In this issue:

 Nearly four years have elapsed since the Gulf oil spill blackened BP’s (NYSE: BP) reputation along with hundreds of miles of coastline, but the oil major finally appears to have put the catastrophe behind it, to a degree the market doesn’t yet fully appreciate. We explain why we’re not the only ones to see a compelling bargain in its share price, and also recommend the purchase of the similarly underrated ConocoPhillips (NYSE: COP), the major with the most upside from unconventional North American plays.

While crude prices have been strong for years, this winter has seen a major rally in the price of natural gas and natural gas liquids, as traders have belatedly awoken to the implications of rising domestic demand and the surging tide of exports. Several portfolio holdings are in prime position to ride these trends much higher.

We wrap up the issue with two more portfolio picks from among the recent IPOs. Both Rice Energy (NYSE: RICE) and Jones Energy (NYSE: JONE) are the cost and efficiency leaders in their respective areas of focus, and both have plenty of growth ahead promising triple-digit rates of return on investment at current commodity prices. We think getting to know them better will prove lucrative.   

Portfolio Action Summary

• Adding BP (NYSE: BP) to the Conservative Portfolio. Buy below $56
• Adding ConocoPhillips (NYSE: COP) to the Conservative Portfolio. Buy below $73
• Adding Rice Energy (NYSE: RICE) to the Aggressive Portfolio. Buy below $27
• Adding Jones Energy (NYSE: JONE) to the Aggressive Portfolio. Buy below $21

Commodity Update

The price of West Texas Intermediate (WTI) continues to defy gravity, trading Tuesday at $100.29 per barrel, up $5.30/bbl from two weeks ago. Brent traded up $1.87/bbl to $108.76, which dropped the Brent-WTI spread to $8.47/bbl (which is growing bearish for refiners). The weather remains very cold and natural gas inventories are historically low (see image below), which has pushed the front-month contract for natural gas trading Tuesday to $4.87/MMBtu, up $0.43 from two weeks ago.

In Other News

• The US State Department released the final environmental impact statement for the Keystone XL pipeline. The report concluded that “the proposed Project is unlikely to significantly affect the rate of extraction in oil sands areas…”

• The price of West Texas Intermediate crude reached $100/bbl for the first time in 2014.

• Boardwalk Pipeline Partners (NYSE: BWP) lost nearly half its value after announcing an 80 percent cut in the partnership’s distribution.

• Chevron (NYSE: CVX) reported one person hurt and another missing following an explosion at a natural gas well in Pennsylvania.

• The US Department of Energy approved Sempra Energy’s (NYSE: SRE) Cameron liquefied natural gas (LNG) project in Louisiana; it was the sixth LNG export project to receive DOE approval

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