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Gutsiest Oil Exploration IPO: Herb Greenberg

The most interesting IPO you’ve never heard of?

That’s one way to look at Oasis Petroleum, which is scheduled to price tonight.

On one level I consider it the gutsiest IPO of the week: An oil exploration company in a sea of post-BPoil exploration stock disasters.

On the other—as Gary Kaminsky suggested to me on Strategy Session: That’s why this deal’s timing may be so good. While many investors may not distinguish between deep-water drilling and oil shale, the smart money does and is.

My round of calls to energy investors shows this is likely to be a hot deal in that crowd this reason: Oasis is the purest play in oil shale in the Northern Plains’ Williston Basin. Its management and assets are highly regarded.

However, it’s not alone among public companies with high concentration of oil shale assets. Others include Continental Resources, Whiting Petroleum and Brigham Exploration .

Less concentrated but certainly on the scene: EOG Resources and Kodiak Oil & Gas. All of their stocks have been good performers this year.

One obvious question it would seem: With deep-sea drilling in the dumps, will oil shale assets become more valuable? And will they be likely candidates for a takeover? And if so—who would be the likely buyer?

Exxon Mobil is in the process of buying XTO Energy, which is active (but not exclusive) in the region. (With its cash, it can do anything.)

Royal Dutch Shell has been more focused on gas. That leaves, among others, Hess and Marathon Oil , which both are actively exploring in the region.

My take: This oasis is real, but like oil & gas exploration companies, so are the risks—falling oil and gas prices among them.

Symbol
Price
 
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%Change
CLR
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EOG
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ICTXX
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KOG
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MRO
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RDSA
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WLL
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XOM
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From the prospectus:

“During the fourth quarter of 2008, we also recorded a $45.5 million charge to recognize an impairment to the carrying value of our proved oil and gas properties as a result of the decline in oil and gas commodity prices. In response to the commodity pricing environment in the fourth quarter of 2008, we reduced our planned 2009 capital expenditure program and also initiated discussions for early termination of two of our drilling rig contracts. In addition, although we drilled ten wells in the second half of 2008, we elected to delay the completion of five of the wells until mid 2009, as a result of lower commodity prices without a corresponding decrease in completion costs available from our vendors. We subsequently completed these wells in mid 2009 when completion costs were significantly lower.”

Something to keep in mind.

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.