Adding Some Oil To My Holdings

Energy is a need for humanity, and oil companies have been in the front lines benefiting from covering this need. So, how can I get a piece of it?

Swift Energy Co. (NYSE: SFY)

This company is a small player in the oil  and natural gas industry but with huge potential to make my investment double in a relative short period of time. Swift Energy Co. had been on the wrong side of the industry, they were playing mainly on the natural gas (NG) and natural gas liquids (NGL). Now, with more and more operations on the Eagle Ford Shale they are becoming an oil company and moving away from the not so lucrative natural gas industry (as stated on their latest quarterly results). This move is expected to materialize on the next few months.

Although Swift's balance sheet is not very healthy with a current debt higher than the current assets and virtually no cash on hand. I still believe that it has the means to navigate through this transition. Once the sale of their Louisiana assets (which are mainly natural gas producers) gets completed and the operations on the Eagle Ford Shale (mainly oil producing wells) are reflected in the upcoming quarters we will be able to see the stock of this company go at least to book value of $24.71 as of 3Q2013 (right now is trading at about $14 per share).

Adding to my thesis, Terry Swift, the company's Founder and CEO has made recent purchases of the stock on the open market. There may only be 25,000 shares between 8/5 and 11/4 of the present year but remember; while there are many reasons for an insider to sell a stock (tax related, estate planning, etc) there is only one reason to buy, and that is to make money!

In my opinion, this stock is being treated as a "natural gas" company and investors are still overlooking the fact that they are shifting away from natural gas and will become an "oil" player in the next few months. Though I will not put all my money into this stock I will certainly give it a space in my portfolio.






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