The best corporate managers are always one step ahead. Salesforce is the second coming of Amazon.com...
BHP offers 65% premium for Petrohawk--take the money and find another energy acquisition play
07/15/2011 3:36 pm EST
After Thursday’s close BHP Billiton (BHP) announced a $12.1 billion cash bid for Petrohawk. The price is about 65% higher than the closing share price for Petrohawk on Thursday at $23.49.
BHP, which earlier this year, paid $4.8 billion to acquire shale oil and gas assets from Chesapeake Energy (CHK), is clearly still in the hunt for more shale acreage. Petrohawk owns about 1 million net acres of shale in the Eagle Ford, Haynesville, and Permian basins of Texas and Louisiana. (Eagle Ford is one of my two favorite shale plays—the other is the Bakken formation in North Dakota and Montana.)
If you own shares of Petrohawk, I’d sell today. At a recent price of $38.20 a share, the stock has captured almost all of BHP Billiton’s $38.75 a share offer.
Where might you put that cash to work?
If you’d like to take that cash and roll it over into another potential energy acquisition, in Eagle Ford I’d suggest taking a look at Pioneer Natural Resources (PXD). You should also consider some of the oil plays in Columbia that trade on the Toronto market such as Petrominerales (PMG.CN) or Pacific Rubiales (PRE.CN.) I’ve repeatedly recommended Bakken shale players Brigham Exploration (BEXP) and Oasis Petroleum (OAS). Many of these stocks are up today on the Petrohawk news—Brigham, for example, is up 6.7% as of 2:30 New York time. I hope you already own some of these names. If not, this market is so volatile that you’re likely to get another dip not too far down the road.
Full disclosure: I do not own shares of any stock mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did own shares of Brigham Exploration and Oasis Petroleum as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/ (I will post the fund’s holdings updated through the end of June next week.)
Related Articles on STOCKS
Now about new highs being celebrated, amidst deterioration of a slew of internals: This suggests nei...
Our daily breakout stock ideas are most suitable for aggressive investors seeking ideal entry points...
I understand, my views are not outside the mainstream, but long-term investors should buy Apple shar...