For years now America's energy renaissance has made headlines and attracted the interest of investors, many of whom have grown rich. The scale of America's shale resources is impressive indeed:
- Shale oil: total estimated reserves 223 billion barrels (58 billion economically recoverable today).
- Shale gas: 2,421 trillion cubic feet (Tcf) of natural gas (665 trillion recoverable).
- In recent years its been able to raise prices on its oil and gas.
- Its CEO, Miguel Galuccio, is a former Schlumberger executive and appointed by Argentina's current president.
- Revenues have been growing strongly, an average of 27% annually over the last three years.
- It has recently signed agreements with Chevron, Baker Hughes, and Schlumberger as part of a five year, $37.2 billion investment program aimed at increasing oil production 29% and gas production 23% by 2017.
- It has access to the Vaca Muerta shale formation, estimated to hold 16.2 billion barrels of oil and 308 Tcf of natural gas.
- Its operating and net margins are slightly above industry average.
There are three reasons for investing in Baker Hughes and Schlumberger instead of YPF: technology, political pull, and dividend growth opportunity.
When it comes to investing in foreign oil and gas production, the direct route, (foreign oil and gas producers) can be fraught with excess dangers and risks that long-term investors need not expose themselves to. So called "pick and shovel" providers (oil services companies), are a much better risk-adjusted method for cashing in on the potential shale boom.
Adam Galas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.