How to Invest in the New U.S. Oil Boom

Last year marked the first time since 1949 that the U.S. was a net exporter of petroleum products.

High energy prices and new, advanced drilling techniques are sparking a production boom in resource-rich areas such as the Permian Basin in the southwestern U.S. and the Bakken of North Dakota. While investors who want to play the oil boom may be tempted to claim a stake in industry giants such as Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM), a recent Wall Street Journal article, Frack Attack: How to Play the Next American Oil Boom, suggests that investors look beyond the majors to profit from the U.S. energy explosion: “Investors with an appetite for risk might want to drill deeper into the sector to find smaller companies sitting on U.S. oil-shale riches—which make tempting takeover targets, analysts say.”

One company that fits this description perfectly is Cross Border Resources, Inc. (OTC QX: XBOR), a Texas-based oil and gas company with $28 million in proven reserves. XBOR holds over 31,000 acres in the Permian Basin, one of America’s most prolific oil and gas regions, and is targeting various emerging plays including the Bone Spring and Wolfberry, and more conventional plays such as the Abo, Yeso and San Andres.

As a non-operator partnered with the most prominent names in the Permian Basin, including Cimarex (NYSE: XEC), Apache (NYSE: APA) and Concho Resources (NYSE: CXO), XBOR has easy access to rigs and frac crews, expediting production. Management expects production to reach 500 barrels of oil equivalent per day by the end of January, up from 320 barrels at the end of the third quarter. The Company recently updated investors on its 2nd Bone Spring operations and plans to update its other Permian Basin activity in the next several weeks.

The combination of growing reserves and increasing production, set amid a new American oil boom, makes XBOR a highly attractive takeover candidate. RedChip Research recently rated XBOR a Strong Buy with a 12-month price target of $5.00, a potential upside of more than 250%. You can learn more about the Company by watching our interview with Cross Border’s CEO, Will Gray, from our recent Small-Cap New York Conference.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.