Eagle Ford and so much more
Sure, this next company is the nation’s No. 2 natural gas operation, but it’s aggressively growing its oil production. In fact, Chesapeake Energy Corporation (NYSE:CHK) grew its oil production last year by 84% over 2011. That growth has been thanks in part to its outstanding position in the Eagle Ford, where it was able to increase its liquids production by more than 250% over the previous year. Looking ahead, the company has a 10-year drilling inventory of more than 3,500 locations in that play, as well as oil and NGL upside from its positions in the Utica, Mississippian, and Granite Wash. While Chesapeake will probably never be known as an oil company, it’s still a great American energy company.
Balancing growth with oily income
So far, all of the companies on this list are focused on aggressively growing oil production. While Linn Energy LLC (NASDAQ:LINE) is also fairly aggressive in its growth, when compared with the rest of the names on this list, it’s rather tame. The big difference here is that LINN is structured like an MLP, meaning the company pays out a very large distribution to its investors. Currently, the company is yielding more than 9%, making it a great income stock for our oil ETF. Not only that, but LINN is getting even more oily as it nears closure of its deal for Berry Petroleum. The deal will add a lot of high-margin California oil as well as bolster the company’s oil-levered position in the Rockies and Permian Basin.
Foolish bottom line
While I’m sure most investors would rather purchase an oil ETF and be done with their oil exposure, these five companies have the potential to outperform any oil ETF. Buying a basket of oil companies and creating your own American oil ETF also gives you more control over performance. Not only that, but it will instill in you the pride of ownership, which really flies in the face of today’s approach of high-speed trading and stock-ticker flipping.
The article Create Your Own American-Made Oil ETF With These 5 Stocks originally appeared on Fool.com.
Fool contributor Matt DiLallo owns shares of Linn Energy and SandRidge Energy and also has short September 2013 $5 puts on SandRidge Energy. The Motley Fool has options on Chesapeake Energy.
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