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The introduction of hydraulic fracturing (fracking) has led to a production renaissance for U.S. oil and natural gas companies.
By 2015, the United States will surpass Russia and Saudi Arabia to become the world's biggest oil producer, according to the International Energy Agency (IEA).
And that's not the only good news.
Last week, U.S. oil and natural gas companies helped reverse a historic trend that has plagued the country since 1995, according to the Energy Information Administration (EIA).
It said that in October, domestic oil production exceeded crude oil imports for the first time since 1995, while petroleum net imports were the lowest since February 1991. The EIA also reported last week that the Gulf Coast put out a record 207.2 million barrels of oil.
What's behind this trend reversal?
The answer leads us to where the profits lie...
The Driving Force Behind the U.S. Energy Sector Boom
While the government tends to take credit for the energy surge, it's the private sector that's driving the boom. Companies are taking on massive projects and developing technological innovation around the country.
According to CNBC, analysts say oil and gas drillers are just beginning to reap the benefits of the boom in energy-related technology.
"We are on the cusp of the next technology revolution," HighTower partner and managing director Paul Pagnato said to CNBC on Tuesday. "We're just at the tip of the iceberg."
And on the wings of innovations in tech, oil and natural gas companies are expanding at an astounding rate. From the beginning of 2007 through the end of 2012, the U.S. oil and gas industry recorded a 40% employment jump to 162,000 total jobs. The rest of the private sector grew by 1% in the same time period.
As this trend reversal continues, you could make a lot of money if you know how to invest in the right oil and natural gas companies.
Just on Tuesday, a number of energy companies surpassed their 52-week share-price highs on the Standard & Poor's 500, including EQT Corp. (NYSE: EQT), Hess Corp. (NYSE: HES), and Baker Hughes Inc. (NYSE: BHI).
And recently, Deutsche Bank placed "Buy" recommendations on several producers and master limited partnerships (MLPs), saying that the "fundamental outlook of U.S. gas demand is compelling."
Two stocks in particular are poised to soar as the United States marches toward greater energy security and increased production of oil and natural gas...
Two U.S. Oil and Natural Gas Companies Poised to Soar
The boom in production is coming from shale fields like the Marcellus, Eagle Ford, and Permian basins. But too often, investors forget about what's happening in the Bakken.
The Bakken region stretches across North Dakota and Montana and remains one of the top energy-producing regions. Its oil production numbers are expected to soar even higher this year. Energy analysts Wood Mackenzie Ltd. project output in the Williston Basin - located in the Bakken - to increase more than 70% to 1.7 million barrels of oil per day (bopd) by 2020 due to improved drilling techniques there. Energy Aspects Ltd. oil analyst Virendra Chauhan expects Bakken production to average about 1 million bopd in 2014 and projects that number will grow to 1.1 million bopd by 2017.
We want to consider the oil and gas companies that are poised to expand production and increase their profits in the Bakken in years ahead.
There are two companies that fit this profile - in coming years both will expand their acreage and drilling capacity.
The first is Kodiak Oil & Gas Corp. (NYSE: KOG), which has significantly ramped up its capital expenditures to capture growth in the Bakken region. Last year, Kodiak spent more than $750 million to boost its oil and gas operations. The company handsomely profited from this expansion, almost doubling its annual sales to a little more than $900 million. And it's expected to continue this trend in the years ahead.
The second company is the big one. It's ConocoPhillips (NYSE: COP), which continues to expand throughout the Bakken region at a staggering pace. Last year, Conoco's Bakken operations expanded by 60%. Each day last year, the company produced 30,000 barrels.
But if Conoco has its way, we haven't seen anything yet.
The company hopes to ramp its production up to 60,000 bopd within a few years.
KOG stock was trading at $13.39 per share on April 24. Shares were up 19.18% year to date. COP stock was trading at $74.45 per share the same day. Its shares were up 5.32% in 2014 and 27.72% year over year.
Gas prices are rising in the United States, up 2.4% over the past week alone. And you can bet that as we move into the summer season, the worst is yet to come. The climb means gains for this sector - and for investors...
Related Articles:
- CNBC:
Energy Stocks Hit 52-Week Highs As Boom Rolls On - Bloomberg:
Bakken Oil Output Seen Growing with Drilling Improvements
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.