NEW YORK (Real Money) -- News of the acquisition of oil driller Rosetta Resources (ROSE) by Noble Energy (NBL) caused the former to rise by over 27% Monday. The deal should close during the third quarter, and will net shareholders 0.542 shares of Noble for each unit of Rosetta.
Despite the pop in Rosetta, it's still more than 50% below last year's closing high of $54.85. This is as much a reflection of the state of the shale oil industry as it is on the company. Rosetta's business is focused in Eagle Ford and the Permian Basin, two shale hot spots that have seen sharp declines in production due to crude oil's recent selloff.
With so many drillers from those areas now fallen on hard times, could the Rosetta deal spark a series of similar transactions? One name that may find itself in play is Carrizo Oil & Gas (CRZO), which also has operations in Eagle Ford. Carrizo's market cap is just $2.67 billion, only slightly larger than Rosetta's, making it an inexpensive acquisition target.
One look at its chart tells us Carrizo isn't your typical driller. This stock is an anomaly in the energy sector, having climbed nearly 25% for the year to date. Carrizo's chart remains bullish, as the stock is currently forming a bull channel (black lines). The stock is now at the lower end of that channel, creating a potential buying opportunity.