American energy companies are pumping enough natural gas that we lead the world in its production. Starting next year, we could lead the world in oil production, too. That boom is opening up the door for smaller companies to fuel profits to the average American investor instead of that money being shipped back to OPEC.
Investors looking to profit from this boom should take a closer look at the following three oil and gas companies as each offers intriguing profit potential.
Penn Virginia Corporation (NYSE:PVA) is using Texas' Eagle Ford Shale to fuel impressive oil production growth in 2014. The company currently expects its oil production to grow by a jaw-dropping 65% to 85% this year. Not only that, but Penn Virginia currently has a 10-year drilling inventory that should keep its oil growth flowing.
That said, this is a debt-heavy company as it used debt to fuel its buying spree in the Eagle Ford Shale. Further, it needs to sell assets to fuel its drilling program. However, if everything goes according to plan, Penn Virginia should be self-funded in three years. The combination of risk and reward is very intriguing and some analysts are suggesting that Penn Virginia's stock is worth nearly double its current price to a strategic buyer. Bottom line: Penn Virginia is a company that could fuel a huge return for investors in 2014.
Emerging on three fronts
Like Penn Virginia, Carrizo Oil & Gas, (NASDAQ:CRZO) has a solid position in the oil-rich Eagle Ford Shale, which is driving its business. However, it also has positions in the emerging liquids-rich Utica and Niobrara Shale plays, which offer investors nice, long-term upside. Overall, Carrizo Oil & Gas sees these three assets fueling crude oil production growth of more than 40% in 2014.
Like many of its peers, Carrizo Oil & Gas is using a fair amount of debt to fuel its growth. Further, the company uses joint ventures and asset sales to bridge the gap in funding its capital plan. However, it built a solid foundation that currently includes more than 1,000 future well locations. That should keep Carrizo Oil & Gas busy for more than a decade, if it's not bought out before that happens.
A different way to play the boom
Atlas Energy, L.P. (NYSE:ATLS) is a different kind of energy company in that it typically doesn't own oil and gas wells outright. Instead, it owns the general partner and 37% of Atlas Energy Resource Partners, L.P. (NYSE:ARP), which owns the wells. In addition to that, Atlas Energy owns the general partner as well as 6% of the common units of a midstream energy service provider and has ownership interests in an energy-focused private equity partnership.
Atlas Energy is more of an income growth play. Its ownership of the general partners, incentive distribution rights, and common units has fueled a stunning rise in its quarterly distribution. Since 2011, its payout has grown from just $0.07 per quarter to $0.46 a quarter. Its payout could grow another 50% next year as Atlas Energy Resource Partners and its midstream business are both expected to increase distributions in 2014. Bottom line: Investors looking for a growing stream of income should take a closer look at Atlas Energy.
There are hundreds of ways to invest in the American energy boom this year. Penn Virginia, Carrizo Oil & Gas, and Atlas Energy are among the most compelling opportunities that I see right now. These are all stocks that are working to fuel American energy independence by taking money away from OPEC and putting it into the pockets of American investors.
Fool contributor Matt DiLallo has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.