2005 marked the fourth straight year of good times for energy investors. While the U.S. budget for the current fiscal year is around $427 billion, the market capitalization for the petroleum stocks in the John S. Herold universe grew by $500 billion by year-end 2005. "Without a doubt, the total wealth generated is both eye-popping and exceeds all previous years," report Herold analysts Robert Gillon and Kathryn Berger in the research firm's annual year-end stock-performance review. The analysts examined 383 companies' total shareholder returns-stock-price gains plus dividends-in 2005 and found that the vast majority outperformed expectations. Of note, 13 stocks tripled in price while 50 doubled. According to the analysts, shareholder returns rose more than 10% in the first quarter of 2005. Third-quarter growth shot up 25%-spurred by spiking gas prices-while fourth-quarter gains dipped when natural gas prices fell. "But the same pattern was evident at the end of 2004," the analysts say. "Three years is a long time for a bull to run, but this one still has fire in its eyes." For a third consecutive year, Canadian E&Ps, integrated oils and royalty trusts outperformed their U.S. counterparts. Connacher Oil & Gas, a new heavy-oil-focused producer, led Canadian E&Ps with 621.5% in total returns in 2005; Husky Energy Inc. was one of the top five integrated oils with total returns of 82.8%; and Canadian Oil Sands Trust's total return topped off at 95.8%. North American producers had size in their favor though, flipping the pattern of the two prior years. Among the super-independents, Nexen Inc. reported a 135.7% return, bumping Canadian Natural Resources to second place. Vintage Petroleum was top dog in the large U.S. producer category with 136%, and Southwestern Energy-which has more than doubled its shareholder returns for three years straight-has climbed up into the next-size category with 2005 total returns of 183.6%. Ultra Petroleum was another North American winner; its returns totaled 131.9%. As a group, the 31 larger independents saw a median return of 59.4%, up from returns reported in the prior year. Maurel et Prom was the only loser (-13.6%). The analysts note that stockholders of Pogo Producing, last year's worst performer in its peer group, are still waiting to see the benefits from the company's restructuring efforts. E&Ps that operate mainly outside of North America lost steam in 2005 following two years of stellar performance, the analysts add. The group reported a total median return of 41.8%. "While we expect that the gap will close, natural gas prices remain low in many other regions and income gains were subdued compared with this continent. Still, significant discoveries remain to be found and developed, and these are richly rewarded...." For more on this, see the February issue of Oil and Gas Investor. For a subscription, call 713-993-9325, ext. 129.