Tony Daltorio, Investment U Research
Back on Wednesday, September 9, I wrote on how to profit from British Petroleum ADR (NYSE: BP)'s huge discovery in the Gulf of Mexico, and how to profit from peak oil.
And while I stand by the profitability of both that find and stock, I think I should clarify that "peak oil" really doesn't exist anymore. So instead, let's call it peak-cheap-and-easily-recoverable-oil instead, since that seems much more appropriate.
The days of cheap and accessible oil are long gone, but that very fact opens up rich opportunities for investors who face up to the realities of today's oil market.
Possibly the biggest reality comes down to this: Giant oil fields are the industry's lifeblood. Out of the world's 70,000 oil fields, the largest twenty account for a quarter of global production.
That's all well and good, but those giants have operated for decades. Saudi Arabia's Ghawar, the largest of the lot, began production in 1948 and has since gone through half of its 140 billion barrels of recoverable reserves.
In addition, the rate of discovery keeps falling, at least for the significant fields. They used to make 56 billion barrels worth of oil per year in the 1960s. By the 1990s, that rate had dropped to 13 billion barrels and today, it continues to decline. Annual discoveries now equate to only half the oil the world consumes each year.
Furthermore, most newly discovered fields are either small or located offshore. A decade ago, deep-water finds accounted for only a quarter of all discoveries. Today, they account for half… a significant change since these types of fields have had a history of declining faster than onshore oil fields.
Yet intrepid companies such as BP, continue to strike black gold under deep ocean floors. Among that number, is an emerging oil giant that's more than ready and willing to play with the big boys…
A Formidable Force In The Energy Sector
We heard a lot about Brazil as one of the four fastest emerging countries before the recession. But then as Russian stocks, currency, hopes and dreams tanked horrifically last year, and even China GDP faltered, enthusiasm in the BRIC countries took a nasty tumble.
Panicky investors got out way too soon though, because Brazil's prospects of becoming a leading oil producer keep getting better. The country just recently announced the discovery of a giant offshore oil field that could amount to twice as much as BP's Tiber field in the Gulf of Mexico.
