Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Why Banks Will Be Slammed In The Next Crisis—And That May Be Good News - 23rd Jan 18
Medicare Premiums Are A Shared Pool - Coming Changes That Will Transform Retirement - 23rd Jan 18
Charged Atmosphere of Heavy Police and Security Presence at Sheffield Street Tree Felling Protests - 23rd Jan 18
Pension Crisis And Deficit of £2.6 Billion At Carillion To Impact UK - 22nd Jan 18
Two Factors for Gold That You Don’t Want to Miss - 22nd Jan 18
Why You Must Own Silver in 2018 - 22nd Jan 18
This Could Be The Hottest Mining Stock Of 2018 - 22nd Jan 18
Stock Index Trend Trade Setups for the SP500 & NASDAQ - 22nd Jan 18
Stock Market Deceleration / Distribution - 22nd Jan 18
US Markets vs Govt Shutdown: Stock Markets at all time highs - 22nd Jan 18
Land Rover Discovery Sport - 1 Month Driving Test Review - 22nd Jan 18
Why should you use high-quality YouTube to mp3 converter? - 22nd Jan 18
Silver As Strategic Metal: Why Its Price Will Soar - 21st Jan 18
Stocks, Gold and Interest Rates Three Amigos Ride On - 21st Jan 18
Why Sometimes, "Beating the S&P 500" Isn't Good Enough - 21st Jan 18
Bunnies and Geckos of Sheffield Street Tree Fellings Protests Explained - 21st Jan 18
Jim Rickards: Next Financial Panic Will Be the Biggest of All, with Only One Place to Turn… - 20th Jan 18
Macro Trend Changes for Gold in 2018 and Beyond - Empire Club of Canada - 20th Jan 18
Top 5 Trader Information Sources for Timely, Successful Investing - 20th Jan 18
Bond Market Bear Creating Gold Bull Market - 19th Jan 18
Gold Stocks GDX $25 Breakout on Earnings - 19th Jan 18
SPX is Higher But No Breakout - 19th Jan 18
Game Changer for Bitcoin - 19th Jan 18
Upside Risk for Gold in 2018 - 19th Jan 18
Money Minute - A 60-second snapshot of the UK Economy - 19th Jan 18
Discovery Sport Real MPG Fuel Economy Vs Land Rover 53.3 MPG Sales Pitch - 19th Jan 18
For Americans Buying Gold and Silver: Still a Big U.S. Pricing Advantage - 19th Jan 18
5 Maps And Charts That Predict Geopolitical Trends In 2018 - 19th Jan 18
North Korean Quagmire: Part 2. Bombing, Nuclear Threats, and Resolution - 19th Jan 18
Complete Guide On Forex Trading Market - 19th Jan 18
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

Shale Oil Stocks are Poised to Earn Investors Big Profits

Commodities / Crude Oil Jun 29, 2012 - 07:31 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleDon Miller writes: With oil production soaring in the United States, shale oil stocks will be pumping out profits for years to come.

It's all thanks to huge deposits of shale oil.

At least four new major shale oil plays including the Bakken in Montana and North Dakota, the Eagle Ford in Texas, and the Marcellus in Pennsylvania and New York, may have more than 20 billion barrels each of recoverable oil.


Each of these new shale oil plays has the potential to double the total reserves we have today.

In fact, the "shale oil revolution" will soon make the United States the world's leading producer of crude oil, a report from Goldman Sachs Group Inc. (NYSE: GS) recently predicted.

The United States will produce more than 10.7 million barrels of oil per day by 2017, the report said. That's more than any other country, including Saudi Arabia.

And even though oil prices are in a short-term swoon, the glut of shale oil is about to make savvy investors a huge fortune.

That's why you need to take a hard look at a particular group of shale oil stocks that stand to benefit most from this boom.

But first, you need to know how this came about.

Fracking Frees Up Shale Oil
In short, we have "fracking" to thank. You've probably heard of the term by now.

Fracking − injecting wells with chemicals, water, and sand to force natural gas and oil out of rock − has turned the energy markets upside down.

Fracking is freeing up enormous amounts of crude from previously unattainable oil deposits. The technology is also making some abandoned wells viable again.

Counting the output from Canada and Mexico, a recent report by Citigroup Inc. (NYSE: C) declared North America "the new Middle East."

But as production has accelerated in North Dakota, the Canadian tar sands, and the Rocky Mountains, oil has been piling up in the Midwest, particularly Cushing, OK - a primary storage area for U.S. crude.

As it happens, that's good news for us.

The Opportunity of Shale Oil Stocks
Inventories of U.S. crude increased by 2.9 million barrels to 387 million barrels last week, the highest level since July 1990, theEnergy Department reported.

This development is what's behind our investing opportunity in shale oil stocks.

You see, all that new oil has to run through pipes to get where it's going.

Right now there simply isn't enough pipeline capacity to carry the oil sitting in Cushing to refineries in Texas and Louisiana. And without a way to get the oil out of Cushing, prices for oil there has dropped.

Since this glut began in 2011, prices for the same quality crude have been $8-$25 lower at Cushing than along the Gulf of Mexico, where prices closely follow that of Brent crude in Europe, according to a study by the Energy Institute at Haas.

Prior to 2011 there was enough pipeline capacity to keep the price difference between Cushing and the Gulf at less than $2.

It's easy to see how pipeline companies can profit from this situation - and several are already making their moves.

Seizing the Shale Oil Opportunity
Recognizing the dire need for their services, pipeline companies are stepping up and increasing capacity as quickly as possible to move the shale oil out of Cushing.

The best shale oil stocks fall into the category of master limited partnerships (MLPs).

MLPs own and build pipelines and almost everything else involved with the transportation and storage of oil, and are required to pay out all their profits as dividends to shareholders.

Money Morning's Global Energy Strategist Dr. Kent Moors advises investors to take a close look at MLPs, especially so-called midstream providers who are experiencing a wave of mergers and acquisitions (M&A).

"The market will produce a rising number of pipeline, processing, gathering, and storage facilities mergers, with the position of MLPs and the equity issuances from them, becoming even more decisive," Moors said.

Because of unique tax laws and the potential M&A activity, MLPs provide genuine potential for both price appreciation and a dividend well above market averages, Moors says.

One good candidate is Enbridge Inc. (NYSE: ENB) which recently was involved with a partner in a pipeline that will carry 150,000 barrels of crude daily from Cushing to the Gulf.

This is the first of a number of pipeline projects - including the southern leg of the Keystone pipeline − scheduled to come on line in the next few years.

Another is Linn Energy (Nasdaq: LINE). Linn is involved in the actual production of shale oil and gas and has around 2.8 trillion cubic feet of gas-equivalent reserves, assuring future production growth.

Best of all, Linn is fully hedged through the end of 2013 and more than two-thirds hedged through 2014-2015. Whether gas is at $2 or $15, the company should be able to maintain its payout of 8.06%.

For more information on these kinds of investment opportunities, you can sign up for Moors' free newsletter, Oil & Energy Investor, by clicking here.

Source :http://moneymorning.com/2012/06/28/shale-oil-stocks-are-poised-to-earn-investors-big-profits/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules