU formed a base over the past 10 years and seems to be breaking out to the upside.
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7 Mid-Cap Stocks Surging on Huge Earnings Surprises
Goldilocks is famous for being very particular about her porridge. It couldn't be too hot or too cold. It had to be just right.
That reminds me of mid-cap stocks: Not too big, but not too small -- just the right mix of growth and stability.
Unlike small caps, mid-caps are multi-billion-dollar companies and sometimes even market leaders. That provides these companies with a nice touch of stability that small caps with values dipping below $1 billion usually don't offer.
But unlike global mega-caps such as Exxon Mobil (NYSE: XOM) and Microsoft (Nasdaq: MSFT) worth hundreds of billions and long past peak growth, mid-caps valued between $2 billion and $10 billion still have the ability to grow many times over in the long run.
These unique qualities have made mid-caps popular with investors looking for a balance between growth and stability. They have also produced market-crushing gains. In the past 12 years, the iShares Core S&P Mid-Cap ETF (NYSE: IJH) is up 223% against the S&P 500 Index's 62% return. Take a look at the big gain below.
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Dave Landry's Market in a Minute - Wednesday, 10/30/13
Random Thoughts
The Ps had a decent day. They tacked on over ?%. This action keeps them at all-time highs.
It was mostly a big cap party but the Quack did manage to end up 1/3%. And, this is enough to keep it at multi-year highs.
The Rusty came in third with a little over ?% gain. This was enough to keep it at all-time highs-albeit barely.
Let's look at the good:
Like the indices, most areas remain at or near new highs. Consumer Non-Durables, Consumer Durables, Drugs, Energy, and Leisure to name a few. Areas at lower levels such at Metals & Mining continue to improve.
The Transports also ended at new highs.
Foreign shares (EFA) remain in a solid uptrend.
The Bad:
The Quack and Rusty have lost a little steam. They haven't made much progress over the last week or so.
The Ugly:
There continue to be quite a few debacle de jours. SANM and DAN are the latest victims. See recent columns for others.
Prognosis:
As I preach, you have to put together the clues and weigh the evidence. As you can see from the above, the good outweighs the bad and the ugly. You have to be careful not to fight the trend but you certainly don't want to become too euphoric and completely ignore the warning signs as they present themselves.
So what do we do? Even though there is some bad and ugly, not much has changed just yet: I'm still seeing some setups in trending stocks that have pulled back. These include areas such as Solar/Alternate Energies, Energy-Oil, Metals & Mining, Internet, Hardware, and Drugs. Therefore, continue to look to add/add back on the long side. As usual, make sure you wait for entries. As I preach, this, in and of itself, can often keep you out of new trouble. Continue putting together your momentum watch lists (or pay me to do it for you). Stocks like QTWW should be on that list--I'll do a Youtube soon on how to create momentum lists. Once again, as long as the market remains near new highs, I would avoid the short side for now. Regardless of what you do, make sure you honor your stops once triggered
Futures are firm pre-market.
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Barchart.com's Chart of the Day - Astronics (ATRO) for Oct 29, 2013
The Chart of the Day is Astronics (ATRO). I found the stock by sorting the New High List for frequency then flipped through the charts. Since the Trend Spotter signaled a buy on 8/15 the stock is up 36.44%.
It is a manufacturer of specialized lighting and electronics for the cockpit, cabin and exteriors of military, commercial transport and private business jet aircraft. A major lighting and electronics supplier to the aircraft industry, its strategy is to expand from a components and subsystems supplier to an aircraft lighting systems integrator, increasing the value and content it provides to various aircraft platforms. Luminescent Systems Inc. its primary operating subsidiary which produces its aerospace and defense products.
Barchart's Opinion trading systems are listed below. Please note that the Barchart Opinion indicators are updated live during the session every 10 minutes and can therefore change during the day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com web site when you read this report.
Barchart technical indicators:
100% Barchart technical buy signals
Trend Spotter buy signal
Above its 20, 50 and 100 day moving averages
16 new highs and up 15.30% in the last month
Relative Strength Index 81.20%
Barchart computes a technical support level at 45.83
Recently traded at 47.85 with a 50 day moving average of 41.36
Fundamental factors:
Market Cap $694.30 million
P/E 27.85
Revenue projected to grow 27.60% this year and another 32.40% next year
Earnings estimated to increase 41.40% this year , an additional 17.18% next year and continue to increase by 19.00% annually for the next 5 years.
Financial Strength is B++
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Hedge Funds Circling Over the European Wreckage
Have you ever wanted to spend your summers basking in the sunlight at your mountain top Tuscan villa, surveying the manicured vineyards which produce your own estate bottled wine? Are you drawn by the cachet of claiming George Clooney as a celebrity neighbor on the model strewn shores of Lake Como? How about a luxury apartment that is walking distance from the Vatican?
Hedge fund managers are salivating at the prospect of one of the greatest fire sales in history, as assets of every description were being dumped in the wake of the hard times that hit Europe. On the menu are trillions of dollars of distressed loans hived off by desperately downsizing and deleveraging continental banks. Corporations are expected to dump money losing divisions and subsidiaries in a race to raise cash.
In many respects, these deals of the century represent the second shoe to fall after similar bargains were had in the US during the 2008 crash. Europe?s day of reckoning was postponed by four years, thanks to a recovery in the US, QE1, QE2, QE3, and Federal Reserve policies that kept interest rates at century lows.
The complacency in Europe since then has been staggering, with many turning their noses up, claiming it could never happen there. Some are predicting that the balance sheet scrub could take as long as a decade, similar to Japan?s tortuously long repair of its own banking system.
Some hedge funds are taking advantage of the wholesale withdrawal of European banks from the credit markets to beef up their own international lending?at much higher interest rates. The same funds, like Highbridge, similarly locked in enormous spreads in the US when conditions were dire.
Several American private equity firms are said to be setting up new European distressed asset funds to peddle to pension funds and high net worth individuals. Those who made similar investments in the US four years ago, made fortunes.
For individual investors the easiest and ripest pickings may be among the European bond ETF?s that already trade in the market. Many of these have suffered gut churning declines in recent months as the European melt down unfolded, despite offering yields multiples of what can be found at home.
Below is a short list of continental ETF?s you may want to consider:
PowerShares DB Italian Treasury Bond Fund (ITLY)
Wisdom Tree Euro Debt Fund (EU)
iShares S&P Citigroup International Treasury Bond Fund (IGOV)
SPDR Barclays Capital International Treasury Bond ETF (BWX)
Germany Bond Index (BUND)
Of course, the eternal question of when to buy is the open to debate. There have been enormous declines in European bond yields since the peak. It was a simple shortage of paper, not any ECB intervention that drove yields down so rapidly.
Aggressive traders are already starting to scale in.
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October 30, 2013 ? Quote of the Day
?If you can?t catch the most extraordinary event in our lifetimes, what do we really know? How in the world did I miss it?? said Alan Greenspan, former chairman of the Federal Reserve.
go to the Mad Hedge Fund Trader's website
Highly recommended, unconventional trading service:
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Hot Links: Just How Insane
Stuff I'm Reading this Morning...
Okay, this is some shit you didn't expect - SAC is going to plead guilty to securities fraud! (WSJ)
Larry Fink, CEO of BlackRock: Fine, I admit there are a handful of bubbles right now... (Bloomberg)
Greggy on the "W" chart in the Dow that signifies a win. (DragonflyCapital)
Dan Greenhaus on just how insane this rally has been. (BusinessInsider)
Lee Cooperman: Here's what I think of the market and four of my favorite ideas. (MarketFolly)
My fave read this week so far, Barry O drafts an email to the 80's Reaganites as his bull market pulls ahead. (BusinessWeek)
JP Morgan sees 'most extreme excess' of global liquidity ever (Telegraph)
European business confidence explodes to 97.8 in September. (Bloomberg)
Is all hell breaking loose in Puerto Rico? David Kotok explains. (TBP)
John Cassidy on the Alan Greenspan non-apology. (NewYorker)
LOL, check out how the Washington Post covered the onset of the Great Depression back in the day: (WonkBlog)
The greatest books ever, a list for autodidacts. (FarnamStreet)
Something similar to this happened to me just this week when I found a twenty dollar bill in a sweatshirt pocket from last winter... (Guardian)
Down vests are hot this fall, here are the best ones out: (GQ) and (GQ)