Energy Investing: Independent Oil and Gas Stocks Companies - dummies

Energy Investing: Independent Oil and Gas Stocks Companies

By Nick Hodge, Jeff Siegel, Christian DeHaemer, Keith Kohl

Okay, so maybe you want more bang for your buck. What energy investor doesn’t? Then perhaps you’ll consider the independent oil and gas stocks. It’s the group of stocks that energy investors are most curious about, and a lot of major trading successes can be found here.

So what are they? Put simply, independent oil and gas stocks companies have no downstream activity. The downstream sector of the petroleum industry involves the refining and processing operations, along with marketing and, finally, distribution. This tends to include midstream operations, too, which involve the transportation and storage of oil and gas production.

Essentially, that leaves some personal favorites: the exploration and production companies, ranging from the smallest wildcatters to some of the largest oil and gas producers in the United States and Canada.

Some energy investors wonder why anyone would like an oil company that isn’t considered part of Big Oil. Bigger is better, or at least it is in their eyes. But when you look at the U.S. oil and gas boom that’s taken place since 2008, Big Oil seems like it’s always late to the party.

ExxonMobil’s biggest deal in over a decade was to acquire XTO Energy in 2009 for $35 billion. At the time, XTO Energy was an independent company heavily invested in shale gas plays across the country.

A useful place to whittle the field and find new opportunities is the Industry Center of Yahoo! Finance. You can find a complete index of independent oil and gas companies at the Yahoo! Finance website. Your broker is also an excellent place to find and filter potential investments. Use this table as a stepping block to begin your search of independents.

Top Independent E&P Companies
Company Name Exchange: Ticker Market Capitalization
Anadarko NYSE: APC $41.5 billion
Canadian Natural Resources NYSE: CNQ $34.2 billion
Apache NYSE: APA $29.6 billion
Noble NYSE: NBL $20.1 billion
Continental Resources NYSE: CLR $16.7 billion
Encana Corp. NYSE: ECA $14.2 billion
Chesapeake Energy NYSE: CHK $13.7 billion
Cabot Oil & Gas Corp. NYSE: COG $13.5 billion
Tullow Oil NYSE: TLW.L $11.3 billion
Denbury Resources NYSE: DNR $6.8 billion

Small independent companies are among the most susceptible to the wild price swings of oil and natural gas. Always keep a stop-loss in place to prepare for the worst.