Here's How You Can Profit From the United States' Oil Boom

Saudi Arabia can keep its oil, we have enough of our own. Photo Credit: Flickr/azrainman

It's an exciting time to be an energy investor. Oil production in the U.S. is booming and as oil prices stay high, it's easy to see a future in which U.S. oil production takes a giant leap forward. That future could yield real wealth-building profits for investors, which is why I'm going to show you where to look and how to invest in America's exciting oil future.

The Bakken is booming, but it's only the beginning
This past May, the Bakken set a new record for daily oil production at an average of 810,129 barrels of oil per day. That puts the play on pace to produce an average of 850,000 barrels of oil per day by year's end. That's a pretty big number, especially when considering the total output for the U.S. is around 7.3 million barrels of oil per day. It's even more impressive when considering that the Bakken has only been producing large quantities of oil for the past few years.

Looking into the future, there are projections that suggest the Bakken's production could double by 2017:

Source: Continental Resources Investor Presentation

Leading the charge is Continental Resources (NYSE: CLR  ) , which expects to triple its own oil production over that time frame. The company is already the region's largest producer, driller, and leaseholder. It has ambitious goals to triple production to over 300,000 barrels of oil equivalent per day by 2017. If Continental succeeds, it would produce an additional $20 million per day in revenue as long as oil stays over $100 a barrel. Investing in that growth today has the potential to really fuel the returns of a retirement portfolio.

Everything is bigger in Texas
While the Bakken was setting new highs, the Eagle Ford was quietly catching up to it as its average daily production sailed past 600,000 barrels of oil per day for the first time. At its current pace, the shale play has the potential to match or pass the Bakken within the next two years and it's expected to produce about 1.4 million barrels of oil per day by 2016.

That has the potential to really drive the results of producers focused on the Eagle Ford, such as Chesapeake Energy (NYSE: CHK  ) . The company produced an average of 75,000 barrels of oil equivalent per day last quarter, of which 65% was oil production. That production came from the company's 650 producing wells; however, looking ahead, Chesapeake sees the potential for 3,500 additional wells on its acreage. That means that it's still in the early innings in the Eagle Ford, giving investors plenty future upside by investing in its stock.

Despite the Eagle Ford's production and prospects, the big oil play in Texas could end up being in the Permian Basin. The legacy West Texas oil basin could hold enough oil to make it the second-largest oil field in the world. There are estimates that the Sparberry/Wolfcamp portion alone could produce upwards of a million barrels of oil equivalent per day by the end of the decade:

Source: Pioneer Natural Resources Investor Presentation

That potential has a company like Pioneer Natural Resources (NYSE: PXD  ) seeing a future that includes drilling more than 40,000 wells to capture over 9 billion barrels of potential oil equivalent production. That's $900 billion of potential oil in the ground for this $22 billion company. While it will cost a lot of money to get the oil out of the ground, it still makes for a very compelling investment opportunity.

Don't forget about the Gulf of Mexico
Last, but certainly not least is the Gulf of Mexico. It was once thought that the BP (NYSE: BP  ) disaster in 2010 would turn off oil production in the Gulf for good. However, after three years of production declines, the Gulf is poised to not only rebound, but could double its production over the next few years:

Source: Enterprise Products Partners Investor Presentation

That's good news for producers like BP, as well as a variety of service companies like Enterprise Products Partners (NYSE: EPD  ) . The company is one of the many that are providing the region with infrastructure critical to get the oil from production platforms to the Gulf Coast refining complexes. One of its projects, the Lucius Crude Oil Export Pipeline, will move 115,000 barrels of oil per day from the deepwater Gulf of Mexico to refiners. This is just one of the many solutions that Enterprise is providing producers in the Gulf, which will help to give a really solid return to investors as the oil boom continues.

Final Foolish thoughts
I've really only scratched the surface of our oil potential. There are new shale plays emerging, and potential shale plays yet to be discovered, that have the potential to produce game-changing amounts of oil during the coming decade. This coming oil boom has the potential to build wealth for those who are invested before it really shifts into high gear. 

As you can see, record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza". Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (17) | Recommend This Article (33)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 26, 2013, at 11:29 PM, ralfyman wrote:
  • Report this Comment On July 27, 2013, at 12:08 PM, tombland wrote:

    I'm not interested in profiting from oil or other fossil fuels. Green energy only.

  • Report this Comment On July 27, 2013, at 12:48 PM, cept4Grace wrote:

    tomb land: Oil is biodegraded green stuff.

  • Report this Comment On July 27, 2013, at 2:20 PM, willeiz wrote:

    This is mental.

    First as ralfyman posted, clearly the limitlessness that is currently pushed in the media (you among them) is deeply fishy.

    Either you are superficial in your thinking, or you are deliberately superficial, which suggests that you are deeply invested in this form of energy.

    This is Frakking and it's a horrible form of energy extraction, probably second only to our beloved and disgusting tar sands.

    I wouldn't support it if I were you, and i think you'd gain credibility

  • Report this Comment On July 27, 2013, at 2:40 PM, tombland wrote:

    @cept4Grace It's not green when it's burnt.

  • Report this Comment On July 27, 2013, at 4:37 PM, kenosee wrote:

    disgusting tarsands you say willeiz,,,,, What tar sands would you be speaking about????

  • Report this Comment On July 27, 2013, at 11:44 PM, fullmoonchaser wrote:

    Hey, I happen to live over the Bowdoin Dome, which is next door to the Bakken Formation. The energy companies have been extracting natural gas from this area for over fifty years. Guess how they do it? With fracking, of course...

    So far there is very little scientific evidence that it is doing any environmental damage. Guess that it is just a problem when the tree huggers give it their attention. Our potable water does not have any nasty chemical byproducts of the fracking process. Of course, a lot of the water in this area is unfit for human consumption, but it has always been that way and it is NOT a result of fracking. Ol' Mama Nature is to blame for it. Lots of alkali around here...

    Anyway, fracking has been around this area for many years and it doesn't pose as much threat to our environment as the so-called environmentalists do.

    If it is tar sands we are talking about, more than likely they are in Canada, which I notice seems to be a part of the USA when oil is being discussed...

  • Report this Comment On July 28, 2013, at 9:58 AM, DukeMontrose wrote:

    Why is foolish SDRL not in the equation?

    Aren't three units at full tilt in the Gulf, hauling some not so foolish $2 million PER DAY into the SDRL coffers?

  • Report this Comment On July 28, 2013, at 4:51 PM, jrcrwfrd wrote:

    To willeiz and others, please educate yourselves on the hydraulic fracturing issue. Also, learn to compare the misinformed rhetoric with what is actually being concluded in industry and governmental sponsored studies. DOE and State of CA have yet to find direct links of "fracking" with water contamination. Also know that well casing failures (while rare) is a different issue than fracking. If water contamination were to occur, it's because of casing failure not the vertical or horizontal fracturing.

    http://hosted.ap.org/dynamic/stories/U/US_GAS_DRILLING_DRINK...

    I would agree with this article linked below that Big Oil has not done a very good job of presenting facts and educating the general public. Shame on them.

    http://hosted.ap.org/dynamic/stories/U/US_GAS_DRILLING_INDUS...

    Why does no one talk about how much worse agribusiness is on water than the energy industry?

  • Report this Comment On July 28, 2013, at 10:12 PM, borneofan wrote:

    I suppose using horses for transportation has also been proven unsustainable. Nevertheless, we made stirrups, saddles, shoes, and various styles of carriage for many centuries. Make hay while the sun shines and bloom where you are planted. A few more useful decades from oil and gas should be enough to tide us over til the future inevitably arrives. Why not profit from today's ventures? And save it for what lies ahead?

    I rather doubt the utility of today's predictions. I would much rather bank on reaction speed to the crisis that has yet to appear.

  • Report this Comment On July 29, 2013, at 4:37 AM, nolasue wrote:

    Full moon must have buried his head in the tars sands because there is a lot of documented evidence of the environmental and human health damage caused by fracking and the toxic chemicals they use. One Vice President went so far as to bury in a rider in a major bill that guaranteed the fracking industry would not have to disclose what those toxic chemicals were and would be immune from EPA intervention.lawsuits settled by those affected come with an agreement they will not disclose any Information to the public and media about their settlement and the energy company involved. The natural gas that was supposed to last the USA 100 years is being sold off to other countries as well as the cheap oil we are producing now. We use ours up then we will really be stuck buying others very expensive oil and gas. Real forsight by the profit and money hungry energy barons and politicians who are supporting this.

  • Report this Comment On July 30, 2013, at 7:11 PM, hemifan426 wrote:

    Until oil drops 80 bucks a barrel and gas drops 2 bucks a gallon, there will be no boom and the US will stay in the current depression. This whole myth that high oil and recovery work together needs to be thrown out. There is no senario where high oil and gas will spur a recovery. Basic economics dont change because greed and fools think they should. The denial depression lives on and high oil is driving it. Oil and its derivatives are in every product on the market, does anyone really believe that increased oil prices is good for production??? Get real folks, oil prices are destroying the economy and the future with it. Real inflation is running anywhere from 10 to 30% annual and real unemployment is 22% or better. The depression is producing lies and fools. Either the current business senario changes and DEFLATION occurs, or the depression will continue. The stock market is sitting on a huge bubble. When the fed stops printing play money, the market is going to nose dive. Facts are facts, the economy is in deep, deep trouble and feeding more lies into it does not help.

  • Report this Comment On August 10, 2013, at 1:26 PM, kingwoodtxnole wrote:

    To all the above commentators who are worried

    about fracking:

    If we were drilling very shallow wells near the surface, then your worries MIGHT come into play.

    Maybe a broken something might comtaminate

    some ground water. I have never seen any water

    wells deeper than 1000-1500 feet at the most.

    The oil and gas well that are being fracked are

    at 8,000 to 25,000 feet and where water is encountered, casing (pipe) is set to prevent it from coming to the surface. We don't want to mix water

    with the oil/gas which would then have to be separated and purified before being re-injected into

    the ground.

    All you hear & see about the dangers of fracking are

    put forth by those who hate the oil and gas industry. Try this exercise: take away all the oil and gas from the world market and then try to

    feed, clothe & shelter the world and also try to get everyone to work so they can make a living.

    The tree huggers will not provide a living for your

    family. They just want to further their socialist agenda.

    Fracking is good for our country. Not fracking is good for middle east terrorists who feed off of our

    oil purchased from Saudi Arabia.

  • Report this Comment On August 12, 2013, at 1:51 PM, WPON1963 wrote:

    Bought some farmland in 2008 to protect some of my liquid assets from possible cataclysmic bank failure. Thankfully, bank system did not fold. However, surprisingly have earned income from an oil company contracting to explore for deep oil/natural gas. If they hit pay dirt, will get a percentage of the profits. Free enterprise at work. Few countries in the world allow an an average citizen to share in the cornucopia of the earth. As for socialist environmentalists, look at the record of the socialist countries in developing resouces. Their environmental record is abysmal. How is the air quality in China? How much oil leaks onto Siberian tundra from Russian oil drilling? How many nuclear reactors have they sunk in the Arctic? Oil will run out eventually, but hopefully development of fusion reaction will someday embark humanity on sustainable energy. Solar, wind and geothermal are good, but will not cut it if we are to maintain an advanced society free of human slavery and barbarism.

  • Report this Comment On August 18, 2013, at 10:59 AM, jims1950 wrote:

    BP screwed us and got away with it. whose next???

  • Report this Comment On August 20, 2013, at 11:29 AM, Bshaef wrote:

    I guess its too much to ask everyone to learn how to spell "fracing" correctly, so I give up on that. I fraced my first well in Western Oklahoma in Feb,, 1964 and have seen hundreds of frac jobs since then. The only harm I ever saw from a frac job was when an engineer didn't design the job properly and the hole collapsed and sealed itself off at 11,000 feet.

  • Report this Comment On August 20, 2013, at 7:00 PM, RRobertsmith wrote:

    Wolfcamp is not going to come online due to lack of water,and Williston is much MUCH overstated. PA and NY are a lawyers paradise....

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