Out Fox The $treet

 Summary Saudi Arabia offered discounted oil pricing to Asian customers to increase market share. The goal appears to harm marginal producers around the globe including producers in the US. Sandridge Energy appears one of the vulnerable producers in the US with minimal profits from past capital spending plans.  The recent decision by Saudi Arabia to offer discounted oil prices to Asian customers has grave indications for the modern domestic oil producers. Only a few months ago, domestic oil producers appeared destined for non-stop drilling growth with WTI crude prices hanging above $100. With the recent substantial declines in oil prices and growing supplies, one has to wonder if the OPEC led by Saudi Arabia isn't hoping to crush upstart shale produces in the U.S. that were previously drilling full speed ahead without any real regard to long-term prices. The risk OPEC faced is that higher oil prices woul...

As the Permian Basin gains attention, investors need to become more acquainted with Concho Resources ( NYSE: CXO     ) . The company is a leading pure-play operator in the basin, producing over 20% production growth and generating solid profits. While the company's stock has surged recently, it is cheap compared to fellow Permian operator Pioneer Natural Resources ( NYSE: PXD     ) . It also offers an important lesson to investors focused on the attention-grabbing companies such as SandRidge Energy ( NYSE: SD     ) . While SandRidge Energy was busy making deals for assets, Concho Resources quietly built up a solid acreage position and is now reaping the rewards of strong production growth. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The recent surge in natural gas prices isn't benefiting investors in natural gas producer  Chesapeake Energy ( NYSE: CHK     ). The stock actually declined during the polar-vortex winter. Even though natural gas inventory levels have fallen below the lows of the last five years, the futures price for the fuel source used to generate electricity hasn't moved much. In essence, the market still isn't convinced that a long-term structural change has occurred in the natural gas market. Chesapeake Energy remains one of the largest natural gas producers despite a move to focus on greater oil production. The company projects approximately $5.4 billion in capital expenditures during 2014, which will be nearly completely funded via operating cash flow. Other energy producers including Halcon Resources ( NYSE: HK     ) and SandRidge Energy ( NYSE: SD     ) are encountering the same issues of capital efficiency not leading to stock gains. Read...

About two years after announcing the surprising purchase of Gulf of Mexico producer Dynamic Offshore Resources, LLC, SandRidge ( SD ) is announcing the sell of those related assets at a fraction of the original cost. The good news is that though the deal was value destructing, the company did pay a large portion of the original deal for stock at higher prices. The deal highlights the importance of focusing on core competency and questions why the new management team is willing to dump the assets at such low prices. Reading the recent presentations from the company it is apparent that the new management team wasn't exploring the development of the Gulf of Mexico assets. Oddly, the team appeared willing to dump these assets without even attempting to spruce them up. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Anytime a legendary investor pounds the table that a stock is worth double its price, investors ought to take the time to review the prospects. In this case, Lee Cooperman of Omega Advisors continues to be bullish on the reorganization progress at SandRidge Energy  ( NYSE: SD     ) . With the stock trading in the $6 range, Cooperman recently repeated claims that his analysis values the company at over $10. SandRidge Energy is an oil and natural gas exploration and production company focused on the Mississippian formation in Oklahoma along with Gulf of Mexico and West Texas assets. The stock has long struggled due to Wall Street's lack of understanding of the deal made by the previous CEO Tom Ward. Read the full article here . Disclosure: No position mentioned. Please review the disclaimer page for more details. 

The prolonged cold snap in the U.S. has pushed natural gas prices toward multi-year highs around $4.40/btu. At the same time, most of the domestic exploration and production firms sit below the highs from back in 2011 when the S&P 500 was at considerably lower levels. The combination could present a buying opportunity for the domestic natural gas producers including Chesapeake Energy ( NYSE: CHK     ) , SandRidge Energy ( NYSE: SD     ) , and WPX Energy ( NYSE: WPX     ) to name a few that are intriguing.   Read the full article here . Disclosure: Long WPX. Please review the disclaimer page for more details. 

As the Federal Reserve hints at tapering the bond buying program over the next year, cyclical stocks including energy exploration and production firms should become interesting buys. These stocks have underperformed the market rally over the last year as investors have piled into high yielding stocks as bond yields hit extremely low levels. Now that money should flood out of those stocks and bonds into growth stocks. The main reason more » Disclosure: No positions mentioned. Read the disclosure page for more details. 

On first thought, the announcement of the resignation of the CEO at SandRidge Energy (NYSE: SD ) appears nothing to get excited about. Even if the market can blame Tom Ward for the stock weakness over the last few years, losing the founder of the company can’t be a good thing. The interesting part of this news is that the market has another prime example to follow. Not only did more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

As natural gas prices soar this year, Chesapeake Energy ( CHK ) is likely the biggest beneficiary. The heavily indebted, asset rich firm will make out like a bandit if natural gas prices triple as Jeremy Grantham suggested earlier this month. As Chesapeake was its own worst enemy with an aggressive land acquisition and drilling plan over the last decade, the company might become its own best friend with a scaled back capital spending plan. After a decade of rapid growth, Chesapeake turned into the largest independent producer of natural gas and a leading landholder in the vast majority of the important shale areas. The company has a leasehold on 15M net acres and has a reserve base of nearly 20 Tcfe. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After reporting earnings back on November 6th, Carrizo Oil & Gas, Inc (CRZO) plunged over the next week. While the company beat earnings estimates, the market was clearly disappointed with some of the reduced production estimates even if it was due to previously announced joint ventures. The company is an oil and natural gas exploration and production company focused on the shale plays: Eagle Ford, Niobrara, Marcellus, and now the Utica. One has to wonder if Carrizo isn't running into some of the investor's frustrations as with Halcon Resources (HK) and SandRidge Energy (SD) . The numerous joint ventures along with previous sales of Barnett Shale assets make the company difficult to value. With Wall Street focused specifically on quarterly production growth numbers, the constant shifting of assets leads to confusion. Read the full article at Seeking Alpha. Disclosure: Long CRZO. Please review the disclaimer page for more details. 

On first thought, the announcement by TPG-Axon that SandRidge Energy (SD) should fire the CEO that founded the company and brought it to this position seemed ridiculous. After more research, the investor might just have a point. The activist investor submitted a letter last Thursday arguing that the Board of Directors should be realigned and the CEO should resign. SandRidge is an oil and natural gas exploration and production company that primarily focuses on the Mid-Continent, Permian Basin, and Gulf of Mexico. CEO Tom Ward has become a prominent leader in the oil exploration field making it further unlikely that he will be ousted. He was an original founder of Chesapeake Energy (CHK) that left to start SandRidge. The combined experience suggests that he has the knowledge to make this company successful. Read the full article at Seeking Alpha. Disclosure: No positions mentioned: Please review the disclaimer page for more details. 

SandRidge Energy (SD) presented at the Johnson Rice Energy Conference yesterday. The presentation didn't provide a lot of new information, but it did further highlight how this company is less risky than it appears. The company is an oil and natural gas exploration and production company focused on the Mississippian, Permian Basin, and now Gulf of Mexico. Since the CEO, Tom Ward, was a co-founder of Chesapeake Energy (CHK) , the company is routinely painted with the broad swath as being a risky wildcatter, similar to how Aubrey McClendon supposedly runs that company. While SandRidge has a propensity for debt and aggressive growth, management has correctly steered this company towards oil production that is hedged considerably into the future. Not to mention, the company takes on less risky and less costly drilling programs. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Halliburton (HAL) is quickly going from a market leader in the oil services field to the one that is always wrong. Today, CFO Mark McCollum reported at a conference that domestic revenue would miss estimates. This after the company famously complained about high guar prices squeezing margins, only to load up on the product at the peak price. The company is one of the world's leading oil service firms, with revenue approaching $29B for 2012 and a market valuation of nearly $30B. Not surprisingly, the stock has traded down 2-3% today, especially after McCollum mentioned that the profit margins would take a 2.5 to 3 percentage point hit. Read the full article at Seeking Alpha. D isclosure: Long CJES and WFT. Please review the disclaimer page for more details. 

After reporting earnings on Wednesday night, Continental Resources (CLR) moved up slightly as investors battled over the huge production gains and the spending increases. For some reason the market was disappointed with a forecast increase in capital spending while oil approaches $94 (not to mention that Brent crude exceeds $112). The company is an oil and natural gas exploration and production company focused on the Bakken and Anadarko areas. The market remains very focused on reduced spending in the domestic energy production sector that any added spending is seen as negative. SandRidge Energy (SD) encountered this very problem the previous week. Though natural gas still struggles around $3, the market is missing that oil prices remain strong. Why wouldn't an oil exploration company attempt to produce more oil at these prices? Read the full article at Seeking Alpha. Disclosure: No positions. Please review the disclaimer page for more details. 

After reporting earnings on Thursday night, SandRidge Energy (SD) dropped 3% even as the market soared on Friday thanks to the bullish jobs report. For some reason the market was disappointed with a forecasted increase in capital spending while oil approaches $91. The company is an oil and natural gas exploration and production company focused on the Mississippian, Permian Basin, and now Gulf of Mexico. The market is very focused on reduced spending in the domestic natural gas sector that any added spending is seen as negative. Though natural gas still struggles around $3, the market is missing that oil remains strong. Why wouldn't an oil exploration company attempt to produce more oil at these prices? Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Anybody following this blog knows that I've been talking about the inverse Head & Shoulders charts that have shown up lately. The Oil Services (OIH) still has potential as well as the numerous other individual stocks including the one I've mentioned. Today though Sandridge Energy (SD) highlighted how the chart works to perfection. Not only does SD have what amounts to a near perfect shoulder setup, but the stock rocketed 23% on a JV deal. This move helped form what ultimately could be the breakout above the neckline right around todays close around $8. Looks like a move straight up to $12 might be possible now. Anybody catching that reversal near $4.5 in early October is sitting very strong right now. See chart blow. Disclosure: No positions mentioned. Please review the disclaimer page for more details.  Update 12/23 2:40pm: SD jumped to $9 today, but has since fallen back to $8.5. Looks like a clear breakout though the stock quickly stalled. 

Our philosophy isn't to pick stocks based on ones potential for a buyout, but this theStreet.com report caught our attention. Harry Rady of Rady Asset Management owned biotech company Cephalon (CEPH) that recently got a buyout offer from Valient International (VRX). Since Stone Fox Capital also owned CEPH in our Opportunistic folios it was intriguing to see what else he picks, since we might have similar investment styles. Looking over his list we actually already own one of his top picks in Savient Pharma (SVNT). He also lists Activision Blizzard (ATVI) and NuVasive (NUVA) that have been on our radar. Might be time to double up research on these picks. Rady sees 100% gains in both SVNT and NUVA and interesting that they are both in the medical/health sector like CEPH. SVNT has been a long term holding that we've ridden to the $20s only to see it crash back below $10 when the sale of the company failed. With the new management team in place, they appear to be the stronges...

As Nat Gas prices continue to plunge due to strong supplies from shale plays and low demand from industry, nat gas producers like Chesapeake (CHK) and now SandRidge Energy (SD) make bigger moves into oil drilling. To a major extent they are victims of their own success. The major success in shale drilling by the founders of CHK which now include the CEO of SD has led to much higher gas production even as demand lagged in 2009. Today SD announced the purchase of Arena Resources (ARD) which mainly focuses on oil production in the Permian Basin in Texas for $1.6B. This marks a major shift for SD into oil that the CEO claimed at a conference a few months back was '10x more profitable to drill for then gas'. Guess that should've signaled to the markets that SD was going to make such a move. Recently CHK announced that they were moving more drilling resources towards oil and away from nat gas. The April Investors Presentation shows a goal of 20% oil production and a probable dro...