Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Choosing the Right Oil Company to Own in 2013


Choosing the Right Oil Company to Own in 2013

I have been making the point about crude oil production and capex absolutely CONTROLLING the energy space right now and through 2013 and this week's entry is perfect to point that out again through the released quarterly reports of EOG Resources (EOG) and Pioneer Natural Resources (PXD).

The action in both of these stocks in the market recently have been an oil investors' study --- 2013 is all about crude production and capex for that production.

Where are you getting your crude? How much is it costing you to develop? How much will it continue to cost you? When those numbers add up and the results tell a tale of efficiency and growth, you've got a stock that you can confidently hold.

Look hard at what I mean in EOG, a recommendation of mine that's just been tearing it up in the last six months:

There was another beat in the 4th quarter, but that's hardly what interested me in their report. It is their continuing stellar production numbers and continuing guidance for their operations in the Eagle Ford, which is turning into the most compelling play for US crude independence, even outstripping the Bakken – and EOG has a major stake there. Production is guided at increasing 28% in 2013 and the initial production numbers confirm that Eagle Ford continues to hit high percentages of long-producing assets. EOG will tighten spacing and add 400 wells – showing why Eagle Ford is not just another US shale oil ‘play' – it is a game-changer.

This makes EOG still a raging buy, even after their big move in the last 6 months. With increasing and sticky oil prices hovering internationally close to $120/bbl. EOG will mint money through 2014.

Pioneer Natural provides a great contrast as they are a bit more over their skis than EOG -- equally attempting to ‘play the volume game' to its advantage, however.

But Pioneer's big play is in the Permian basin, which has required more Capex to find resource growth and continues to marginally disappoint on production growth. In their latest report, Pioneer has increased their capex guidance to $3bln., leading to their secondary stock offering of 8mm shares on tap overnight. While production from one of their big Wolfcamp developments is increasing, it's not the type of blowout growth that EOG, for example, has guided on in the Eagle Ford.

Still, investors liked the report well enough and believe in the potential of PXD's Permian assets, bidding the stock up 3.5% today. This is a move I'd rather fade, not because I don't believe in the production guidance, but because I want to be investing in the strongest cycle, which is right now clearly in the Bakken and Eagle Ford.

But the important takeaway is again production growth. While your homework might lead you elsewhere than these two, that still must be the number one thought in choosing the right oil company to own in 2013.

By. Dan Dicker of Oilprice.com

This report is part of Oilprice.com's premium publication Oil & Energy Insider . Oil & Energy Insider gives subscribers an information advantage when investing, trading or doing business in the energy sectors. Successful investors, hedge funds and senior executives, have access to high level intelligence and power in ways that you, as an individual investor, are locked out of (the game is and never has been fair.) Let us help you level the playing field by using our network of traders, intelligence assets and high level partnerships to ensure you are making the right investment decisions.

To find out more on how you can get a legal inside advantage in the energy markets please take a moment to visit: http://oilprice.com/premium

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

OceanaGold: Man Killed In Waihi Mine Accident

A 29-year-old man had died following a work place accident at OceanaGold mine, Waihi last night. The man was killed after the front end loader he was in rolled down a slope. The accident happened at approximately 6.30pm on Thursday night. More>>

ALSO:

Constructing Consent: Annual Housing Consents Highest In Over A Decade

More than 29,000 new homes gained building consent in the year to June 2016, up 16 percent from the previous June year, Statistics New Zealand said today. More>>

ALSO:

War Against Weevil For Future Peas: “No Peas, No Weevil” Ban Now In Place In Wairarapa

The Ministry for Primary Industries (MPI) has today placed a ban on growing peas within a specified area and placed controls on moving pea material (seed and untreated pea straw) within, in and out of this area for the next 2 years. More>>

ALSO:

Wood Producers: Crisis In New Zealand Log Supply

New Zealand wood processing leaders held a hui with senior government officials and political leaders in Whangarei yesterday to assess the acute log supply shortage to local mills in Northland. More>>

Consents And Taxes: Trustpower 'Very Disappointed' With Judgement

Trustpower is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers. More>>

ALSO:

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news