WealthTrack Interview: The Shale Oil Revolution

Comments

• bee

  July 2018

  An investment 10 years ago in VGENX has been a challenging ride. I really would like to get excited by this sector. A better 10 year play has been FSCHX which uses OIl & Gas as its feed stock or Utilities such as GASFX and FSUTX which transport and covert these resources into electricity.
  
  10 years chart comparing these funds:
  
• hank

  July 2018 edited July 2018

  Yes - “challenging ride”. I’m not speculating on the sector anymore (other than a small position in a real assets fund (PRAFX). But I once did. Crude bottomed at around $26 in early 2016. It’s now back above $70 (varies slightly by grade). So that’s been a nice recovery and puts the price within reach of the $100+ where it topped out around 2014. Nat gas (a byproduct of crude drilling) hasn’t budged since early 2016. Stubbornly holding below $3. That’s a constant curiosity to me. How do you spell GLUT?
  
  From an investing principal standpoint, I believe in maintaining a small exposure (5-15%) to the area of natural resources, of which oil is a part. However, from a pocketbook standpoint, it hasn’t paid off over the past decade. These kinds of cycles appear to play out not in years - but over decades,
  
  Funds? PRNEX (T. Rowe Price New Era) has always maintained a heavy exposure to the oil sector and is a well managed, reasonable ER fund).
• oletimer63

  July 2018

  I’ve owned PRNEX since 2002. Still waiting to make what I lost when the market tanked.
• hank

  July 2018 edited July 2018

  oletimer63 said:

  I’ve owned PRNEX since 2002. Still waiting to make what I lost when the market tanked.

  There ya go ... In principal you were right. In terms of profitability you were outmaneuvered by Mr. Market.
  
  I didn’t mean to plug the fund. It happens to be the first TRP fund I ever purchased (early 90s). Did OK at the time. Their prospectus back than noted that the industries it invests in tend to be highly cyclical. (I’d imagine it still does.) Used it more recently as a (lower volatility) proxy for energy. Tough multi-year ride. Came out fine in the end - but have no desire to repeat the experience.
  
• bee

  July 2018 edited July 2018

  Related Story...interesting geo-political dynamics when it comes to the production and trade of resources:

  For too long, Russia has enjoyed near-monopoly status as the main supplier of natural gas to our European allies, and wielded that power as a means of political coercion.
  
  Simply stated, the United States wants to help our partners increase their energy security by increasing the diversity, not only of their supply, but of their suppliers as well.

  energy-secretary-perry-true-energy-independence-is-finally-within-our-grasp
  
  Forbes Article:

  The U.S. may continue to lead the world in natural gas production for a few more years, but the level of proved natural gas reserves implies that our lead could be short-lived.
  
  The Middle East's proved natural gas reserves at the end of 2017 were 2.8 quadrillion cubic feet, nearly ten times U.S. proved reserves of 309 trillion cubic feet. For perspective, U.S. proved reserves are only 4.5% of the global total.
  
  Russia has more proved natural gas reserves than any other country with 1.23 quadrillion cubic feet, followed by Iran with 1.17 quadrillion cubic feet. Total proved natural gas reserves at the end of 2017 were enough to satisfy 2017 global production rates for 52.6 years.

  the-u-s-is-still-the-global-natural-gas-king