| Don't Touch That Dial! |  |  Small Caps at the Forefront Like the natural gas resource sector that was the focus of our last issue of PetroPortfolio, oil and gas investing also offers several ways to diversify your holdings. There's "big oil," whose recent growth has made tycoons of those fortunate enough to get on board early. But many majors have shown a recent tendency to go the slow-and-steady route, intentionally limiting expansion to keep reserves low, and prices high. And there are the juniors, who often surge ahead into uncharted waters, in search of the next big strike. At PetroPortfolio, you may have noticed that our analysts and editorial staff have a fondness for the little guy... and his or her big potential. So, how do you know which juniors are worth your research time? If commodities make your stomach churn, there are plenty of other ways to grow your oil and gas portfolio, and we've been looking at a few. Ashland, Inc. (NYSE:ASH) is involved in diverse businesses including oil distribution, refining and marketing. Forest Oil CP (NYSE:FST) has holdings in the Gulf of Mexico, Texas, Louisiana and Oklahoma, without the added risk of Mid-East oil production. Precision Drilling (NYSE:PDS) provides contract drilling field services. And Valero Energy (NYSE:VLO), with 15 refineries running near full capacity, is less dependent on fluctuating oil prices. From infrastructure and delivery systems, to improved cost projections, to non-conventional resource plays around the globe, take a closer look at how oil companies big and small are moving forward this quarter. Whether you are a seasoned and self-directed small cap investor or are looking into juniors for the first time, this issue of PetroPortfolio provides fuel for thought as you build your portfolio. | | | In Through the Out Door Other Ways to Play the Oil and Gas Market Commodities make your stomach churn? There are plenty of other ways to grow your portfolio. Support services -- everything from equipment rental companies to the pipeline sector -- often have less volatile options for consideration. This report on pipeline juniors shines the spotlight on an often-overlooked sector. "Pipeline companies operate one of the simplest and most stable business models around. These firms simply own expansive pipeline networks...connected to refineries or storage...terminals," according to the author. Regardless of prices, product has to reach the consumer, and companies that construct and operate these delivery systems can be more stable than exploration juniors. The author's recommendations in this arena include Enbridge Energy Partners (NYSE: EEP), Kinder Morgan (NYSE: KMP) and El Paso Corp. (NYSE: EP). The Street Authority | | | A Tale of Fractured Shale Unconventional Opportunities Around the Globe Oil and gas shale is fine grained, sedimentary rock containing kerogen, a mixture of solid organic compounds including fossil fuels. In other words, oil and gas. In a previous issue, PetroPortfolio covered the well-known Barnett Shale in Texas; other fractured shale formations include the Bakken Shale in North Dakota and the Whangai-Waipawa shale formations in New Zealand. One of the more active companies in this arena this year is Trans-Orient Petroleum Ltd, a small-cap with a laser focus on oil and gas shale extraction methods. Trans-Orient is a small cap exploration and unconventional company worth looking into. And investing a part of your energy portfolio in non-traditional means of oil and gas extraction diversifies your holdings within the sector -- a move toward increased portfolio stability. PetroPortfolio Editorial Staff | | | Moving at a Snail's Pace Big Oil Reluctant to Expand Infrastructure Big oil is keeping shareholders happy with record returns in a choppy market. If oil demand is holding steady (for now), there's no real incentive for large caps to expand drilling operations, build new refineries, or construct more pipelines. In fact, big oil is counting on strong demand for its products to keep prices up, allowing these blue chips to deliver stellar performance numbers quarter after quarter without the risk inherent in expanded drilling and refining activity. Is big oil worried about the increasing popularity of bio-heat and bio-diesel? Current numbers and analyst estimates suggest not. The fact is, as long as big oil delivers big profits to shareholders, making fund and pension managers look good in the process, they're sitting pretty...and leaving expansion to the juniors. PetroPortfolio Editorial Staff | | | Improving Upstream Estimates One Firm's Answer to More Accurate Projections It's one thing to bring product to the surface. It's quite another to get that product to the consumer. In fact, careful planning and dependable cost estimates improve the likelihood of successful drilling and processing outcomes for producer and investor alike. Berwanger, a Siemens Company subsidiary, has developed its Oil and Gas Manager software to estimate costs from field development planning to mechanical integrity based on equipment in operation and on-site. This ability to estimate upstream costs can provide juniors greater control in the allocation of capital assets, improved accuracy of projected outcomes and more tightly-defined project parameters... all key elements to a careful forecast and a successful drilling operation. Berwanger | | | Published by PetroPortfolio Ltd. Copyright 2007 PetroPortfolio Ltd. All Rights Reserved.
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