Texas Tar Sands May Boost TXCO

I'm up to 50% cash as of this writing, adding more short positions, and still more inclined to think that the market's latest bounce will end up being a bear market rally rather than the inflection point that marks the bottom for 2008.

But several of my existing long positions have actually fared quite well over the past few months, and these exceptions to the market's pall deserve to be highlighted. One such stock is TXCO Resources (TXCO - commentary - Cramer's Take).

I'm not as heavily invested in the energy sector now as I was between 2004 and 2007. After stellar runs in many energy names, insiders in that sector have stopped their wholesale buying during any dips and seem more intent to lock in whatever gains they have mustered. My largest remaining exposure to energy is in midstream plays whose partnership structure pays me a decent yield to stick with them.

The two exploration and production (E&P) plays I'm still in have had disparate fortunes. One of the two, Goodrich Petroleum (GDP - commentary - Cramer's Take), had a horrendous fourth quarter in terms of price action. Investors continue to focus on the sagging price of the natural gas GDP produces instead of the volume increases and cost efficiencies this firm is expected to show in 2008. I still like GDP, but it has certainly been just another dog in a market that is full of them.

Which brings me back to TXCO, an E&P play that has shown impressive relative strength in recent months. TXCO is an oil and gas exploration firm focused on the Maverick Basin in Texas. Over 60% of its activity is focused on oil rather than gas -- a much more lucrative commodity these days. This decades-old firm is betting that new drilling technologies will allow it to profitably exploit hard-to-get hydrocarbons from the likes of shale formations and tar sands.

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At the time of publication, Moreland was long , although holdings can change at any time.

Jonathan Moreland is director of research and publisher of the weekly publication InsiderInsights, founder of the Web site InsiderInsights.com and the director of research at Insider Asset Management LLC. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, Moreland appreciates your feedback; click here to send him an email.