Oil is definitely going to bust back down through the 100-dollar level as the entire price jump of the last year has been the work of speculators (i have done a couple of discussion posts on this as well). I mean, honestly. Do you think it's purely coincidence that the smashing down of the price occurs at the same time the US government decides to draw up some legislation to expose and indict speculative price inflation in the oil market? I sure as hell don't.
Arena Resources has a nice looking forward P/E of 14.8, ROE levels of 18% + for the last 5 years and absolutely 0 debt with $90 Million liquid cash, or about 6% of their total Enterprise Value. They are still a small company 1.5B in value roughly with a lot of room to grow in their segment.
I think they will reach well over the $50.00 mark within 12-18 months and will potentially start offering a dividend. They were poised to make strong profits at $75 a barrel and with the price probably hitting down to $80 in the next 6 months but leveling off between $90-$100 they will be in a great position to continue to churn more free cash out and thus expand their business where the huge players are making small cutbacks.
$39.57 (08/17/08)
