OPEC's Oil Collapse

Keith Kohl

Written By Keith Kohl

Posted April 18, 2014

OPEC must be infuriated.

After all, raising oil production shouldn’t be this easy for anyone. And for the 12 members of the oil cartel… it isn’t.

But what really stings more than U.S. oil output topping 8 million barrels per day is that OPEC producers just can’t seem get their house in order.

So Long, and Thanks for All the Oil

OPEC production briefly slipped last month to 29.6 million barrels per day. Now, this isn’t to suggest that members like Saudi Arabia can’t pick up the slack if needed, but far too many people are overly optimistic about the whole situation.

Libya’s oil minister admitted this week that there was no clear timetable to restore steady production.

In Iraq, insurgents seized control of a dam to try and flood particular areas to hinder security forces from advancing. Imagine how restrained oil exports out of the country will be if the fighting spills into the southern part of the country, where oil production has been steadily progressing.

Even when OPEC members are able to export their crude, they have to contend with the U.S. tight oil boom.

In 2007, Nigeria’s exports to the United States averaged slightly more than a million barrels per day. Since then, these exports have collapsed to multi-decade lows.

nigeria exports 4-18

Click image to enlarge

To put a little more perspective on this situation, consider that Nigeria exported a trivial 51,000 barrels per day to the U.S. last January.

And just to add insult to injury, the tight oil boom has even helped one specific group of oil companies we’ve long abandoned.

Even Big Oil Can’t Fail in Texas

Anywhere else in the world, we would expect Big Oil to fall flat on its face. As it stands now, companies like ExxonMobil have relied on more surreptitious ways to bolster their reserves.

In 2003, Exxon’s proved reserves of crude oil and natural gas liquids totaled 9.8 billion barrels.

Exactly ten years later, this amount fell 9% to a little over 9 billion barrels. Today, crude oil only accounts for about 30% of Exxon’s total reserves, which also hold 3.6 billion barrels of bitumen and 71.8 trillion cubic feet of natural gas as well.

Well, so much for being the world’s largest publicly traded oil company on the planet.

There is, however, a place where even Big Oil can’t possibly fail to strike oil: Texas.

Just look at how well ConocoPhillips is faring in the Lone Star State. With its $91.5 billion market cap, ConocoPhillips is spending upwards of $11 billion developing two of the hottest oil plays in the lower-48 states.

They have high expectations, too. The company is planning to its boost production in South Texas to over 130,000 barrels of oil equivalent per day by 2017, more than doubling production in the Eagle Ford within five short years. In West Texas, the company will add over 70,000 barrels of oil equivalent to its daily production.

And yet no matter how many billions of dollars Big Oil spends to keep its production afloat, it’s consistently outperformed by the smaller drillers in the U.S. shale boom — one of which has more than doubled for investors over the last year:

petroplex vs big oil 4-18

Of course, one of the secrets behind the West Texas oil revival involves a little-known feature called stacked pay zones.

In short, they’re oil formations layered one upon another, allowing companies like the Petroplex driller above to tap several different producing formations.

More important, however, is that these oil companies have sparked a second oil rush in West Texas. This time around, new technology has opened up more than 30 billion barrels of recoverable oil — that’s more than three times more recoverable oil than can be found in North Dakota!

And it’s even easier for individual investors like us to get a piece of the action.

If you want to learn more about this tiny Texas driller making headlines in the red-hot Permian Basin, I recommend you take a few quick minutes to read my latest report.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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