Recent oil discoveries in South America have put that continent on the map for investors looking to profit from the development of these resources. While there are many companies that will be operating in the region over the years, these five are among the first movers. That makes these stocks the five best to play this coming oil production boom.
Offshore Brazil
It’s well known that Brazil is blessed with massive oil reserves. The discovery of the pre-salt reserves has added nearly 100 billion barrels of oil equivalent reserves to Brazil’s total estimated reserves. The problem for investors is that the country is keeping those reserves for itself.
That makes Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) one of the best pure-play stocks to buy if you want to invest in the growth of oil production. The company is investing heavily to explore and develop these massive oil fields with a goal to produce 1 million barrels of oil per day by 2016. But it’s not the only company operating offshore: Seadrill Ltd (NYSE:SDRL) is another potential stock play here. One of the interesting things it’s doing is looking at spinning off part its Brazilian business. This will help the company navigate the country’s regulations while retaining upside as offshore oil production grows. It will also help the company to continue producing income to keep its top-tier dividend flowing back to investors.
Shale oil in Argentina
While Brazil’s offshore reserves are well known, we’re just beginning to learn the extent of the shale oil reserves in Argentina. A recent study by the EIA found that Argentina has the fourth-largest technically recoverable shale oil resources, as well as the second-largest shale gas reserves. In fact, the total barrels of oil equivalent are actually estimated to be more than the pre-salt reserves of Brazil.
That potential is drawing many exploration and production companies to the country, including EOG Resources Inc (NYSE:EOG). While currently just a small exploratory operation for the company, Argentina’s potentially vast resources could be a big future growth driver for EOG. That’s because the country’s main shale oil play has the resource potential to make the Eagle Ford Shale look like an eaglet, if it can be economically developed. EOG is very early to the play which makes it one of the best oil stocks to buy if you want to invest in the pure upside from Argentinian oil production growth.
Logistics hub
Another top stock to consider buying is midstream operator Buckeye Partners, L.P. (NYSE:BPL). While a bulk of the company’s assets are in the U.S., the crown jewel is its BORCO storage terminal business in the Bahamas. This asset is of strategic importance to the region as it provides Latin American producers with storage and blending options. As you can see in the map below, the asset’s strategic location puts it in the best position to be a regional hub for the movement of crude oil and refined products. If oil production in the region comes as expected, the company has more than enough room to double its current capacity, which means lots of growth potential for investors.
Source: Buckeye Partner’s, L.P. (NYSE:BPL) Investor Presentation (link opens a PDF)
