The North American Super Shale

For the most part, the first four months of 2015 have been kind to oil investors.

Yesterday, oil benchmarks traded at their 2015 highs, with Brent crude and West Texas Intermediate gaining about $11 per barrel in April alone.

On Thursday morning, Brent crude traded above $66 per barrel, while WTI rose above $59 and teetered near $60 for a while…

And with this rise in price came a buoy for oil stocks of all kinds. Drillers have risen, as have midstream companies and exploration firms.

The rise in oil prices this month is the biggest gain for crude in six years. The last time such fast gains in price were had was back in May of 2009, as the world’s energy companies found ways to pull themselves out of the recession.

I’m sure if you invested back in 2009, you enjoyed your share of gains as oil prices and stocks recovered to hit great heights on the back of the U.S. shale boom.

And if you didn’t invest back then, you probably saw the incredible gains you missed at the time.

As an example, Continental Resources (NYSE: CLR) rose 445% out of recession lows and into the U.S. shale renaissance…

This is just one of the many examples of how investors utilized a similar bear market for crude oil to make a lot of money.

Now that it looks like we’ve found an updraft from the bottom of oil prices, the way you play it will be crucial in determining future gains.

Saudi Struggle Timeline

The reason oil rose so much in April — though many didn’t expect it — hasn’t been reported by the mainstream media with much clarity.

In fact, many still believe oil is doomed to fall again (which looks less and less likely by the day).

The real reason behind this rise has to do with a shifting of power within the oil market: Saudi Arabia is struggling to keep control of global crude oil.

It all begins with U.S. shale production and hydraulic fracturing, which pushed North American production to highs not seen since the 1970s and 1980s.

With the U.S. no longer importing as much crude, exporters like Nigeria and Venezuela had to find other buyers, and in doing so tried to sell crude to Asia, where oil is in high demand.

This cut directly into the market share for Saudi Arabia — the only OPEC member with any real clout — and it decided to boost production and cut prices, setting off the bear market we saw in the second half of last year.

Of course, with prices so low, Saudi Arabia is essentially losing money on every barrel of crude it sells, causing the Kingdom to dip into its foreign currency reserves.

Earlier this year, Saudi Arabia depleted $36 billion from its currency reserves, the biggest recorded drop in history:

As you can see in the chart above, the Saudis have depleted — and continue to deplete — cash reserves in hopes that U.S. production would fail. And although U.S. production has certainly slowed down, companies have maintained a steady level of production.

Now, with the United States and Iran closer to a nuclear deal that would lift sanctions against the Islamic Republic — including limits on oil exports — the Saudis are worried about losing even more market share and influence to their major rival in the region.

The campaign against Iranian-backed Houthi rebels in Yemen has only exacerbated the tensions between the two sides and drained extra cash reserves held by the Saudis.

And when you add that the newly crowned King Salman has accepted power and shaken up the hierarchy at the top of Saudi Arabia’s monarchy, there’s a lot of pressure on the Kingdom’s leaders to stop bleeding its cash and start bringing in more oil revenue through higher prices.

From where I sit, it looks as though this is the bottom, and the bottom is trending upwards ever faster as the Saudis struggle to maintain control of global crude oil.

This leaves room for investors to make gains like the kind seen between 2009 and 2014, when prices rose from the doldrums and into the stratosphere…

The American Oil Play No One is Talking About

With pressure on Saudi Arabia at an all-time high, you can bet oil is going up, and in a big way.

As it continues to rise, oil prices will lift the stocks of a lot of American companies.

But here’s the thing: The ones that stand to make the most are the drillers that remained calculating and cautious in the midst of the bear market.

Even better, now that oil prices are rising, a few drillers are starting to ramp up completion programs in an American formation that spans an unprecedented 59,244 square miles.

It’s the main reason Citibank recently wrote, “Saudi Arabia and the rest of OPEC are at risk of being crushed by the US.”

And as drillers ramp up their programs in this formation, it will only be a matter of time before regular investors realize we’ve hit the bottom. The companies that are here are going to explode — not unlike Continental Resources after the recession.

I’ve singled out a few of the companies in this formation based on in-depth analysis of their financial standing, debt, reserves, and management structure. The companies I’ve selected are poised to see gains as prices go up over the next few weeks and months.

Unfortunately I can’t get you the gains you already missed as oil rose in April. But if you watch my latest presentation, you’ll be able to get in on these companies for the rest of the ride.

Until next time,

Keith Kohl

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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.