Submitted by EnergyTechStocks.com
There’s a simple way to analyze which oil companies investors may want to own and which they may want to sell. The more oil an oil company owns, the less it needs to go into the market and buy somebody else’s crude at today’s high prices, thereby hurting its profit margins. Every oil company presently is drawing down its own inventories. But some companies’ inventories are going to last longer than others’.
Like everything else about the oil industry, oil companies’ inventory levels are a closely guarded secret. Still, there are a number of oil companies that have reserves which, because of their location, should last a reasonably long time. According to analysts, the companies investors might want to own based on their reserves’ expectancy include: Russia’s Lukoil, Canada’s Imperial Oil, and Petrobras, the Brazilian company. Among more recognizable names, ExxonMobil is said to be in good position reserves-wise, although even Exxon is starting to show signs that it may soon become overly dependent on spot-market crude purchases.
Then there are those companies in good position because of “unconventional” oil sources, especially tar sands and coal, the latter capable of being turned into synthetic oil through so-called coal-to liquid (CTL) technology. Analysts say that among the beneficiaries of the ample Canadian tar sands should be Canadian Natural Resources, EnCana and Suncor, while CTL beneficiaries could include Arch, CONSOL and Peabody.
Having said that, investors should realize that companies with potentially large unconventional oil reserves could run afoul of rapidly-rising extraction costs, compounded by delays caused by environmentalists.