NEW YORK (TheStreet) -- I was talking with Action Alerts Plus co-portfolio manager Stephanie Link about energy exploration and production companies in light of recently posted first-quarter earnings.
While it is clear to both of us that most of the earnings reports were impressive, we also both agree that much of the potential gains in many of these shale play exploration and production (E+P)companies have already been booked. Both of us have been trying to look elsewhere in the energy patch to initiate positions.
One place Stephanie sees value is in Marathon Oil (MRO). She feels that the full value of its assets are yet to be realized in the wake of the spinoff of downstream assets into Marathon Petroleum (MPC).
I've been trying to concentrate on more core holdings in US E+Ps, believing there could be a downdraft coming in this red-hot sector, but also willing to risk that to capture very long-term potential gains.
One of those opportunities I see is in Devon Energy (DVN), which still I think hasn't realized the correct valuation based upon their continuing conversion from natural gas production to crude oil and other liquids. Stephanie continues to doubt the management at Devon, however.
Another continuing opportunity I see is in Noble Energy (NBL), not because of its shale play in the Niobrara, but because of its game-changing position in the Levant basin off the coast of Israel.
I compare more notes with Stephanie about the oil patch in the video above.