I had to check because it hasn’t happened in so long: we haven’t recommended an oil or gas producer not already in our portfolios all year. Instead, we’ve spent the last 11 months purging many of the prior upstream picks, and have no regrets about that given their subsequent performance as a group.

With crude prices back in the low 40s per barrel the industry remains deeply unprofitable, and the money problems will only get worse next year barring a major recovery, as the commodity hedges booked when oil prices were much higher run off.

We’re going to shed our producer aversion long enough to add Energen (NYSE: EGN) to the Aggressive Portfolio, however. Its charms, as Robert notes in his piece, include excellent acreage in the Permian Basin that’s driving the growth in the company’s crude output and a relatively strong balance sheet enhanced by well-timed recent sales of gas wells as well as Energen stock.

Declining lifting costs and impressive recent well results round out this package. Lease operating, marketing and transportation expenses per barrel of oil equivalent were down 13% year-over-year in the third quarter as Energen benefited from lower workover, power and water disposal spending. The company is also seeing strong early returns from extending well laterals from 7,000 to 10,000 feet as well as from appraisal wells drilled to the north of its core acreage in the Midland Basin.

Source: company presentation

Energen is  unlikely to break even overall at current prices, but management sees no shortage of attractive investment opportunities at as little as $50 a barrel. It would take something closer to $60 a barrel, however, to get capital spending on new wells up to $1 billion for a third year in a row. Since Energen has only modest hedges for 2016 at significantly lower prices than those it cashed out this year, 2016 cash flow would take a hit without a crude price boost. And the company wants to limit debt to no more than 2.5 times EBITDA.

But this would be a voluntary exercise in self-restraint well beyond the covenants on Energen’s $1.4 billion credit line, of which $1.2 billion remains available. Much of the remaining $550 million in debt is not due until 2021 at the earliest, and carries a modest aggregate interest rate of approximately 5.4%.

It helps that Energen raised $400 million in June via a secondary offering priced 25% above its current valuation, and a similar sum in March from the sale of gas wells in New Mexico. But the biggest source of balance sheet strength was clearly the sale of its Alabama gas distribution business last year for $1.3 billion net of debt.

The combination of financial strength and excellent drilling prospects creates plenty of flexibility, so management won’t finalize 2016 capital spending plans until early next year. Unless prices rebound by that point, the company’s growth plans are unlikely to match this year’s expected 19% output increase.

But they won’t need to leave Energen as one of the most likely long-term beneficiaries of the Permian’s emergence as the premier U.S. shale basin. It’s got the low costs sufficient to ride out this downturn and the resources to capitalize once prices recover.

It may also be one off the likelier midcap acquisition targets in a region that’s recently seen a flurry of tire kicking, including Anadarko’s (NYSE: APC) unsuccessful pass at Apache (NYSE: APA) and ongoing efforts to sell Clayton Williams Energy (NASDAQ: CWEI).

But Energen’s certainly not waiting for suitors, and is in fact looking to fill in its Permian footprint with smaller-scale bolt-on acquisitions of adjacent turf.

The stock has declined less than many of its peers because Energen offers an unusual margin of safety for a midcap driller. And while that’s not saying much, its upside exposure to meaningfully higher oil prices in the medium term is worth the risk. Buy EGN below $64.