Huge New Wells with More to Come - A Bright Spot Amid the Oil Gloom
A compelling upside story emerging in a market overshadowed by a perceived "super glut"
Amid near-term concerns about oil oversupply and the prospects of potential Venezuelan oil production resurgence, oil prices today are sitting near five-year lows in nominal terms and close to twenty-year lows in real, inflation-adjusted terms:
As I’ve previously discussed, the oil industry is deeply cyclical. Historically, periods like this, when sentiment is gloomy and prices are depressed, have often turned out to be among the best times to invest.
One oil producer in particular stands out to me, which I first highlighted back in October in From Money Pit to Money Maker. The thesis is straightforward: the company’s shares are trading at a discount to the value of its base operations while progressing two major growth projects that I am essentially getting for free. The first is a key joint-venture interest in a highly prospective oil play operated by an experienced partner. The second is the completion of gas-fired power generation scheduled to come online into a data-center-driven electricity demand boom.
Since publication, the stock has outperformed the broader energy market, as measured by the Oil & Gas Exploration & Production ETF (XOP), but it has lagged the performance of its joint-venture partner. To me, that suggests there may be more room to run, and it raises the real possibility that it could ultimately be acquired at a meaningful premium:
The JV partner recently released its accelerated 2026 development plans. Early well performance has continued to set new records for the area. In this update, I’ll walk through what that means for my thesis and how it affects my outlook from here.
