The first phase of what I expect to be a three-part series for western oil and gas companies began with a run-up in commodities prices that culminated with crude at $147 a barrel in July. The briefer second phase has seen crude -- and with it, natural gas -- drop to about a third of its high in just four months. Watch for the final phase to begin sometime in 2009 and to culminate with an industry consolidation that could take a bite out of the number of active independent producers.
A year ago at this time, and pretty much through the July price inflection point, the darlings of energy in this part of the world were the likes of Chesapeake Energy
Take Chesapeake, for instance. In less than two decades from its founding, the company rocketed to the top spot among U.S. natural gas producers and led the parade into such unconventional new natural gas plays as the Barnett Shale in North Texas and the Haynesville Shale, primarily in Louisiana. Now, however, its share price is a shadow of its former self, and it's in a quest for funding for its development plans.
The beneficiaries of this changing set of circumstances likely will be the integrated Big Oil companies. ExxonMobil
Other majors, including Chevron
With the possibility -- or perhaps probability -- of a major company shopping spree beginning in the not-too-distant future, it seems worthwhile for Fools to keep an eye on these major shoppers, and perhaps to begin slowly salting away a few shares in them.
ExxonMobil, the biggest of all western oil companies, has been accorded a four-star status by Motley Fool CAPS players. Is your thumbs-up included?
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Fool contributor David Lee Smith doesn't own a drop of any of the companies mentioned. He does, however, welcome your questions or comments. Chesapeake Energy is a Motley Fool Inside Value pick. The Motley Fool has a disclosure policy.