Friday, July 19, 2013
I'm on the road visiting the Williston Basin in North Dakota. And I've never seen this type of growth anywhere in the world.
Williston is in the heart of the Bakken Shale – home to one of the biggest oil booms in America. It runs through North Dakota, Montana, and into Canada. And over the past two years, more than 4,300 wells have been drilled in the area. That's about four times the number of wells drilled last year in the Eagle Ford in Texas.
I traveled the 30 miles from Williston to Watford City. And the growth I saw taking place there is unreal. To put it in perspective, the Bakken makes the Cline and Eagle Ford shales in Texas look like farm towns.
While the Bakken has made headlines about its massive growth over the past two years, I saw no signs of a slowdown. For example, last year, the area was producing roughly 500,000 barrels of oil a day. And today, production has jumped to 750,000 per day. That's 50% growth in oil production in just 12 months.
Some of the major players in the area include Continental Resources, which owns roughly 1.1 million net acres. And it continues to drill like crazy in the area. Hess, Occidental Petroleum, Enbridge, and Statoil are also big players.
Every major oil-services company has set up shop in the Bakken. You can buy almost anything oil-related from these businesses – stuff like fracking equipment, pumps, and drilling rigs. These companies also help operate rigs for oil producers.
One company I didn't expect to see here is General Electric. It's secretly becoming a major oil-services player.
One employee I met at a small bar in Williston said the company plans on spending $80 billion in the oil industry over the next few years. And he told me GE now has almost 40 oil subsidiaries.
If his $80 billion number is accurate, I wouldn't be surprised to see GE go all-out and buy one of the major oil-services companies. My guess would be Halliburton – which has a market-cap of roughly $40 billion.
GE would become an immediate global leader in oil. After all, Halliburton operates in every major shale area in America. It also has a huge international presence – operating in 80 countries.
Even if GE doesn't buy Halliburton, the stock is a strong buy here. Shares are trading at just 11 times forward earnings. That's a huge discount to the average S&P 500 company, which trades at 16 times earnings. Halliburton is also expected to grow earnings at 17% annually. That's much faster than the average S&P 500 company.
Halliburton has at least 35% upside potential in the short term. Longer-term, the stock could see much bigger gains based on the massive shale growth potential in both the U.S. and international markets.
"Some of the country's top shale plays are going to see huge growth in the next few years," Matt Badiali writes. "These companies will grow reserves and production by 30%, 40%, or even 50%... without adding a single new acre of land." It all comes down to the idea of "stacked plays." Learn more here.
Porter Stansberry has called the shale oil boom "the biggest investment opportunity" of his lifetime. "What's happening here is bigger than just one or two oil companies having some success... We are in the midst of a massive, global discovery and expansion phase for oil and gas." Get all the details of the American energy boom in Porter's two-part series here and here.