Energy: The Curious Case of Shale

Industry Focus

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4.6 • 854 Ratings

🗓️ 22 August 2019

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

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Summary

The shale revolution is a case study in innovation. The onset of horizontal drilling and hydraulic fracturing catapulted the USA to the top among global oil producers and created a 100 year surplus of natural gas supply. However, the exploration and production companies that drove the shale revolution haven’t enjoyed in the gains, generating chronically negative cash flows and poor earnings. Motley Fool Contributor Jason Hall joins the show to dive into why profits have been so hard to come by for shale producers and where else investors might look to profit from the disruption shale production has caused.

Stocks Mentioned: AR, OXY, TELL, GTLS, PSX, EOG

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0:00.0	Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day.
0:06.5	Today is Thursday, August 22nd, and we're discussing U.S. shale exploration and production companies.
0:10.9	I'm your host Nick Saipel, and today I'm joined by by Motley Fool contributor Jason Hall via Skype. How's it going Jason?
0:15.0	I'm very, very good. I just want to go ahead and get a go dogs out there
0:19.7	early because we're not going to record before the season really kicks off.
0:24.0	But we're going to, our listeners who don't really enjoy when Nick and I go off on our college football
0:30.6	tangents, we're going to save that for the end of the show, but we are going to talk about football a little bit. We're going to save that for the end of the show, but we are going to talk about football a little roll tide there.
0:36.0	Playing Duke this week, next weekend, I'll be heading down there. We'll chat about that a little bit at the end.
0:40.0	But first, today we're going to talk about shale. We're going to talk about exploration and production companies.
0:46.0	I think shale it's a really interesting case study when it comes to something where you had this huge technological revolution that was the
0:54.3	shale revolution we got access to oil and gas that we hadn't been able to access ever
0:58.9	before which led to a massive increase in production but there really hasn't been much dropping down to the
1:04.9	bottom lines of these companies and we'll kind of explore that. But first off,
1:08.0	before we dive too much into this, just high-level folks that don't know what, when we
1:12.0	say exploration and production or E&P companies in the high-level folks that don't know what when we say
1:12.6	explanation and production or E&P companies in the oil space what does that mean?
1:17.1	I'm going to throw another piece of jargon in there to complicate it even more.
1:20.3	This is the upstream segment.
1:23.0	So you hear all these words and all these different descriptions and the best way to describe it is that the oil and gas industry, the value chain as they call it, is kind of divided up into three major sections.
1:34.0	You have the ENPs, the guys we're going to talk about now, which are the upstream companies.
1:38.6	They're the ones that go out there and they look for oil and gas reserves.
1:42.2	They drill wells to tap it, and they make money by selling
	...

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