You’ll Never Guess Who is Really Leading America’s Energy Boom

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.


Photo credit: Chesapeake Energy 

America is on pace to pass both Russia and Saudi Arabia as the world's top oil producer next year according to the International Energy Agency. We already top the world in natural gas production. Because of that we should be close to energy self-sufficient in the next two decades. You'll be shocked to know who is leading the boom.

It's not big oil giants like ExxonMobil (NYSE: XOM  ) or Chevron (NYSE: CVX  ) as both were late to the party. Instead both acquired the way into America's energy boom as ExxonMobil paid $31 billion to buy XTO Energy while Chevron spent a more modest $3.1 billion to acquire Atlas Energy. It was smaller energy companies like XTO and Atlas that were the early leaders of America's energy boom. In fact, America's energy boom has been led by about 20,000 small and midsized businesses with the typical business in the energy industry employing fewer than 15 people.

The founders of fracking and their small business roots
The discovery of using fracking to unlock natural gas from shale is largely credited to George Mitchell and his small team at Mitchell Energy & Development. Mitchell was a real entrepreneur as he is not only credited with finding the key to unlocking America's vast natural gas resources, but he also began the development of The Woodlands, which is a master-planned community near Houston. Mitchell eventually grew his small energy company to the point where he was able to sell Mitchell Energy to Devon Energy (NYSE: DVN  ) for $3.1 billion.

Photo credit: Devon Energy 

Another of the early leaders of America's energy boom was Chesapeake Energy (NYSE: CHK  ) . The company was founded in 1989 by Aubrey McClendon and Tom Ward with an initial investment of just $50,000. The flamboyant wildcatters and small business entrepreneurs built the company into America's second largest natural gas producer behind ExxonMobil. Ward and McClendon have both since left Chesapeake Energy, each founding the next wave of small energy companies that continue to grow along with the energy boom.

Small business boom
Many of the energy companies operating in America are smaller producers that hope to grow into a Chesapeake Energy or be acquired by a company like Devon Energy or Chevron. These smaller energy companies are the core jobs creators in the energy boom. It's not just energy related jobs either, what's really remarkable is that for every one energy related job these smaller producers create, three additional "induced" jobs are created on average. Induced jobs can be in industries like housing, retail or construction that are necessary to support the growing employment in the energy industry.

CNN Money, for example, recently profiled a woman that moved from Michigan to Pennsylvania to take advantage of the drilling boom. The small business she owned with her boyfriend was a trucking company that moved oilfield equipment. She, however, saw the need for fireproof clothing and safety equipment and has since opened up two retail stores dedicated to providing oilfield service workers with safety equipment at a reasonable price. Like Chesapeake Energy, her business was founded with a modest $50,000 investment, which is expected to yield $3.5 million in sales this year. America's energy boom is filled with similar stories.

Photo credit: Flickr/sushi_ina 

The American oilfield has always been a place where entrepreneurs flocked. While that has created boom and bust cycles, the small business led boom has fueled tremendous economic growth. This latest boom is estimated to have added $300-$400 billion to the U.S. economy over the last few years and is largely credited with keeping our economy from falling back into a recession.

Investor takeaway
While natural gas and oil are the fuels we're after in the latest energy boom, what's really driving the boom is small business. For investors the takeaway is pretty clear, smaller oil and gas companies as well as the supply chain needed to support the industry is a good place to search for investments that are profiting from the energy boom.

One small business investment you don't want to miss

There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (2) | Recommend This Article (2)

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 March 24, 2014, at 7:16 PM, jjmaiers wrote:

    Mr. DiLallo omits some important information from his positive comments about McClendon and Ward at Chesapeake, and later Sandridge. In both companies they packed the board with their cronies and awarded themselves lavish pay and benefits, and loaded the company with debt, enriching themselves at great cost to the stockholders. They should more accurately be described as con men rather than entrepreneurs.

  • Report this Comment On March 25, 2014, at 8:23 AM, Mathman6577 wrote:

    George Mitchell should be in the same category as Edison and Einstein. He completely transformed a large part of the US economy.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2887019, ~/Articles/ArticleHandler.aspx, 9/3/2015 5:50:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Matt DiLallo

Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:

Today's Market

updated Moments ago Sponsored by:
DOW 16,374.76 23.38 0.14%
S&P 500 1,951.13 2.27 0.12%
NASD 4,733.50 -16.48 -0.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 4:00 PM
CHK $7.44 Up +0.06 +0.81%
Chesapeake Energy CAPS Rating: ****
CVX $78.26 Up +0.20 +0.26%
Chevron CAPS Rating: ****
DVN $40.83 Up +0.11 +0.27%
Devon Energy CAPS Rating: ****
XOM $73.79 Up +0.56 +0.76%
ExxonMobil Corp CAPS Rating: ****