Opportunities in energy investing have really never been so focused. With the grand arbitrage in Brent/WTI spreads largely gone, refiners haven’t been so great and need to moderate some before they’ll peak my interest again. Natural gas refuses to play into what should be a growing resurgence of the fuel, at least for the present and oil services companies have been more than a little hit and miss, with the international plays being a lot more interesting than the domestic ones.
So, maybe there’s a lot to position for in the future, but for right now, there’s only one way to trade the space: Look for liquids-rich E+P’s that are showing growth – and doing it with an eye to increasing margins and shedding capex.
I’ve spent almost too much time outlining this thesis in the last several months, but the plus side to my repeating choruses and diligence has been three great candidates that do nothing but continue to trade well: Anadarko (APC), EOG Resources (EOG) and Noble (NBL).
One place that’s been slightly less hyped, largely because results are still slow in coming has been in the West Texas area of the Permian basin known as the Wolfcamp. You can find your hucksters here claiming reserves even more stunning than in the Eagle Ford and Bakken combined and I usually discount such hype, but now that some results are starting to show the potential of Delaware area of the play,…