Friday October 07, 2011
by Stephen Leeb, editor The Complete InvestorWe're adding two new energy plays to our model Growth Portfolio that we believe offer significant growth profiles:
Continental Resources (
CLR) and
Denbury Resources (
DNR).
Continental Resources is one of a number of companies drilling in the Northern Rockies’ Bakken Shale region, which represents the second-largest contiguous oil deposit in the nation.
The company expects its energy output to increase by more than 35 percent this year and to grow at a similar pace for the next three to five years.
Yet this $10 billion company trades at a forward earnings multiple of only 16 and at a significant discount to the net asset value of its current proven reserves (at current oil prices).
We also are buying Denbury Resources. It’s another relatively small oil and gas company with impressive growth prospects.
Its properties range from the Gulf Coast to the Rocky Mountain region; it has nearly 400 million barrels of oil-equivalent proved reserves, roughly 90 percent of them oil.
While the company expects production growth this year to be a modest 5 percent or so, the outlook beyond that brightens, with mid-teens growth projected as two new fields come on line and the company’s Bakken fields benefit from accelerated drilling.
Shares of this $6 billion company are incredibly cheap, trading at 11 times estimated 2012 earnings and with a PEG of 0.5.
Learn more about this financial newsletter at Stephen Leeb's The Complete Investor.
