In a ruling last week, the Obama administration opened the door a crack for U.S. producers to export oil after a nearly 40 year ban.
This ruling apparently applies to condensate, which is a very light form of oil, and a type of oil that is more common in shale production.
According to RBC, condensate production is about 15% of total U.S. crude production and about half of it comes from the Eagle Ford Shale in South Texas. The Commerce Department gave two companies, Pioneer Natural Resources and Enterprise Products Partners, permission to export this type of oil, and that would logically lead other companies to apply for approval in the future.
Immediate beneficiaries should be companies with the largest exposure to condensate production in the Eagle Ford, but the ruling could be a test that leads to the legalization of crude exports in general.
Stay tuned if you invested in producers, refiners or potential export facilities. This a potential game changer for these folks.
James Mathis, managing partner of Echelon Investment Management, believes in enriching his clients’ lives by identifying, preserving and achieving their goals. Echelon partners with clients through every leg of their race ~ asset management, investment advice and retirement planning. Contact him at james.mathis@echelonim.com.
Disclaimer: The author has no stock positions in the companies he mentioned in this article, but could add positions to his own account or to accounts where he has trading authority in the future.