9 Ways to Profit from the U.S. Oil Boom
If you walked down to your local gas station and polled the next 10 people that filled up their tank, I bet you’d be in for a surprise…
Let’s assume you asked a simple question: “where is the majority of U.S. oil coming from?”
Long story short, if anyone responded with “the Middle East” or “OPEC” they’d be dead wrong.
In fact, they’re getting “wronger” by the day!
Today I want to take a look at a handful of stunning oil facts — plus, we’ll update 8 profit plays that can help you cash in.
First off, get a load of this:
- 1 out of every 10 barrels of U.S. oil production comes from North Dakota — so when you fill up your tank, at least devote a little time to the stoic scenery of the Roughrider State.
- The State of Texas now produces more oil than Venezuela
- There’s almost more oil coming out of North Dakota then there is from, say, Mexico!
- U.S. petroleum product EXPORTS are on pace to be the highest ever, this year.
- 61% of U.S. imports come from non-OPEC countries.
Plus, get this:
According to the latest report from the U.S. Energy Information Administration (EIA), “U.S. crude oil production increased to an average of 7.6 million bbl/d in August, the highest monthly level of production since 1989″
To be precise the last time we produced this much oil was in June of 1989…heck, the Berlin Wall was still standing strong.
With the above facts in mind, let’s focus on two pillars of our current oil thesis: first, there’s still a growing global need for scarce oil. And second, there’s an impressive rise of oil opportunities here on U.S. soil.
Add it all up, and it’s time to check in on our favorite ways to play this American energy trend!
Let’s update the 8 companies we covered in the beginning of the year (including another that I’ll add to the list, below.) As you may recall our list covers everything, from exploration and production to processing and storage. The money is flowing in America’s oil patch and today we’ll recap the best ways that you can grab it!
Since we first discussed these players, they’re up 21% on average (including dividends) in a little over 8 months. In fact, only one of the picks is in the red. That’s fantastic! It’s also proof positive that the U.S. oil boom is chugging right along on schedule.
Below you’ll find the full list of companies profiting from America’s energy comeback and how they’ve faired since our initial write-up…(plus, as promised, one extra pick!)
ConocoPhillips (COP) up 22% — ConocoPhillips is a huge domestic oil and gas producer. The company has also made hay out of their shale positions. One statistic still stands out: at a recent conference I heard from Conoco that their breakeven price in the Eagle Ford shale play is around $37/barrel of oil equivalent. Sure, there’s a lot that goes into that number but with prices over $100 today, it’s no wonder COP is up 22% on the year. The company is also sporting a 4% dividend. Don’t stare at this gift horse too long.
Statoil (STO) down 6% — Shares of Statoil haven’t shot out of the gate like most of the others on this list, but the company still has an impressive shale resume here in the U.S. With production in North Dakota’s Bakken and the South Texas Eagle Ford, Statoil has plenty of potential to profit from America’s energy comeback. Stay tuned!
EOG Resources (EOG) up 33% — EOG has been a leader in the U.S. shale boom. The company has exposure all of the big U.S. shale fields (including some work up in Canada’s shale patch!) The Marcellus shale, Permian Basin, Eagle Ford, Bakken and plenty more, EOG consistently finds itself in the sweet spot of shale plays. The company is using its trailblazing knowledge across the shale space — a strategy that’s certainly paying off.
Pioneer Natural Resources (PXD) up 66% — Pioneer is one of the strongest up-and-coming oil companies you’ll see. With production in the Eagle Ford and the Permian Basin this medium-sized oil company could soon morph into a behemoth of shale production. Keep an eye on this one, and take a look at picking up shares on pullbacks.
DCP Midstream Partners (DPM) up 21% — We’ve beat the drum in these pages for DCP over the years, and this midstream player hasn’t disappointed. Of note, DCP is America’s #1 natural gas liquids (NGL) producer. In a world with increasing “wet” byproducts from shale plays, like the Marcellus and Eagle Ford, DCP is in the sweet spot of this market. When energy producers need to process or move their gas much of the time the checks are signed to DCP.
Global Partners (GLP) up 20% — All aboard the rail boom! When companies need to transport their crude from the Mid-west Bakken formation, Global is there. According to company data, Global is a “leader in the purchasing, selling and logistics of transporting domestic and Canadian crude oil and other energy products by rail across its ‘virtual pipeline’ from the mid-continent region of the U.S. and Canada to the East and West Coasts.” With more oil coming online Global looks positioned to profit.
Enbridge Energy Partners (EEP) and Enterprise Products Partners (EPD) up 5% and 13% — The big surprise for investors over the past four years was an increase in crude shipments by rail and barge. Although there are plenty of opportunities to play emerging transportation options, we shouldn’t forget about pipeline players! Enbridge and Enterprise both have valuable pipeline assets in the U.S. and Canada. As more crude comes from North American shale plays, the necessity for pipelines will remain paramount. Of note Enbridge and Enterprise have a 50/50 ownership of the recently reversed Seaway pipeline. This important oil artery will help move crude from America’s oil basket to refiners in Houston.
(#9) Oasis Petroleum (OAS) — Although this update includes the 8 companies I named back in January, I do think we should add one to the list. A recent standout in North Dakota’s Bakken (you can think of them as the Pioneer Natural Resources of the north!) is Oasis Petroleum.
Oasis has strong potential to make a killing in the Bakken. They have a proven track record of production and as more efficiencies come online, more oil will follow! Add this one to America’s energy comeback tour.
According to the latest from the U.S. EIA “The largest area of non‐OPEC growth is North America, where production increases by 1.4 million bbl/d and 1.1 million bbl/d in 2013 and 2014, respectively, resulting from continued production growth in U.S. onshore tight oil formations and from Canadian oil sands.”
“Non-OPEC” growth is right up our investment alley! And as the U.S. oil patch continues to surprise analysts. You and I shouldn’t be surprised to see a huge up swell (even from today’s lofty estimates) in the production of U.S. oil and gas.
More technology, more efficiency, “stacked” plays and pricey oil are going to fuel this boom beyond many wild expectations.
In all, the 9 players above will help you hitch a ride on this skyrocketing boom.
Keep your boots muddy,
Original article posted on Daily Resource Hunter
P.S. The U.S. oil boom is not slowing down. Indeed, there’s plenty of evidence to suggest it’s just getting started. These 9 plays are just the beginning. You’ll want to keep a sharp eye on this developing story. And the best way to do that is to read The Daily Resource Hunter. It’s completely free to sign up, and each day you will get a detailed analysis of the most exciting news in the resource sector… plus a few opportunities to learn how profit from it. So don’t wait… Sign up for The Daily Resource Hunter, for free, right here.