Amidst impressive crude oil production numbers from U.S. shale fields, investors are driving up the stock of companies in a strategic position to capitalize on the growth of shale exploration. Through the end of October, the three companies leading the yearly S&P energy index all have a significant stake in shale plays: Pioneer Natural Resources Co., Chesapeake Energy Corp., and Hess Corp.

            In 2012, the S&P Energy Index was led by refiners, including Marathon Petroleum Corp., Tesoro Corp. and Valero Energy Corp. Analysts believe the main factors contributing to the slowed growth of refiners are the decline of retail gasoline and diesel prices, which have fallen by 16 and 7.3 percent, respectively, since their Feb. 25, 2013 peaks. Increased crude production has contributed to a 17 percent cut since late August in the benchmark North American oil price. Jorge Leis, head of Bain & Co.’s Americas oil and gas practice believes that falling oil prices in the second half of 2013 won’t help refiners as their output of gasoline, diesel and jet fuel will exceed consumer demand.

            Falling oil prices won’t discourage increased exploration and production in U.S. shale play, though, according to Kevin S. McCarthy of Kayne Anderson Energy Development Co. “Even with the recent drop in crude markets, prices are well above production costs in shale formations,” said McCarthy.

Media Coverage Resources:

“Oil Producers Overtaking Refiners on Flood of U.S. Shale: Energy”—The Louisiana Oil & Gas Association