Gulf Coast Oil Profits
Make Exxon Pay You
It might surprise you to learn that the biggest jumps in employment so far this year were along the Gulf Coast.
Truth be told, our immediate thought is that booming states like North Dakota, Texas, or Pennsylvania would've seen the best jobs numbers — but they didn't.
That's not to say these areas are doing poorly. North Dakota has a 2.6% unemployment rate, which is the lowest in the nation.
But for the past year, the Gulf Coast has been the spot to see employment growth.
And I know why...
While the entire market is fixated on the United States' onshore shale plays (as it should be), offshore drilling in the Gulf has been quietly picking up the pace ever since the BP oil spill made drilling the Gulf of Mexico anathema for investors.
And it's been a boon for states on the Gulf Coast.
Florida led the nation in unemployment decline in March with 22,900 new jobs added.
Even better, check out this chart for February from the Bureau of Labor Statistics for yourself...
Click Chart to Enlarge
You'll notice the drop in unemployment in Louisiana and Florida. Their success is due in large part to renewed interest in oil from the Gulf of Mexico.
Over the last two months, Florida's payroll count rose by almost 60,000, while the coastal regions of Louisiana boasted a 2.8% unemployment rate thanks to more offshore drilling.
Clearly the fallout from the Deepwater Horizon disaster has quieted enough for companies to re-open the spigot to Gulf Coast oil without too much attention.
Most people just aren't thinking about offshore drilling and oil spills.
So while environmentalists and the media move on to Keystone XL and coal pollution in China, companies are ramping up their offshore oil production.
And with more and more nations, especially in the Middle East, fighting to nationalize their oil profits, Big Oil barons like Exxon continue to focus more on offshore drilling.
Even BP is drilling more wells in the Gulf just to fight off declines elsewhere.
They doubled the amount of offshore rigs they had before April 2010, when their giant oil spill stoked the ire of millions against deepwater drilling.
And by 2020, BP expects the Gulf to deliver the largest portion of their profits.
It's not just them, though...
All of the Big Oil companies are investing offshore and underwater. According to Wood Mackenzie, spending is set to reach $17 billion this year. With the recent slowdown off the Arctic coast, companies like Shell will be looking to balance out the losses with growth in the Gulf.
And as the land grabs in the shale plays calm down and more nations across the globe nationalize their oil profits, I expect offshore to become the biggest sector for long-term growth.
The Trick to Offshore Gains
For most, finding gains from offshore drilling is tough.
The big issue is that exploration and development costs are utterly huge... way too big for under-the-radar fracking outfits like those in the Permian and Eagle Ford.
Remember, major offshore companies must spend upwards of $100 million just to develop a single well — more than ten times your typical shale well. These high costs make deepwater drilling the exclusive playground for Big Oil — and we both know these major oil companies are far from attractive investments.
And what's the most important aspect to drilling offshore? The rig, of course.
Fortunately, there are far better ways to capitalize on this future oil rush. You see, the incredible prices energy powerhouses like ExxonMobil and British Petroleum are willing to pay provide a rare opportunity for individual investors.
Recently, I've uncovered one of the few undervalued gems still trading under Wall Street's radar. It's trading at only six times earnings and is lining its shareholders' pockets with regular checks... all at the expense of Big Oil.
You can check out all the details behind this offshore stock by clicking here.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
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