Energy Prospectus

The Permian Basin is one of America's most prolific oil basins. It has produced more than 29 billion barrels of oil since 1921. For perspective, that equates to the entire current proved oil reserves of the United States.

Last year, the Permian produced about 312 million barrels of oil, or about 14% of U.S. oil production. However, its best days might be ahead of it. Thanks to new drilling techniques, the oil industry is unlocking more oil all the time. In fact, oil production growth is expected to accelerate from a 7% annual rate over the past five years to a 12% annual rate over the next five. That's driving tremendous production growth at the five companies discussed in the article below.

Full Article> http://www.fool.com/investing/general/2 ... egacy.aspx

Our portfolio companies with large stakes in the Permian are:
Concho Resources (CXO)
Cimarex Energy (XEC)
EOG Resources (EOG)
Rosetta Resources (ROSE)
Whiting Petroleum (WLL)
Approach Resources (AREX)

This is a perfect example of how markets and technology solves resource availability problems. EXXI talks about the bonus to them that a simple 5% increase in recoveries can produce.

IMO we are just starting to see the impact of technology on oil and gas reserves.

Bob

The landscape has definitely changed in the oil patch. However, this great new technology ain't cheap. The horizontal wells are very expensive, so oil & gas prices must remain elevated to justify massive capital expenditure programs.

I do like the Permian because of stacked pays, lots of infrastructure and year-round drilling programs.

I REALLY LIKE the acquisitions announced this week by GST and OAS. I also like the sale by CRZO.

I will have a lot to talk about in my next newsletter that should go out on Monday afternoon.

" The horizontal wells are very expensive, so oil & gas prices must remain elevated to justify massive capital expenditure programs. "

If the price does not support - then that means other technology has provided supply. At some point the price will bring the supply.

Bob

Because the shale horizontal wells decline so rapidly, any pullback in capital spending by the E&P companies will cause a rapid supply response. The U.S. shale plays are the only real growth in global oil supply.