The Not-So-Secret Texas Oil Giants
Nearly 94 years have passed since the first well was drilled into the Permian Basin.
That morning, oil exploded out of the Santa Rita No. 1 and forever changed the scope of West Texas.
Calling it a powerhouse in the U.S. oil industry isn’t hyperbole; it’s a gross understatement.
It’s simply massive.
Stretching from West Texas to southeastern New Mexico, the Permian Basin is over 75,000 square miles composed of more than 7,000 fields, where more than 29 billion barrels of crude oil have been extracted so far.
One would think taking so much oil out of the ground over such a long period of time would diminish its role in our oil supply.
Clearly those people don’t know much about West Texas.
Last week, I mentioned how well the Permian Basin stacked up against the world’s largest plays.
Now, it’s time to put my money where my mouth is and show you the first place investors will look to turn a profit from oil.
Sometimes the simplest trades are the most lucrative.
The Petroplex Powerhouse
My veteran readers know that the Lone Star State has been home to oil pioneers like George Mitchell, whose experiments with horizontal drilling and hydraulic fracturing beneath Forth Worth Texas singlehandedly led to the shale boom that started roughly 10 years ago.
However, anyone who is just starting to dip their toes into the oil sector wasn’t around when production in plays like the Bakken exploded higher.
Remember, up until 2007, U.S. oil output was in a seemingly irreversible decline. Barring a miracle, the future of the United States would’ve been measured by the size of our shackles to OPEC oil.
Well, that miracle took shape in the form of the shale boom... and it changed everything.
Just take a look for yourself...
Look, I understand that headlines today read more like the New York Post than anything else in the never-ending search for more clicks.
So let me put a little more perspective on exactly how vital tight oil is for you and me...
Between 2011 and 2014, right when the shale boom hit its stride, just seven regions accounted for more than 90% of oil and gas production growth.
I’d give you three guesses where those regions were, but you only need one.
Break the numbers down even further, and you’ll find that just three of those regions now make up 50% of total U.S. crude oil production... and one of those massive oil-producing areas pumps out more oil on a daily basis than the other two combined!
It’s true, believe it or not.
The Permian Basin is currently producing around 2.28 million barrels per day right now — that’s more output than both the Bakken and Eagle Ford together.
This is the kind of world-class oil resource that fortunes are built on.
And that includes yours...
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Oil Investing 101: Crisis and Opportunity
When prices were high, life was good for everyone.
You probably don’t need me to remind you what happened to oil prices over the last three years. Like me, anyone with skin in the game felt the harsh sting as oil prices collapsed.
The upstream sector of the oil industry (commonly called the exploration and production, or E&P, sector) was devastated.
There’s no whitewashing how bad things got for these companies.
And yet, throughout the entire price war, the resilience of the Permian Basin came through time and again.
I’ve said before that you can’t keep a good oil play down for long; that may turn out to be especially true in the Permian Basin.
There’s a reason nearly three out of every 10 barrels extracted in the U.S. is from West Texas.
Baker Hughes recently reported 340 rigs actively drilling for oil in the Permian Basin.
Although this is still nearly 200 fewer rigs in the field than in the summer of 2014, I’ll let you imagine the kind of growth that will take place if oil prices head higher.
The simplest trade in the Permian isn’t picking up shares of the big players.
You know the ones... mammoth oil companies like ExxonMobil, Chevron, and Pioneer Natural Resources. Together, these companies command a market cap of $579 BILLION.
They’re the easiest trades to make... not the simplest.
Moreover, if you wanted to buy just a single share of each, you’d shell out a cool 366 bucks.
All three are not only on the radar — they ARE the radar!
Now, if you were a fund manager playing with a few billion dollars of other people’s money, you wouldn’t think twice about picking up a sizable chunk of these stocks.
Actually, chances would be good that you already did years ago.
But everyday investors like you and me may not have that kind of cash lying around.
Fortunately, you don’t need nearly that much.
In fact, I want to show you how a tiny Texas oil stock beat them all:
Not only did this tiny Petroplex driller trading for under $15 a share outperform ALL THREE of those huge oil companies since 2012, but the stock is still flying under the radar of those Wall Street hedge fund managers.
They’re more pissed than you, trust me. You see, they’re forced to take smaller profits because the rules prevent them from truly taking advantage of the Permian Basin.
And you’ll be laughing all the way to the bank.
Keep a close eye on your inbox in the pre-market hours of the morning tomorrow, because I’ll be sending you the full details behind this hidden Texas oil investment gem.
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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