The Last Oil Stock You'll Own
Throughout the brutal downturn for oil prices that began in the summer of 2014, there has been one U.S. anomaly consistently going against the grain: the Permian Basin.
For us, it’s the investment that keeps on giving.
Of course, its position near the Gulf of Mexico gives it a leg up on other oil regions in the Lower 48.
Just think of the raging jealousy that oil sands operators hold for Texas oil drillers. Not only can they extract oil at a profit right now, but they also have the added benefit of proximity to a network of Gulf Coast refineries. It's almost too much to bear.
The fact that the quality of oil from West Texas is lighter and sweeter than virtually everywhere else is another story altogether. We talked about this high-quality oil last week.
If there were any more productive plays in the country, this advantage would mean the Permian could give them all a run for their money.
But there aren’t.
The Permian is an oil investor’s dream all on its own. Producers in the area didn’t just survive the oil rout that we’re only just now coming out of — they made it the only shale play in the country to continue increasing production for the duration.
Just take a look at the Permian's record over the years as compared to the infamous Bakken shale play of North Dakota:
Of course, the Permian was a standout play long before the shale boom and has been the first to pick up the slack left behind by the drop in prices that took thousands of rigs and wells out of the game.
In the past year, the play has brought back online more than 200 rigs and now stands at 340 across the play. The next nearest play, the Eagle Ford just to the south, has grown from 40 to 78 in that time, according to Baker Hughes.
These numbers alone are enough to make it clear: the Permian Basin is where oil companies and investors alike need to be paying attention.
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A Future Play
The Permian already has a history of high performance. It’s produced more than 29 billion barrels of oil over the years and shows no signs of slowing down.
But that won’t mean anything if companies there now aren’t setting up for the future.
You see, it’s not enough to be increasing production in the moment, impressive though the play’s increases have been.
Investors want to be assured that their money will continue to grow. And that means not only turning on the taps now, but also finding new reserves to keep them running in the future.
Earlier this year, that’s exactly what EOG Resources did.
The company increased its presence in the Permian last year with its $2.5 billion acquisition of Yates Petroleum Corporation, which increased the company’s base production by more than 29,000 barrels per day.
This year, EOG reported that it had spud a new well in the area that could be one of the biggest the shale play has ever seen.
The discovery of this well, plus Apache’s Alpine High discovery in February, brings home a potent conclusion, and one I think many investors in the oil space have seen coming for a long time...
Permian is Key
There’s no better place to be right now than the Permian Basin, and it’s clear the prolific play still has a lot to offer investors.
It’s been producing since the early ’20s and has grown into the best oil and gas resource in the country. Now that the U.S. is fully invested in exporting both fuels, the Permian’s advantages are only going to become more prominent.
And the best part is, with everyone else focusing on the highs and lows of the day, we’ve got our own advantage getting in on the growth of a proven winner.
My longtime readers will know all about the Petroplex and the profits it has already won for us.
For newer readers, or anyone looking to get in on the lucrative recovery of the oil industry, I’ve put all of my most valuable research into a report you will absolutely want to read to get the most out of your oil investments.
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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