Profit from America’s Move Towards Oil Independence
Technology and growth stocks may not be looking that good at this time, but the same cannot be said for the oil sector, which is an investment opportunity.
We are seeing significant profits emerge in the oil patch, as the price of West Texas Intermediate (WTI) is holding above $100.00 per barrel.
The presence of the higher oil prices is driving energy companies, from the drillers to producers, both upstream and downstream, to report strong results.
America has become a major producer of oil, which is lessening the country’s dependence on oil from the oil cartel in the Middle East, the Organization of Petroleum Exporting Countries (OPEC).
As many of you know, the trigger that has driven up the domestic production of oil has not been the opening of protected land in Alaska or the incoming flow of friendly oil from the Tar Sands in Canada, but the aggressive efforts to develop shale oil via fracking technology, which has become an investment opportunity.
The impact of shale oil on OPEC was made evident in a report produced by the cartel in 2013 that predicts the decline in its market share due to the influx of shale oil. (Source: Lawler, A., “OPEC to lose market share to shale oil in 2014,” Reuters, July 10, 2013, last accessed May 29, 2014.) This is making shale plays an investment opportunity.
Make no mistake about it: the growth of new oil drilling technologies, such as the horizontal drilling incorporated in the fracking process, will only expand as an investment opportunity. North Dakota is now the Mecca of shale oil and is the second-largest producer of oil in the country after Texas.
The largest shale oil play in the Bakken oil fields of North Dakota is Continental Resources, Inc. (NYSE/CLR), with close to one million net acres in the region.
In a previous commentary, I presented a smaller shale oil play in mid-cap Kodiak Oil & Gas Corp. (NYSE/KOG). The company operates about 154,000 net acres of land in North Dakota. The stock has had a nice run up, but it continues to look like an attractive longer-term investment opportunity.
If you are looking for a smaller and more speculative shale oil investment opportunity, take a look at Triangle Petroleum Corporation (NASDAQ/TPLM). The company explores and produces shale oil and natural gas from the Bakken Shale and Three Forks formations in North Dakota and Montana. As far as acreage, Triangle has about 94,000 net acres in exploration.
We are also seeing some strong insider buying in Triangle, with 9.19 million shares bought by insiders over 10 transactions during the past six months, which is bullish and suggests an investment opportunity. The revenue side looks strong, too. Revenue growth is estimated at 82.1% in FY15 (ending in January 2015) and 31.5% in FY16.
The rising importance of shale oil means you should have some stocks that will benefit from the growth; if you don’t own any stocks like these, now may be your best investment opportunity.