For Berry Petroleum, heavy crude is the right crude

Posted Apr 4th 2008 6:09PM by Joseph Lazzaro
Filed under: Oil, Stocks to Buy

Readers of this space know that one of the preferred sectors is oil / oil services. Given oil's importance in a growing global economy, oil and oil services companies are likely to continue to experience steady demand for their services/products. And with the aforementioned in mind, Berry Petroleum is worth a review.

Berry Petroleum Company (NYSE: BRY) is an independent energy company engaged in the production, development, acquisition, exploitation and exploration of crude oil and natural gas.

Analysts like Berry's ability to cost effectively identify properties with heavy crude oil reserves for sale to refineries. Berry has proved reserves of 150.3 million barrels of oil equivalent.

In addition to its core operations in three southern California counties, analysts also like that Berry is investigating several other basins, which would establish another core area and provide additional growth opportunities and diversification of the company's predominantly heavy oil resource base. The Reuters FY 2008/FY 2009 EPS consensus estimates for BRY are $3.38 to $3.66.

The risks? Analysts are keeping an eye on Berry's ability to maintain cost controls on its research- and technology-intensive operations. A sustained, substantial drop in the price of oil would also hurt Berry's results.

The First Call mean rating for BRY is: Hold [5 firms]. Mean 2008 target: $46 [high: $55, low: $38].

Stock Analysis: Berry Petroleum is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from BRY's shares. Sell / Stop Loss if you were to purchase shares in this company: $33.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: Berry Petroleum, BRY, oil, refineries

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Reader Comments (Page 1 of 1)

4-04-2008 @ 6:36PM

John said...

Of course, if people get their wish for 60-$70 per barrel oil, this Berry guy is punctured by a threaded rod.

6-25-2008 @ 9:47AM

EMMANUEL said...

Dear sir,
i'm looking for serious importers of crude oil,we've bonny ligth.
Best regard.
Emmanuel.
email juche123@yahoo.com or buzzagents8@yahoo.com
phone +234-8033293500
Nigeria,west Arica