First Solar, Inc. (FSLR), Halliburton Company (HAL), Anadarko Petroleum Corporation (APC): The Future of Energy

Page 1 of 2

As an energy investor, I have to look at industry trends to see where the next hot spot is. Throughout history, the hot energy commodity has never lasted long term, and trends can change on a dime. More recently, fracking has changed the game for oil and natural gas, coal is fighting to stay alive, and renewable energy is growing in some areas and struggling in others.

First Solar (FSLR)

Below I’ve gone through the big trends to watch and what to consider while you’re investing.

Coal is the past
The coal industry is struggling — that’s not debatable at this point. Some might say that onerous regulation has been the biggest detriment to the coal industry in the last five years, but the truth is that cheap natural gas has done more than anything to hurt the industry. Sure, environmentalists and some politicians would prefer that we burn natural gas, but the flood of plant closures and bankruptcies of coal miners hasn’t been solely because of regulation.

Look at the consumption chart below and notice how both coal and oil have trended lower while natural gas has trended higher. Fracking changed the game for coal and there’s no stopping the move to natural gas (which I’ll get to in a minute).

US Coal Consumption Chart

U.S. Coal Consumption data by YCharts

The decline in U.S. consumption is troubling for coal miners, but China’s move to rely less on coal and to produce more energy domestically has hurt U.S. exports. Now that China is getting into fracking in an effort to unlock its vast natural gas reserves, I’m afraid the best days are long behind the coal industry.

Oil and gas are still the heart of energy
Oil consumption in the U.S. is declining, but it’s still rising in developing countries, so prices haven’t taken a major hit in recent years. Unlike natural gas, oil is easily transported to the market that will pay the most — now that China is the No. 1 oil importer in the world, oil still has a long run ahead of it.

Natural gas is the hottest commodity right now in the U.S. since fracking technology improved to the point where it can economically be removed from the ground. The cleaner-burning fuel is just now being adopted more widely for transportation, and the U.S. has a great opportunity to export cheap natural gas to the rest of the world.

Halliburton Company (NYSE:HAL) and Schlumberger Limited (NYSE:SLB) are two of the largest companies providing equipment and technology that make fracking possible; they’ll benefit as it expands around the globe. For investors, now may be the time to buy because rig counts have been falling due to low natural gas prices, but export terminals and natural gas fuel are on their way and they’ll help improve prices. Drillers should see a pickup in coming years that will benefit the patient investor.

Another way to play the steady demand for oil and growing use of natural gas is through offshore drillers, particularly in ultra-deepwater. Just this week, a well drilled by Anadarko Petroleum Corporation (NYSE:APC) gave our first look into what may be the largest discovery ever in the Gulf of Mexico. As explorers drill in more deepwater locations offshore they’ll continue to add to discovered reserves, which will lead to more drilling. This reinforcing loop will help rig owners like Seadrill Ltd (NYSE:SDRL) and Transocean Ltd (NYSE:RIG), who own large ultra-deepwater fleets and command in excess of $600,000 per day for these specialized rigs.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!