ETFs For A Post-Qaddafi Libya
One of the brighter headlines delivered to investors has been news of the fall of Libyan dictator Muammar Qaddafi and his oppressive regime. The bottom line with this news is that has potential to be good news for select oil stocks.
Emphasis on potential. Some oil companies reported disappointing second-quarter results due to lost Libyan production and others weren't able to get projects going there following the onset of violence. Still, some analysts think it will take several years for the OPEC member to get its oil output back to the 1.6 million barrel days per day it was pumping before February.
With that, there are several ETFs that stand to benefit as Libya at least attempts to boost oil output in the near-term.
iShares MSCI Italy Index Fund (NYSE: EWI): Broadly speaking, it's hard to endorse any ETF that tracks a member of the European Union these days, but in the case of EWI, Libya would have been a problem regardless of Europe's issues. That's because Eni SpA (NYSE: E), Italy's largest oil company, accounts for over 18% of EWI's weight and that company relies on Libya for 13% of its total revenue.
With the biggest Libyan presence of any Western oil major, Eni will benefit from any good news regarding increased Libyan output. In turn, that scenario will benefit EWI.
Energy Select Sector SPDR (NYSE: XLE): Remember the somewhat disappointing second-quarter results delivered by ConocoPhillips (NYSE: COP) and Occidental Petroleum (NYSE: OXY)? A lot of that was attributable to lost Libyan production. Combine those two stocks with Marathon (NYSE: MRO) and Murphy Oil (NYSE: MUR) and you have four U.S. oil firms with Libyan exposure that account for about 12% of XLE's weight.
SPDR S&P International Energy Sector ETF (NYSE: IPW): IPW will undoubtedly fly under the radar of many as a play on a reborn Libya, but there are multiple reasons to view this ETF as a long-term winner if the new regime can increase oil production. First, Total (NYSE: TOT), Europe's third-largest oil company, helped the rebels that toppled Qaddafi. That means the French oil giant probably won't be forgotten come contract time. Total accounts for nearly 9% of IPW's weight.
Second, BP (NYSE: BP), Europe's second-largest oil company, had planned to start two new projects in Libya this year, but those efforts were delayed due to the violence. The British oil giant is IPW's top holding at almost 10% of the ETF's weight.
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