Government bonds, certificates of deposit and money markets were once the mainstays of retirement portfolios. The rates of return these conservative investments earn have dwindled to the point where boomers can no longer rely upon them the way their parents and grandparents did.
So, as they look beyond the tried and true in an effort to secure their retirements, should boomers turn to energy exploration stocks such as Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP) and BP plc (ADR) (NYSE:BP)? Well, the answer to that question is at least a qualified “yes” because these corporations are bolstered by immense financial reserves and the industry shows signs of continued expansion.
ConocoPhillips could benefit from shale-gas exploration
With a market capitalization of almost $75 billion, ConocoPhillips (NYSE:COP) obviously enjoys a very firm financial footing. And analysts predict that ConocoPhillips (NYSE:COP)'s EPS for 2013 will be $5.48 with performance climbing to $6.02 for 2014, an uptick that bodes well for its continued future profitability.
But one fact might be even more indicative of its potential for ongoing expansion. ConocoPhillips (NYSE:COP) is considering splitting its U.S. operations from its other divisions, a move that could position shareholders to garner impressive profits from the production of shale gas. The flow of new crude oil from fields scattered from North Dakota to south Texas helped boost U.S. production during 2012 to 8.9 million barrels a day, an increase of 14% over the previous year’s total.
ExxonMobil has the heft to take risks
At this point, Exxon Mobil Corporation (NYSE:XOM) is one of the only American-based energy companies that still simultaneously explores, refines and markets fuels worldwide. Lacking the resources to become involved in all aspects of the industry, most other oil companies simply sell their fuel to a refinery or purchase crude and refine it for sale at their gas stations.
And looking to the future, Exxon Mobil Corporation (NYSE:XOM) is being sought after as a partner to participate in exploration projects in yet-to-be-discovered Arctic and deepwater fields. It is also positioned to be a major player in the Canadian tar sands and the exploration of Bakken Shale reserves in North Dakota.
These undertakings come with some considerable risk. But even if, for example, Canadian exploration becomes unprofitable, that outcome would not prove nearly as disastrous for Exxon Mobil Corporation (NYSE:XOM), whose revenue for 2014 is projected to top $437 billion, as it would for a smaller company.
BP: Developing countries will provide a valuable market
Natural gas consumption in Asia grew by 9.9% during 2012. And that same year, oil consumption in China climbed by 5%, a figure below the 10-year average but still substantial results. This upsurge will likely intensify as these countries continue to urbanize, a process that will be helped along by the Chinese government pushing an estimated 250 million people to settle in cities.