Friday, December 10, 2010
With the price of oil on the rise, a two year high of just over $90 a barrel just last week, and the decline in supply due to increased demand in China and India as well as dwindling sources, here are a few pivotal stocks to keep an eye on.
Transocean, the off shore drilling company, that owned the Deepwater Horizon oil rig involved in the Gulf oil spill earlier this year, will rebound from the market shocks following the disaster. Despite the backlash from the Gulf spill Transocean is expected to gain. Indemnified by BP, they will incur no liability for the spill, allowing them to position themselves to respond to future demands for off shore drilling. Stifel Nicolaus an analyst with Thaddeus Vayda predicts a price per share increase of 22% for the company. Source(s):Fortune
Royal Dutch Shell will invest heavily in research and development in an attempt to improve production through developing its refining processes and improving its current well capacities. Shell’s R&D budget will be more, according to Fortune, than any other oil company. A more conservative investment than Transocean it currently has a 8.3 price per earnings, more than twice those of Chevron and Exxon Mobil.
Chevron, in contrast to Shell, is planning to invest billions in exploration in order to increase production. It will allot only about 10% of its budget to current expenditures including refining and transporting of gas. Their capital expenditure budget for 2011 is $26 billion up from $21.6 billion this year, a 20% increase. Source(s): Fortune, Chevron
Although the Obama administration is strongly encouraging investing in renewable energies we are apparently still heavily vested in fossil fuels.