"This country, I believe, by the end of this decade is going to be a net exporter of energy..."
Richard Heckmann, CEO of Heckmann Corp. (NYSE: HEK, Stock Forum), said that just last week. It's hard to believe. Right now, the U.S. consumes a huge amount of foreign oil. According to the U.S. Energy Information Administration, the U.S. still imports more than half the oil it uses. That's nearly 10 million barrels of oil per day.
We're the No. 2 producer of natural gas in the world. But we still consume more than we produce, meaning we're a net importer of natural gas as well.
But Heckmann is a "water services" provider for companies drilling for oil and gas in shale fields across the country. In short, Richard Heckmann has a front row seat on the booming shale gas industry. If he believes the country is going to produce enough gas and oil that we're exporting more than we're bringing in, it's worth taking note... and looking for ways to profit.
One opportunity is in Heckmann itself. To get at the oil and gas trapped in shale rock, you have to pump the rock full of water and chemicals, breaking it up (or "fracking" it). Heckmann provides the water oil and gas producers need.
My colleague, Frank Curzio recently gave Growth Stock Wire readers the heads-up on this company. It's up about 17% since then, so it's not as attractive as it was a couple months ago. But if Richard Heckmann is right, this is a massive long-term trend. There are other plays out there. And the numbers are starting to look like he is right...
In the past four years, U.S. natural gas production grew by 14%, increasing every year. Meanwhile, natural gas exports jumped more than 50% during that time. Imports are down in each of the last three years.
So the trend is heading in the right direction. But it's still very small. For Heckmann's predictions to come true any time soon, there must be a huge change on the horizon.
October provided a ton of earnings results from shale gas producers like Cabot and Range Resources. These companies are leaders in the Marcellus Shale, an area Growth Stock Wire readers know well. The latest numbers look promising for the country's long-term energy supply...
In its recently-completed quarter, $9 billion natural gas producer Cabot grew its total oil and gas production by 39% versus the same period last year. This year, the company is on track to grow production by 44%. Analysts are expecting the company to boost production by another 50% in 2012.
In its latest quarter, $11 billion "unconventional" drilling giant Range Resources posted a 7% increase in production versus last year. The bigger story for investors is the long-term production growth in the company's core territory, the Marcellus Shale. Range expects to ramp its production rate in the Marcellus up to 400 million cubic feet of natural gas per day. In 2012, analysts are predicting Range will grow its production more than 40%.
These are just two examples of dozens of big oil and gas companies that are boosting production. Companies in other major shales – like the Eagle Ford, Haynesville, and Barnett – will continue to add to the country's supply. And Heckmann Corp itself saw revenues doubled over the past six months. In 2012, sales should easily triple versus this year's numbers.
In short, the shale boom is still in its early stages. If production keeps growing at double-digit rates for all these companies, it's possible that Richard Heckmann's prediction will turn out to be dead-on.
More importantly, it will mean billions of dollars in profits spreading through the energy sector. My favourite ways to play it are still oil services stocks, including the giants Schlumberger and Halliburton. Over the long term, they'll make billions of dollars helping major producers in the U.S. (and outside) boost their production levels.
But they're both up big since early October. So I suggest you watch for any weakness here. Be ready to grab them on pullbacks, when oil prices drop and investors get skittish on the global economy. That's the time to get into position for the bigger long-term trend – and the greatest shift in the U.S. energy market we've seen in a generation.