The Wall Street Journal today presented an interesting framework to think about investing in oil.
The article takes a rather conservative perspective and suggests that investors should look at oil not for growth but for dividends. So they consider the super majors a better bet than the independents.
While several points in the article are valid – e.g., depressed gas prices, surplus capital availability, and an uncertain short-term outlook for the oil industry – it is probably premature to write-off further growth in the oil industry. Investors still value exploration over production based on the appreciation companies have enjoyed when reporting new discoveries. Further, gas prices do not seem to have adequately reflected the drop in unconventional investment.
Interesting times.
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