Today's Feature Stock from CKCC Research Desk is Petroleum Development (Nasdaq:PETD)

Oxford, MS 9/8/2011 (PennyPayDay) – Today’s featured stock from CKCC Research Desk is Petroleum Development Corporation (Nasdaq:PETD) and highlights from its research report are as follows:

PETD announced that it entered the Utica Shale play in Southeastern Ohio. The company purchased 30,000 acres in the wet gas and oil window of the play and is pursuing additional opportunities to increase its leasehold to 80,000-100,000 acres. The move into the Utica Shale play makes a lot of sense for PETD at this juncture, potentially providing a liquid-rich new project area and diversifying operations outside the Rockies. The company agreed to pay $50MM for the acreage or $1,650/ACRE, which is cheap compared with recent transactions. Reiterate BUY and price target of $40.00.

The acreage is located in Noble, Washington, Morgan, and Guernsey Counties, Ohio, where the Point Pleasant formation varies between 100-300 feet in thickness. The Point Pleasant formation is reportedly thicker in areas to the north, where Chesapeake Energy, Gulfport Energy, REX Energy and HESS Corp. recently announced acreage acquisitions. Recall that the Point Pleasant formation is the main target and has been likened to the Eagle Ford play formation for its reservoir characteristics. About 75% of the acreage purchased by PETD is held by production.

PETD will spend $10MM in 2011 and $40MM in 2012 to acquire and earn its 30,000 acre leasehold. The company’s plans include drilling one vertical well in 4Q11 and two horizontal wells in 2012. Lease costs and drilling commitments will be funded through borrowings under the company’s credit revolver.

A number of E&Ps recently acquired acreage in the Utica play at deal prices ranging from $2,500/ACRE to almost $6,000/ACRE. HESS announced a joint exploration and development agreement yesterday with CONSOL Energy to develop nearly 200,000 acres in the Utica play. The implied deal value equates to nearly $6,000/ACRE for HESS’ acquisition of 50% of CONSOL’s 200,000 acre leasehold.

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