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Landmark Ruling in Mexico a Boon for These U.S. Oil Stocks?

Commodities / Oil Companies Dec 11, 2013 - 03:46 PM GMT

By: InvestmentContrarian

Commodities

Sasha Cekerevac writes: In 1938, Mexico nationalized its oil industry, taking over all aspects from production to final distribution. This ban on ownership by foreign companies continues today; however, changes are underway.

Under the leadership of Mexico’s new president, there is a growing desire and need for the knowledge and technical skills developed by foreign companies, many of which are U.S.-based, to stem the decline in oil production and revive the industry in that country.


I think this will be a tremendous investment opportunity for oil stocks going forward. Mexico still has a tremendous amount of energy commodities under the ground, but many need advanced technology to extract them. And U.S.-based oil stocks are among the leaders in the world when it comes to extraction technology.

By allowing foreign-based companies to help develop projects, oil stocks would profit from having access to new reserves, and Mexico would benefit from having billions of dollars in funding and access to those with top-notch technical skills.

There are several different types of oil stocks that would benefit from this investment opportunity. One company that I’ve liked for some time is Halliburton Company (NYSE/HAL), a global leader in the oilfield service industry.

While Mexico has not yet changed its legislation and we don’t know which companies will obtain these oil rights at this time, Halliburton has been extensively offering its services in Mexico for a number of years. I think it’s highly likely that Halliburton would benefit from more work as this investment opportunity opens up.

When investing in oil stocks, one has to consider the company’s current level of production, future reserves, and potential for growth in terms of exploration and acquisition abilities. Halliburton is uniquely situated in that it provides oilfield services, offering extremely advanced technological know-how to many other oil stocks and creating a synergistic investment opportunity.


Chart courtesy of www.StockCharts.com

This is not to say that one should simply buy oil stocks immediately, as this type of investment opportunity takes many years to develop; it’s important to still wait for an attractive entry point. However, I would certainly add Halliburton to the top of my watch list when it comes to oil stocks.

Another one of the leading oil stocks to keep an eye on is Chevron Corporation (NYSE/CVX). Not only does Chevron have extensive knowledge in such areas as deepwater drilling, but it also has the capital needed to build and develop these oilfields. This type of investment opportunity requires capital, highly skilled workers, and advanced technologies.


Chart courtesy of www.StockCharts.com

Chevron is another one of those oil stocks that have shown an extremely strong performance over the past few years. I still believe there will be a tremendous investment opportunity for many oil stocks over the next decade, especially for firms that can increase their access to new reserves.

If Mexico does go ahead with reversing its ban on foreign firms, I think Halliburton and Chevron are two oil stocks that could be part of a new, multi-decade investment opportunity.

This article Landmark Ruling in Mexico a Boon for These U.S. Oil Stocks? was originally published at Investment Contrarians

By Sasha Cekerevac, BA
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

About Author: Sasha Cekerevac, BA Economics with Finance specialization, is a Senior Editor at Lombardi Financial. He worked for CIBC World Markets for several years before moving to a top hedge fund, with assets under management of over $1.0 billion. He has comprehensive knowledge of institutional money flow; how the big funds analyze and execute their trades in the market. With a thorough understanding of both fundamental and technical subjects, Sasha offers a roadmap into how the markets really function and what to look for as an investor. His newsletters provide an experienced perspective on what the big funds are planning and how you can profit from it. He is the editor of several of Lombardi’s popular financial newsletters, including Payload Stocks and Pump & Dump Alert. See Sasha Cekerevac Article Archives

Copyright © 2013 Investment Contrarians - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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