Capitalize on the U.S. Oil Boom

As the U.S. overtakes Russia as the world’s largest producer of oil and natural gas, exchange traded fund investors could take advantage of the growing revenue streams from master limited partnerships.

The U.S. extracted about 22 millions a barrels a day of oil, natural gas and related fuels in July, whereas Russia puts its 2013 oil-and-gas production at around 21.8 million per day, the Wall Street Journal reports.

The recent surge in U.S. output is attributed to new “fracking” techniques in shale-rock formations of oil and natural gas that were previously unmanageable. Specifically, supply from Bakken oil field and the Eagle Ford shale formation continues to rapidly increase.

“The increase in production in the region is fostering midstream development, including building new pipelines, expanding existing pipelines, railcars, trucks, and barges,” S&P Capital IQ said in a research note earlier this year. “We are positive on midstream companies leveraged to liquids production in the Eagle Ford Shale and Permian Basin.”

As the U.S. extracts more oil, master limited partnerships, which specialize in transporting oil and gas, could benefit from the increased volume, generating greater revenue and potentially increasing dividend payouts for investors.

MLPs build, acquire and operate transportation assets. While investors link MLPs with energy, specifically natural gas and crude oil, they are more involved with transporting the commodities. Consequently, the performance of MLPs is less dependent on commodity prices than on how much of the commodity is pushed through.

Source:  Tom Lydon, ETF Trends

Global X MLP (MLPA) and Global X MLP & Energy Infrastructure (MLPX)are components of the D2 Capital Management Multi-Asset Income Portfolio.

 

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.