It's time to buy U.S. E&P assets, and it's time to sell, depending on your long-term goal. Each year, prognosticators suggest major oil companies will buy a large U.S.-focused E&P, such as Devon Energy Corp. or Anadarko Petroleum Corp. Each year passes, and the forecast is as valuable as the fortune cookie that comes with Chinese take-out: It's fun, and it was free (well, it didn't show up on the bill). As each year passes, the major oils continue to miss opportunities. Of course, ExxonMobil or ConocoPhillips produces out an Anadarko a quarter or at least in under a year, so buying one of these isn't significant to near-term results. By the SEC's definition of what is "material," ExxonMobil might not even need to put out a press release on buying an Anadarko (just joking). But what the major oils have been missing is the "promise," i.e. the PDNP and PUD, probable and possible. They do invest heavily abroad on probable and possible; they miss this right at home. It's better for the U.S. independent oil industry that the major oils have practically left it alone to grow at home -- the evidence is in how they've grown since the mid-1980s. Of course, a major buying a Devon Energy would result in a large number of U.S. assets coming onto the market for smaller independents to work and profit from, since the majors would do as they do -- divest. As for a time to sell, it's profit-taking time for many producers. Sell to a major now at $140 oil and $13 gas and in today's capital-gains tax regime, and buy a bit of it back next year at a smaller price and virtually untouched. –Nissa Darbonne, Executive Editor, Oil and Gas Investor, A&D Watch, OilandGasInvestor.com; ndarbonne@hartenergy.com
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