The BP PLC (NYSE ADR: BP) oil spill has been a wakeup call for energy-sector regulators.
But it's been an even bigger wakeup call for investors.
Years from now, investors will look back at this period as a turning point - the start of the greatest profit opportunity of this generation. And that's not all. The post-oil-spill period will go down in history as the period during which the United States was finally able to break its dependence on foreign oil, says Dr. Kent Moors, a career energy-sector consultant who works with governments and corporations throughout the world.
Investors who understand the energy-sector shifts that are taking place "will make more money in energy investments over the next several years than in any other sector during any other period in their lifetimes," says Dr. Moors, who is also the editor of the Oil & Energy Investor newsletter. With the changes he's currently projecting, "a large measure of energy independence for the U.S. becomes possible. And I'm not just talking about a mere economic 'recovery' here. We'd be looking at a standard of living that's 60% higher, an economy expanding at 5% to 7% a year and - most important of all - a future that we could dictate."
To understand the top trends unfolding in the new energy sector, please read on...
Shell Grabs Crucial Shale Gas Deposits With $4.7 Billion Deal
Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B) announced Friday it would pay $4.7 billion in cash for U.S.-based East Resources, Inc. to obtain a sizeable stake of "high-potential" North American shale gas acreage.
Shell, Europe's largest energy producer, gets 1.05 million acres of gas properties in the northeastern United States and Texas. About 650,000 acres gained in the acquisition are part of the crucial Marcellus Shale, a tight gas property with shale formations estimated to hold up to 262 trillion cubic feet of recoverable gas.
The remaining acres are part of the Eagle Ford Shale area in South Texas. The deal brings Shell's total U.S. tight gas acreage up to 3.6 million acres.
"The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth," Peter Voser, chief executive of Shell, told The New York Times.
Decline in U.S. Natural Gas Imports is Causing Panic in Leading Exporting Nations
The world 's biggest natural gas exporters met today (Monday) in Algeria and agreed to index gas prices to oil as shrinking U.S. natural gas imports are causing a global supply glut.
"All ministers agreed and supported that we continue our efforts to achieve indexing gas to oil," said Russian Energy Minister Sergei Shmatko.
The Gas Exporting Countries Forum (GECF) members include Russia, Iran, Qatar and eight other nations that hold two-thirds of the world 's gas reserves. They 've watched gas prices fall nearly 50% in the past two years. Current gas prices of $4 per million British thermal unit (BTU) are about 20 times lower than oil, but are usually around 10 times lower than oil.
U.S. natural gas prices have fallen 28% since December as an increase in the U.S. shale rock gas supply has reduced the need for U.S. natural gas imports. Shale rock gas is retrieved from tight rock formations and its U.S. boom led the country to extract more gas than Russia last year for the first time since 2001.
Russia 's energy giant Gazprom has a five-year plan to take 10% of the U.S. natural gas market share, but U.S. shale gas exploration has put a damper on that goal.
"The influence of shale gas raises the prospect of change on gas markets," Russian Natural Resources Minister Yuri Trutnev told Reuters. "We have a problem with shale gas. This is not only my position, but the position of Gazprom as well."
As the United States becomes a less reliable consumer, gas suppliers aren 't having much luck replacing the lost business.
SandRidge Energy Buys Oil Developer to Reduce Its Reliance on Suffering Natural Gas
SandRidge Energy, Inc. (NYSE: SD) on Sunday announced it would pay $1.6 billion for Arena Resources, Inc. (NYSE: ARD) to develop a more oil-focused business, as natural gas prices remain low.
SandRidge will pay $2.50 in cash and 4.78 SandRidge shares for each Arena share - a 17% premium to Arena's $34.26 Thursday closing price. The combined company will be valued at around $6.2 billion.
This purchase makes SandRidge one of the largest producers of conventional oil and gas in West Texas. It's the second acquisition for the company since November, when it paid $800 million for Forest Oil Corp. (NYSE: FST) properties.
PetroChina, Shell Target Australia's Arrow Energy
Oil companies Royal Dutch Shell PLC (NYSE ADR: RDS.A) and PetroChina Co. Ltd. (NYSE ADR: PTR) yesterday (Monday) made a joint offer for Australian energy producer Arrow Energy Ltd. in yet another demonstration of how China is turning Australia into its personal commodities broker.
The $3.4 billion (A$3.26 billion) deal would give shareholders A$4.45 per share - a 28% premium from Friday's share price - and a share in a new Arrow international-business entity for each current Arrow share.
Market reaction was favorable as Arrow's prices soared 47% Monday following the news, up to A$5.11 on the Australian stock exchange (ASX).
"It's an opportunistic bid and good for Arrow shareholders," Tim Schroeders, Pengana Capital portfolio manager, told CNBC.
How to Profit From the Geothermal Energy Push
Geothermal energy isn't a new concept in the United States.
It's actually been around for some time, with numerous geothermal power plants in California, Nevada and a few other western states. There are new plants on the drawing board, too. Unfortunately, the recession has stifled the construction progress on many of them.
But all that's about to change. Thanks to a few key technological developments - and a big cash infusion from the government - the stars are aligning to produce the perfect storm for this super-green energy source.
The New Oil Index is About to Create Even More Opportunity for Investors
Speculators in New York won't be calling the shots anymore. Not in oil, anyway.
The way we price it. The places we trade it. The companies that stand to profit most.
It's all about to change.
This was confirmed at a meeting I just attended in The City, London's financial district. I arrived from Moscow's Domodedovo Airport for an unusual Saturday morning gathering of bankers, traders and analysts called only days before.
The subject? A new oil-pricing index.
This is huge.
More oil-project funding is raised within a three-mile radius of The City's Liverpool Street train station than anywhere else on Earth. And now they're preparing to control the oil trade, as well.
This will create all kinds of new ways to make money in oil. Not just with fancy financial instruments designed for the "big boys," but with retail investments, too. So there's money in this for you.
For more on the future of crude-oil investing ...
Investment News Briefs
Former McKinsey Director Pleads Guilty in Galleon Scandal; Unemployment Claims Drop; EPA Tightens Ozone Standards; Cold Snap Threatens Natural Gas Production; State Tax Collections Plummet; Oil Slides From a 15-month High
Exxon Deal For XTO Energy May Set Off Wave of Energy Mergers and Acquisitions
In a deal that may set off a wave of mergers and acquisition (M&A) activity in the energy sector, Exxon Mobil Corp. (NYSE: XOM), the biggest U.S. oil company, agreed to buy XTO Energy Inc. (NYSE: XTO), the largest U.S. natural gas producer, in an all-stock deal valued at $31 billion.
Exxon, which hasn't made a major acquisition since it bought Mobil ten years ago, is taking advantage of the low gas prices pressuring smaller, debt-laden gas exploration companies. The economic downturn and discoveries of vast pools of North American natural gas have kept a lid on gas prices, leaving companies in the industry strapped for operating cash.
The deal announced yesterday (Monday) values XTO at $51.69 a share, 25% higher than Friday's closing price. XTO holders will get 0.7098 share of Exxon for each share of XTO. The Texas-based oil giant will also assume $10 billion in debt.
From Russia With Love: China Looks North For Latest Resource Deal
A preliminary gas agreement between China and Russia is the latest indicator that the Red Dragon continues to diversify trade partners outside of the United States, and signals willingness between the neighboring countries to shelve any political differences for mutually beneficial deals. The deal between the Russia's Gazprom OAO (OTC ADR: OGZPY) and China National [...]