Petrohawk energy buyout

Petrohawk Energy Corporation (NYSE:HK) was recently acquired by BHP Billiton for US $15.1 billion giving access to BHP to 1,000,000 net acres in 3 world class shale plays: Eagle Ford, Haynesville and the Permian Basin. Deep pockets can afford to buy natural gas assets years before export terminals come into play in 2015. Liquid natural gas export terminals will be game changers for natural gas lifting the commodity’s price higher as the first 2 become operational in Kitimat, British Columbia and Sabine Pass, Louisiana.

Looking at HK’s chart got me to build castles in SkyWest’s sky. Obviously, SkyWest Energy is not of the same size and does not have the same amount of land. But it has the same quality of land in a world class resource play, the Cardium. SkyWest’s stock chart would be similar to Petrohawk in the event of a takeover especially at this price level.

Lovely Premium

While PetroHawk investors got around 55% premium to their last stock price, SkyWest investors would get at least 100% at today’s prices. When you’re a public company you don’t need a “For Sale” sign on your front lawn in order to attract buyers. Many people will knock on your door when you have attractive assets. In my view, a takeover will happen sooner or later, but for that to happen, the right numbers must be written on the check. That’s one thing SkyWest’s CEO promised me, he won’t be going down for cheap. After all, he’s going to be losing his job!

Even though you might dismiss this scenario as a pipe dream , it doesn’t require a takeover to double SKW’s share price from this level. Steady oil prices above $90 and consistent execution will make sure the market takes another look at this company in the next 6 months. But before any of that can happen, it would be nice of the kids in Washington to find common ground and agree on some formula for the US debt.

For the latest operational update that I posted this week, check SkyWest’s Stock Picks page.

Economic roundup:

Greece Defaults

S&P: 50-50 Chance of US Downgrade

Fed Planning for Potential Default

Researchers: Gulf Drilling Could Add 230,000 Jobs

Boehner Said to Seek $3 Trillion Cuts, Signal for Markets

Weekly blog roundup:

Are You Investing Wisely in Yourself? (Invest it Wisely)

Global Energy ETF for Exposure to International Oil and Gas Stocks (Oil and Gas ETFs)

MBA earnings, cost, and debt (No Debt MBA)

Why I’d rather take out student loans than dip into my 401k (No Debt MBA)