How to Profit from America’s Rise to Top Oil Producing Powerhouse

By Moe Zulfiqar for Daily Gains Letter | Feb 26, 2013

The U.S. is expected to overtake Saudi Arabia as the world’s top oil-producing nation by 2017; and by 2030, it’s also expected to become a net exporter of oil to the global economy—meaning it will be self-sufficient when it comes to energy consumption, according to a report published by the International Energy Agency (IEA). (Source: Rosenthal, E., “U.S. to Be World’s Top Oil Producer in 5 Years, Report Says,” The New York Times, November 12, 2012.)

In addition to the U.S. becoming a major oil producer, the IEA also indicated that the U.S. will overtake Russia as the world’s top natural gas producer by 2015. (Source: Ibid.)

Having said that, how can investors take advantage of this growth in energy production in the U.S. economy but not invest in oil and gas plays?

Hercules Offshore, Inc. (NASDAQ/HERO) provides shallow-water drilling and marine services to companies involved in oil and natural gas exploration and production worldwide. The company is based in Houston, Texas; Hercules’ fleet of jackup rigs is the largest in the U.S. Gulf of Mexico, and it’s the fourth-largest in the world. In addition, the firm is also the operator of the largest inland barge drilling fleet across the U.S Gulf Coast, and the largest lifeboat fleet worldwide. (Source: Hercules Offshore, Inc. web site, last accessed February 25, 2013.)

 Chart courtesy of www.StockCharts.com

Currently trading near $6.70 with an average three-month volume of about 3.2 million per day, almost 74% of Hercules is held by institutions and 18.5% is held by insiders. The company’s book value stands at $5.57. (Source: Yahoo! Finance, last accessed February 25, 2013.)

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