Forget about Big Oil this year and focus your attention on those smaller US-shale-focused players because they have begun to outperform the big boys and we expect much better returns for investors. So if you want bigger returns this year, you have to look smaller. And we can find you a handful of smaller players focused on US shale set up to earn bigger profits for investors than the supermajors. If you need more convincing, check out the second-quarter financials coming out now and compare them with the supermajors. They paint a very interesting story.
Why are the smaller players outperforming the giants?
• They are spending on high-margin drilling from US crude wells
• They are focused on the US, where shale growth is clear, either staying put to the US altogether, and sticking to shale, or having divested their overseas and offshore assets to raise cash
• The transport glut has eased a bit, leading to a 16% rise in the WTI, while London-traded Brent has fallen about 2.2% (this is wrong-footing the supermajors)
• They aren’t “integrated” like the supermajors, so they’re not taking a hit on poor-performing sectors like refining
Who to Watch
EOG Resources Inc. (EOG)
This is THE biggest player in the Eagle Ford shale in Texas, and its profits are expected to triple this year. We’re looking at over $1.9…