For oil exploration and production companies positioned in the United States, the new year should be a great one. That's because oil production is soaring in the United States, thanks largely to advanced technologies that make previously hard-to-reach resources suddenly obtainable.
The U.S. Energy Information Administration's recently released domestic production report has some striking findings that seemed virtually impossible just a few years ago. That's why those companies that are devoting huge amounts of resources to the highest-potential projects in the United States should see their earnings grow strongly this year, and beyond.
The great American oil boom
According to the U.S. Energy Information Administration, U.S. oil production is now at levels unseen since 1988. As the EIA states in a recent report, the four-week moving average rose to more than 8 million barrels per day in the United States. And, going forward, continued technological advancements and steady economic growth should result in even greater production totals.
The EIA estimates oil production in the United States could soon near the historical high of 9.6 million barrels per day, reached in 1970. To this end, the agency believes annual U.S. oil production will grow by 800,000 barrels per day through 2016.
That's why ConocoPhillips (NYSE: COP ) is likely to perform well over the next few years. Its operations are highly geared toward domestic production, a calculated move that should pay off handsomely for the company and its investors. ConocoPhillips is devoting huge resources toward the most promising plays in the United States, including the Eagle Ford, Permian, and Bakken onshore fields. All told, its development programs in the lower 48 states will account for an additional 365,000 barrels of oil equivalents per day by 2017. This will represent 60% of the company's total production growth over that time frame.
And, ConocoPhillips' offshore discoveries in the Gulf of Mexico will only add to its growth. ConocoPhillips recently announced a major discovery at its Gila well in the Gulf, which represented the company's fourth major discovery in the deepwater Gulf. In all, ConocoPhillips holds an interest in 454 Gulf of Mexico deepwater blocks, which cover approximately 2.2 million net acres.
ConocoPhillips controls a 20% interest in the Gila well, which is majority-operated by fellow major BP (NYSE: BP ) . This discovery represented BP's third in the Gulf of Mexico in recent years, and is an important step in BP restoring its operational footprint in the region.
Despite BP being based in the United Kingdom, it's heavily invested in U.S. oil production. According to the company, BP has invested more than $55 billion in the United States over the past five years—more than any other energy company.
Smaller exploration and production companies should also capitalize on the great American oil boom right alongside the super-majors. Those previously mentioned shale plays are key for Hess Corporation (NYSE: HES ) . Hess is seeing strong results in the U.S., particularly from its North Dakota operations, including the Bakken field. In all, Hess's oil production in the United States is already higher through the first two months of the 2013 fourth quarter versus the third quarter.
Hess has produced 105,000 barrels of crude oil per day in the United States through the first two months of the fourth quarter, compared to 103,000 barrels per day in the entire previous quarter. Hess is likely to benefit two-fold from its rising production, as well as its ability to lower production costs. That means significant margin improvement going forward, and even great profits to enjoy.
Final Foolish thoughts
America is truly embarking on an age of spectacular oil production growth. Reports are now confirming just how strong production growth is in the United States, and even further growth is likely in the years ahead. ConocoPhillips, BP, and Hess are three major players in domestic oil production, and should be high on the list for investors looking to capitalize on the great American oil boom.
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