Bakken and Eagle Ford Lease Holders Good Investments?

Eagle Ford acreage is peaking the interest of oil & gas operators. First, Marathon spent over $20,000 per acre and then BHP acquire Petrohawk. The article below details a few reasons why it might be the right time to invest in Eagle Ford Shale operators and the companies who are active in South Texas. The liquids-rich and oil plays of the Eagle Ford and Bakken Shale have become the hottest real estate in the US.

"This (BHP-Petrohawk) buyout makes oil leases in these areas more expensive. It means demand for these leases is going up. It means many big leaseholders in the most desirable plays, the Bakken and the Eagle Ford, will likely see their share prices rise. This will be partially due to the short term increase in the value of their leases, but it is also due to the long term expected BONANZA nature of their holdings.

 

There is little doubt this will boost the companies small enough to be buyout targets. However, logic says the constant expectation of further buyouts (and the actuality of some) will even boost the big caps by extension, especially those who have large lease holdings in the Bakken and the Eagle Ford.

Given the approximate 50% premium to the stock price that BHP just paid for HK, it likely means the small companies are going to command big premiums. With this deal and the recent Marathon (MRO) deal for Eagle Ford acres, the going price for Eagle Ford leases seems to be about $20,000 per acre. This is a huge premium to the price those acres commanded just a few years ago."

Read the full news release at SeekingAlpha.com