“I know Putin is a hot topic right now, but oil exports from Russia have no effect on us. What about the big players like Saudi Arabia?” writes Sheldon, a concerned Energy and Capital reader.
He emailed his query after reading this week’s columns from both me and Jeff Siegel on Russia, the civil war in Ukraine, and their bearing on the Chinese and European energy sectors.
And while Putin is attempting to harness control over two continents, Sheldon’s email got me thinking more broadly about U.S. oil and our evolving relationship with the Organization of Petroleum Exporting Countries (OPEC).
Allow me to explain how drastically different our energy picture is compared to 10 years ago… and how you can profit from it.
OPEC is Hemorrhaging Money
Back in December, Saudi Oil Minister Ali al-Naimi told the press that he anticipated the U.S. would import between 1.4 million and 1.5 million barrels of Saudi crude every day in 2014.
Oh, how wrong he was…
Last month, the United States only imported 878,000 barrels per day from Saudi Arabia — the least since 2009, when oil exports were low due to the recession.
In June, imports of Saudi crude at Gulf Coast refineries were at their lowest levels since 2010.
Between April and June of this year, in fact, imports to the U.S. from Saudi oilfields dropped by 562,000 barrels per day.
And the state-run oil company has been unable to replace most of that drop; total exports fell by 506,000 barrels per day over the same time period.
But it’s not just Saudi Arabia who is feeling the pain from a lack of U.S. imports…
All of OPEC has been under pressure. Exports to the U.S. are at record lows.
Between 2005 and today, U.S. imports have fallen by 54% from Saudi Arabia, 56% from Venezuela, 59% from Mexico, and an unbelievable 93% from Nigeria.
In fact, Nigeria has seen its total exports decline from over 2 million barrels per day in 2005 to around 1.8 million per day today. And virtually none of that oil is going to the U.S.
Domestic Powerhouse
U.S. imports are being slowly phased out thanks to a 65% increase in domestic oil production. And now that Canada sends most of its surplus oil to the U.S., OPEC has been feeling the crunch.
U.S. tight oil formations have pushed production to near record highs. Our output is the highest since 1986 and still rising.
The Bakken is closing in on 1.2 million barrels per day, the Eagle Ford is about to average 1.5 million per day, and the biggest shale oil formation — the Permian Basin — eclipses both of them.
The massive Permian is on pace to breach 2 million barrels of oil per day by the end of the year.
Of course, we’ve been talking about the Permian for years, and, as you can expect with such high production numbers, it’s been a boon for investors during its growth phase.
One of the stars in the Permian has been Pioneer Natural Resources (NYSE: PXD).
Back in 2009, when the formation still had yet to breach the 1 million barrel per day benchmark, Pioneer was trading around $50 dollars.
But as I write this on Thursday, Pioneer trades over $200 and hasn’t shown any signs of slowing down.
As you can see, investors who got in back in 2009 banked 600% gains from the company. Compare that to the gains of under 100% for those who invested in Big Oil.
Much of this success can be directly attributed to the Permian Basin, where Pioneer has 8 billion barrels of resource potential spread over 640,000 net acres.
$1 Stock in the Permian
Unfortunately, if you haven’t already invested in Pioneer, I would say now isn’t the best time to jump in. In fact, you would probably lose money if you did…
However, there are plenty of other profit opportunities in the Permian — if you know where to look.
In fact, readers of my Oil & Gas Trader advisory are all too familiar with the formation.
My last recommendation from the play gained 72% before we sold it, and my next company is looking even more palatable.
It trades for just $1 and has 20,000 gross acres in the play, where it has been quietly ramping up production.
Now, I realize 20,000 acres is nothing compared to Pioneer’s 640,000, but you have to remember this is a $1 company that’s been increasing its month-over-month production steadily this year.
Last month, I alerted my readers to this stock, and they have already seen a quick 15% gain on the share price.
But they know, like I do, that the company hasn’t even come close to hitting its full potential.
You can find the details on this $1 Permian player in my latest investment report. Don’t miss out on this round of gains.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
