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

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

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!