How to Successfully Battle Big Oil

This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.

Large integrated oil majors have historically been safe investments that offer fortress-like balance sheets, vast resource rights, and technical expertise to scale production. While the majority of crude oil is still produced from conventional plays, modern technology and expertise in shale exploration and production has leveled the playing field for smaller E&Ps. Producing hydrocarbons from shale rock is similar to a manufacturing plant. More hydraulic fracturing stages usually leads to more production, and with steep well decline curves scale is no longer a competitive advantage.

Shale plays have opened the door for first movers like Continental Resources  in the Williston Basin and EOG Resources  in the Eagle Ford to build up immense assets and offer shareholders returns that dwarf those from large integrated oil companies.   

More solid energy investments
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


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Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool owns shares of EOG Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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