For the first time in nearly 20 years, government estimates project that te U.S. will produce more oil than it imports. Not only should this bring stability to American pump prices, but it also provides a great opportunity to make money through energy stocks. Exxon Mobil Corporation (NYSE:XOM) and ConocoPhillips (NYSE:COP) are two big names preparing to make a killing. But there’s more–below is look at which companies are prepped to capitalize on the next U.S. oil boom.
Unrest abroad and production back home
Thanks to the growing unrest in the Middle East, the American government is reconsidering its energy policies. These policies brought a significant drop in land leases and drilling permits under the Obama administration, down nearly 40% during his tenure. Companies with no choice migrated away from the U.S. toward other emerging markets. But change is coming. New developments in Alaska, North Dakota, and Texas are leading the way to record highs of American oil production.
American production leader Chesapeake Energy Corporation (NYSE:CHK) capitalized on the new trend. After strong first-quarter earnings with production up more than 56% year-over-year, Chesapeake recently announced it will raise its target for 2013 American oil production by 1 million barrels. Why so much? Well, Chesapeake reaped the benefits from its tremendous performance in the Eagle Ford Shale of Texas.
After nearly two decades of dependency on foreign oil, it seems hard to imagine a radical American recovery. But the proof is in the pudding. Note the chart from the U.S. Energy Information Administration (see below). Production is on its way back home, and in a major way.
It might just be time to realign your portfolio. To oil giants, booming oil production in the U.S. is like tossing an underhand pitch to Barry Bonds. Smack. Homerun. And like Chesapeake Energy Corporation (NYSE:CHK), both Exxon Mobil Corporation (NYSE:XOM) and ConocoPhillips (NYSE:COP) are ready at the plate.
ConocoPhillips is emerging from a transition period during which it sank millions of dollars into technologies to help unlock the black gold that experts never thought possible – the unreachable oil. With effective research and development, ConocoPhillips (NYSE:COP) is looking ahead to a successful stretch of oil production.
Company targets estimate a peak production of a staggering 1.9 million barrels of oil per day. Much production will come from the now unlocked Eagle Ford and Permian basins in Texas and North Dakota, which feature oil and natural gas. And with the most attractive price between the oil giants, along with a healthy 4% payout, ConcoPhillips is a buy even for value investors.
Exxon Mobil Corporation (NYSE:XOM) is not far behind. Earlier this year, ExxonMobil and a few other producers pledged $1 billion to the development of the North Slope of Alaska. ExxonMobil’s project is focused on tying into a Western pipeline bringing an additional 10,000 barrels a day into production. Yet ExxonMobil’s vision extends just as far south as it does west.
The company also is making arrangements for the creation of a $10 billion terminal in Texas, to export the predicted excess oil production. Thus, Exxon Mobil Corporation (NYSE:XOM) isn’t going to just make money on American consumption – but also might become the leader in exporting to foreign nations.