NEW YORK (The Deal) -- Oil prices are sliding again, this time on worldwide worries about Greece, and the possibly of sanctions being lifted from Iran, which is expected to boost that country's oil production for export. The price of crude fell below $51 a barrel on Tuesday after weeks of hovering around the $60 level.
Tudor, Pickering, Holt & Co. Securities, the energy-centric investment bank with a widely read morning report -- including frat-boy humor every Friday -- said Wednesday that the recent selloff of oil and gas stocks has created a buying opportunity. It noted that the oil and gas companies it covers are now collectively trading at 60% below their net asset value based on their proved, possible and probable reserves (ouch).
Anadarko, based in the Woodlands, Texas, and led by R.A. Walker, is a large independent oil and gas producer with properties in the U.S. and around the world, both onshore and off, which analysts say is a plus. Its properties in the Wolfcamp area of West Texas' Delaware Basin are particularly promising, and it has been identified as a prime beneficiary if the U.S. oil export ban is lifted. Like other oil and gas companies, it's been paring its portfolio through the downturn: Just this week, Anadarko and affiliate Western Gas Partners (WGP) agreed to sell dry gas Bossier Shale properties in East Texas to Legacy Reserves (LGCY) for $440 million. It's also expected to monetize part of its Mozambique and U.S. midcontinent properties and some of its shares of Western Gas. Simmons & Co. International has the company at overweight and Jefferies recently upgraded the stock to a buy.
Like Anadarko, Houston-based Noble Energy has properties scattered across the globe, including a $6.5 billion gas field off the coast of Israel (which it was recently cleared to develop after some political pushback). In May, it agreed to buy Rosetta Resources for $3.9 billion, a price analysts thought was a bargain, expanding into West Texas' Permian Basin and South Texas' Eagle Ford Shale. (Further asset additions in the Permian are likely.) It's also been shedding assets, including 38,500 net acres in Colorado's Boulder County in May to an undisclosed buyer for $120 million. KLR Group has Noble at a buy and Jefferies analyst Jonathan Wolff moved Noble to hold from underperform on Monday.
Finally, there's Concho Resources, which is based in Midland, Texas, and led by Tim Leach. Analysts have tagged Concho as a potential takeover target, mostly because of its dominant position in the Permian Basin -- and particularly after Noble's groundbreaking purchase of Rosetta. Simmons analyst Pearce Hammond reiterated his overweight call on the stock last month given its outperformance, its lack of layoffs despite the downturn, and its ability financially to make small bolt-on acquisitions in its core areas, which can "further fortify" its robust drilling inventory.
TPH also adds three "high-beta" names -- Wall Street speak for "high risk" -- to its pick list. They include Tulsa, Okla.-based Laredo Petroleum (LPI) - Get Report, Randy Foutch's oil and gas company which has properties primarily in the Permian and has been a rumored takeover target for a while ("If we get a good offer, we'll look at it," he told the Deal on the sidelines of an industry luncheon on Wednesday); Houston-based Oasis Petroleum (OAS) - Get Report, which is led by longtime CEO Tommy Nusz and is one of the few pure plays in the Bakken in the Rockies and has also been mentioned as a possible buyout candidate given the recent rise in M&A in the sector; and Austin, Texas-based Parsley Energy (PE) - Get Report, the Permian player led by CEO Bryan Sheffield which went public last year and that analysts think could be on the buying or selling end of a transaction. And why not, given these low, low prices?
This article was originally published at 5:13 p.m. ET, July 9, 2015, on The Deal.