I’ve been following one management team in the oilpatch for years, because I know they are among the best in the business.
They have built and sold junior producers before—in fact, there was a bidding war for their last one.
They are the types of serial entrepreneurs that I love to invest alongside.
These guys live to create value for shareholders—and that’s because they themselves are major shareholders.
The last company that they built and sold looked like this:
1. Very rapid production growth.
2. Prudent management of the corporate balance sheet.
3. Exceptional ability to lock down a world class oil play.
4. Very happy shareholders.
In the last few months, they have locked up an incredible land package that surrounds one of the biggest success stories in the global oil patch.
That’s in addition to them producing millions in free cash flow this year from existing production—that’s right, free cash flow at these low oil prices.
These new properties have locked in massive production growth for the coming years.
But it will grow this year as well—because of its incredibly low cost production. You see, there is huge upside in this, their new company’s stock price today, simply from the panic in the oil sector subsiding.
Yes even in 2016 with oil prices at ridiculously low levels my OGIB conventional oil pick will grow production.
When oil prices start to rise it will grow even faster—like it did over the past five years as production soared 600%–into the tens of thousands of barrels a day.
That’s right, I’m not talking about a start-up junior that is going from 200 to 1000 barrels a day. This is the Real McCoy.
I believe that oil prices are likely to rise moderately.
I see a range between $45 to $60 per barrel in the coming few years.
The Saudis aren’t going to let the shale producers breathe.
That price environment is perfect for my OGIB conventional oil pick.
All the while, management at shale producers have to obsess about the price of oil.
Management at my conventional oil pick knows that it is built for any oil price.
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