With more than 1,700 companies on deck to report earnings this week, there's going to be a lot of chatter about quarterly results. Rather than getting drawn into all the earnings narrative, I want to shift today's focus to something much bigger, with a much longer time horizon. I'm talking about energy, specifically, U.S. energy production in the Permian Basin.
In case you're not familiar with the Permian Basin. It's an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. It covers an area approximately 250 miles wide and 300 miles long and is composed of more than 7,000 fields in West Texas.
The greater Permian Basin accounts for nearly 40 percent of all oil production in the United States and nearly 15 percent of its natural gas production, according to the Federal Reserve Bank of Dallas.
The Delaware Basin, alone, within the Permian Basin, has the potential to produce 46.3 billion barrels of oil and the potential to produce 281 trillion cubic feet of natural gas.
That's huge, and over the next several years, if not decades, that's going to be very profitable for energy producers with exposure to the region.
Oner of my favorite ways to play the trend is by way of Diamondback Energy, Inc. (FANG) an independent oil and natural gas company, which focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin.
The company boasts excellent financials, with profit margins and operating margins of 48.2% and 65.99%, respectively. Over the trailing 12-months, the company generated more than $9 billion in revenue and net income of $4.34 billion.
Those are really solid numbers, and I think it makes Diamondback look very attractive as an acquisition candidate.
Speaking of acquisitions in the energy space, just two weeks ago, Exxon Mobil Corp (XOM) announced it was in preliminary talks with Pioneer Natural Resources Co (PXD, which is the third largest oil producer in the Permian Basin.
If PXD looks attractive, with a $52.66 billion market cap, then I think FANG (with a $26.65 billion cap) and exposure to the Permian Basin looks very attractive as well.
Even if FANG doesn't get acquired, I want to own shares of FANG for the long run because of its exposure to the Permian Basin, stellar financials, and its 7.97% dividend yield.
Rather than buying options for a short-term "flip the chart" opportunity, I like buying shares of Diamondback Energy, Inc. (FANG) for the long run, right now.
The post This Is the Best Energy Stock to Buy Right Now appeared first on Total Wealth.
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Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
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