I’m still buying many of these companies today as what has transpired has confirmed my belief that Mr. Market has greatly underestimated the value of the acreage that these companies have locked up.
Everyone is now starting to notice the unconventional revolution that is occurring in the oil sector — even the International Energy Agency!
Today the IEA is out with its 2012 World Energy Outlook in which for the first time the agency fully embraces what is going on with unconventional oil in North America.
Here is the IEA’s chief economist Fatih Birol:
Some of his main observations:
- By 2017 the U.S. will be the top oil producer in the world overtaking Saudi Arabia, and by 2015 it will overtake Russia as the top natural gas producer in the world
- Today the U.S. imports 10 million barrels of oil per day; 10 years from now Birol expects that import needs will drop to 4 million barrels of oil per day.
- U.S. imports of oil from the Middle East will actually go to zero within a few years.
- Despite this increase in American production Birol does not see any decrease in oil prices, the reason being that the new sources of oil (tight oil, oil sands, deepwater) require a high oil price to be economic, and because Middle Eastern producers require $80 or more in order to balance their budgets.
I hope he is right about oil prices staying at $100 and above. If they do I’m going to do well with my portfolio of unconventional producers that will be growing production year after year for the next decade at least.