EOG Resources (EOG), Continental Resources, Inc. (CLR): Which Companies Will Benefit From This Booming Trend?

What about the Majors?

ExxonMobil recently increased its Bakken holdings when it purchased 600,000 acres from Denbury Resources. ExxonMobil also bought Celtic to increase its acreage in liquids-rich plays in Alberta, Canada. It wouldn’t be surprising if it went on to buy small players in the Bakken and Three Forks formations like Kodiak Oil & Gas Corp (USA) (NYSE:KOG). The reality is that ExxonMobil is so large that it needs to look far beyond the Dakotas and Montana to fight declining production. It is also active in the Gulf of Mexico, Tanzania and the Russian Arctic.

With a low total debt-to-equity ratio of 0.07, a 27.4% ROI and a 12.2% profit margin, ExxonMobil has no problem financing acquisitions. The opening up of the Three Forks formation isn’t an earth shaking development, but it will fight declining production. The company currently trades at a price to earnings (P/E) ratio around 9 and is a good investment for more risk-averse investors.

Conclusion

There are a number of firms active in the Bakken and Three Forks formations. Smaller players like Kodiak are good potential takeover targets. With a substantially lower debt load, EOG Resources Inc (NYSE:EOG) is more secure investment than Continental Resources, Inc. (NYSE:CLR) or Kodiak. ExxonMobil is a good option for investors looking to dabble in energy and invest only a small amount in the Three Forks and Bakken formations.

The article Fracking Just Keeps on Growing: The Three Forks Edition originally appeared on Fool.com and is written by Joshua Bondy.

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