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The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.

The Companies to Own for the Coming 'Supercycle'

By Flavious Smith, editor, Commodity Supercycles
Saturday, June 17, 2017

 Today, I (Flavious) want to talk about what I expect in the near term with oil prices...
These days, just about everything you hear about oil is negative. And while I'm incredibly bullish over the long term, I believe we could first see more trouble across the sector...
Continued drilling and rising U.S. production will keep a lid on prices. At today's prices below $50 per barrel, all but the very best companies are still losing money... And many still carry a heck of lot of debt.
I think we'll see another wave of bankruptcies before the bear market finally ends... These high-cost, high-debt firms will lead the way.
But it's not all "doom and gloom." These troubles will finally set the stage for a real recovery... And this one will be led by the good ol' USA.
 Here's the thing: I think oil prices are a lock to soar over the next several years...
I expect we'll see a $500 price tag on a barrel of oil before the next boom is over... And early investors in the right American companies will get filthy rich as they do.
The reason is simple... Oil demand is going to absolutely soar.
Today, the U.S. remains the world's largest consumer of oil. We use nearly 20 million barrels of oil per day. This is nearly double the next largest consumer, and more than four times as much as any other nation on the planet. This shouldn't be a surprise to anyone...
But as I showed you earlier this week, the second- and third-largest consumers are no longer "developed" nations as they were for most of the past century...
Those titles now go to China and India. These two countries account for most of the demand growth we've seen in the last decade or so. And it's just a tiny fraction of what we could see in the next 20 years.
As I mentioned, the ongoing industrial revolution in China will lead to much higher demand for oil from the mobilization of the country's nearly 1.4 billion people. And India has even more room for growth... Its 1.3 billion people use just one-third of the oil used in China.
 So what kind of growth are we talking about?
As I said Wednesday, even if demand in China and India rises just five barrels of oil per person per year – about one-quarter of what we use today in the U.S. – global consumption would rise by nearly 10 billion barrels per year.
That's an increase of nearly 30% over today's levels... and that's a conservative estimate over the next 10 to 20 years. Even with rising shale oil production, this kind of demand growth will dwarf global supply... and send prices soaring.
This surging demand will create a boom unlike any we've seen in decades – or maybe ever... Porter and I agree that we could see oil at $500 per barrel or more before it's all said and done.
I also expect that for the first time in our lifetimes, the U.S. – rather than OPEC – will become the world's most important oil producer.
 Why? Because no one else is as perfectly positioned to meet the demand for more oil...
If you've been a Stansberry Research reader for long, you know that new technologies like horizontal drilling and hydraulic fracturing ("fracking") have transformed the oil business.
They have not only unlocked a whole lot of oil that wasn't available before... but they've also made getting that oil out of the ground cheaper and less risky than ever before.
For generations, oil was drilled one way. We drilled straight down into the ground. But these "conventional" vertical wells are a crapshoot. Only one out of 10 wells drilled this way produces enough oil to make a profit.
This means that one good well has to make enough money to cover the cost for all 10. That's an expensive and risky way to do business... But for years, that's all we had.
But these new technologies have completely flipped the equation... Today, as many as nine out of 10 "unconventional" horizontal wells are productive.
We can spend a heck of a lot less money and produce more oil per well. And as I like to say, more oil plus less cost equals more profit.
 Who will reap the biggest rewards from the coming boom?
Naturally, it's going to be the companies with the most experience and expertise using these new technologies. And it just so happens they're located right here in the U.S.
Fact is, our exploration and production companies are the best in the world at both finding and producing new sources of oil.
They're the ones who created and developed these new technologies in the first place... And they're years ahead of the rest of the world at putting them to use. Because of this, they'll be the first to react when demand rises and prices start to move higher.
Of course, the companies that will benefit the most will be those that also own the best deposits in areas like the Bakken Shale in North Dakota, the Eagle Ford Shale in South Texas, and – best of all – the Permian Basin in West Texas and southeastern New Mexico.
Despite the big drop in prices, America's best oil companies are already doing well... But they're going to make an absolute killing when prices finally start to rise.
I'm going to do everything I can to make sure Stansberry Research readers are along for the ride.
 Earlier this week, we talked about a lot of these details during a free webinar...
And if you were there, you know we also officially introduced our brand-new resource advisory: Commodity Supercycles. If you weren't able to join us, it's not too late to get the details for yourself – including everything you need to know to profit from the next oil boom – with a charter subscription to Commodity Supercycles.
Unlike many of our high-end services, Commodity Supercycles is designed to be accessible – and affordable – for virtually any investor. Better yet, as a charter subscriber, you can lock in the biggest discount we'll likely ever offer on this service.
The regular price of Commodity Supercycles will be $199 per year going forward. That's just $0.55 a day. But if you sign up today, we'll knock more than 25% off the normal cost... and throw in a second year for FREE. That's two full years for less than $0.25 a day.
We know of no other service anywhere that offers the potential for truly life-changing gains of up to 1,000% or more at such a low price. Click here to see for yourself.
Good investing,
Flavious Smith
Editor's note: On Wednesday night, Flavious and Porter sat down to explain why they believe we're approaching the next "supercycle" in the oil and gas sector. As a 40-year veteran of the industry, Flavious says he has never seen an opportunity like this. Right now, you can gain access to all his research for the next two years at a steep discount. Learn more here.

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