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Boreal Energy: A Cheap Drill Stock for Options Traders

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  Published in Stocks and Investing on Thursday, December 18th 2025 at 10:38 GMT by CNBC

Oil‑drilling stock “Boreal Energy” – a bargain for options traders

When oil prices hover near multi‑year highs, investors often turn to the companies that actually drill the wells that feed the market. CNBC’s latest feature, “This oil‑drilling stock is remarkably cheap – how to trade it with options,” spotlights a little‑known player that, according to the article, is “trading at a discount to the sector average, with a robust balance sheet and a clear path to cash‑flow generation.” The piece is not just a valuation snapshot; it is a hands‑on guide for option traders who want to capture upside while limiting downside risk. Below is a 600‑word walk‑through of the article’s key points, enriched by the links it follows for context on drilling fundamentals and options strategy.

1. Why Boreal Energy Stands Out

Market context
The article opens with a brief recap of the current oil environment: Brent crude at $88 a barrel, U.S. WTI at $84, and a backdrop of geopolitical uncertainty that keeps demand firmly in the “strong” zone. The author argues that, in such a setting, drilling operators have the most direct exposure to price spikes because their costs are largely fixed while revenue scales with spot prices.

Company fundamentals
Boreal Energy (ticker: BORN) is highlighted for a number of financial metrics that the author compares against the top five U.S. drilling firms (Halliburton, TechnipFMC, Baker Hughes, Aker Solutions, and Schlumberger). The link to the CNBC “Oil & Gas” page offers readers a quick way to check industry averages. Key numbers from the article include:

The article notes that Boreal’s 2024 revenue is $520 million, up 18 % from 2023, and that the company has a pipeline of five new rigs slated for deployment in Q3. Its management team’s track record of bringing projects online ahead of schedule is cited as a competitive moat.

Valuation driver
Boreal’s discount is largely attributed to a “conservative risk‑profile” and a relatively low debt‑to‑cash‑flow ratio. The author follows a link to CNBC’s “How to calculate intrinsic value” page, which explains how the discounted‑cash‑flow model is applied to drilling companies where earnings can be volatile. The article asserts that even a modest 5 % discount to the intrinsic value calculated by a 10‑year DCF is a strong buying opportunity for traders.

2. Options Strategies for a “Cheap” Drill Stock

The bulk of the article is devoted to actionable option plays. It assumes a reader who already has a brokerage account that offers options and a willingness to hold a position for 30–90 days. Each strategy is broken into three parts: setup, risk management, and exit plan.

a) Cash‑Secured Put

Setup – Buy a put at the current price (~$24) with a strike 10 % below the market price (e.g., $21.60). The premium is ~2 %. The trader allocates enough cash to buy 100 shares if the put is exercised.

Risk management – The maximum loss is the premium paid (2 %) plus any decline in the underlying to the strike price. The downside is capped at the strike level.

Exit – If the put expires in the money, the trader acquires BORN at $21.60 and can hold the shares. If it expires out of the money, the premium is kept as profit.

b) Covered Call

Setup – Own 100 shares of BORN (currently at $24) and sell a call at $28. The option premium is roughly 4 %.

Risk management – The trade’s maximum loss is the decline of the stock minus the call premium. The upside is capped at $28 per share plus the premium.

Exit – Let the option expire worthless (if BORN stays below $28) and keep the premium. If the call is exercised, the trader sells shares at $28 and keeps the premium.

c) Protective Put (Collar)

Setup – Buy a put at $21.60 (same as the cash‑secured put) and simultaneously sell a call at $29. The net cost of the collar is the difference between the put premium and the call premium, often around 1 % of the stock price.

Risk management – The collar protects against large downside moves while allowing upside beyond $29. The trade is “budget‑friendly” because the call premium offsets most of the put cost.

Exit – Let both options expire or close them early if the stock moves significantly.

d) Long Straddle (for volatility play)

Setup – Buy both a call and a put at the current price ($24). Total cost ~4 %.

Risk management – This strategy bets on a big move in either direction. The maximum loss is the total premium.

Exit – Close the spread when the underlying moves by >4 % in either direction, or when the implied volatility changes dramatically.

3. The “Risk” Side of the Story

The article does not shy away from the perils of drilling stocks. Key risk factors highlighted include:

1. Oil‑price sensitivity – A drop of 30 % in spot prices can crush margins for operators like Boreal. The author links to CNBC’s “Oil‑price forecast” page to provide readers with a quick look at analyst consensus.

2. Regulatory & ESG pressures – Climate change policies, carbon‑pricing proposals, and public opinion can affect drilling approvals. The piece cites a 2024 EPA rule that could raise operating costs for new rigs.

3. Geopolitical risks – While Boreal operates primarily in the U.S., a sudden spike in demand in the Middle East can lead to supply constraints that push drilling costs higher. The article links to the “Middle East oil politics” section on CNBC for context.

4. Capital intensity – Drilling is a capital‑heavy business. The author notes Boreal’s recent capital raise of $150 million to upgrade its rig fleet, and the risk that future capital calls could dilute shareholders.

4. Putting It All Together

In the concluding section, the author advises readers to combine the valuation “discount” with a carefully chosen option play. “A cash‑secured put at 10 % below the current price offers a disciplined entry point,” the piece states, “while the covered call provides a way to generate income if the price plateaus.” The article suggests that even an option‑centric investor can benefit from Boreal’s solid fundamentals by using a collar – a low‑cost way to protect against downside while maintaining upside potential.

For those who prefer to stay on the aggressive side, the long straddle is recommended as a “volatility bet” if the trader expects a major price swing, whether due to an upcoming earnings release or a geopolitical event. The article ends with a reminder that options trading is “not a get‑rich‑quick scheme,” and that proper risk management (position sizing, stop‑losses, and regular portfolio reviews) is essential.

5. Final Takeaway

Boreal Energy’s cheap valuation, bolstered by a strong balance sheet and a forward‑looking rig schedule, makes it an attractive candidate for option traders who want both income and upside. The CNBC article’s step‑by‑step guidance, coupled with the links to market data, valuation tools, and risk alerts, turns a complex, sector‑specific story into a practical playbook for the savvy investor. By following the suggested cash‑secured puts, covered calls, collars, or long straddles, traders can leverage Boreal’s price dynamics while maintaining disciplined exposure to a volatile yet fundamentally sound asset.