Landmark Ruling in Mexico a Boon for These U.S. Oil Stocks?

In 1938, Mexico nationalized its oil industry, taking over all aspects from production to final distribution. This ban on ownership by foreign companies continues today; however, changes are underway.

Under the leadership of Mexico’s new president, there is a growing desire and need for the knowledge and technical skills developed by foreign companies, many of which are U.S.-based, to stem the decline in oil production and revive the industry in that country.

I think this will be a tremendous investment opportunity for oil stocks going forward. Mexico still has a tremendous amount of energy commodities under the ground, but many need advanced technology to extract them. And U.S.-based oil stocks are among the leaders in the world when it comes to extraction technology.

By allowing foreign-based companies to help develop projects, oil stocks would profit from having access to new reserves, and Mexico would benefit from having billions of dollars in funding and access to those with top-notch technical skills.

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There are several different types of oil stocks that would benefit from this investment opportunity. One company that I’ve liked for some time is Halliburton Company HAL, a global leader in the oilfield service industry.

While Mexico has not yet changed its legislation and we don’t know which companies will obtain these oil rights at this time, Halliburton has been extensively offering its services in Mexico for a number of years. I think it’s highly likely that Halliburton would benefit from more work as this investment opportunity opens up.

When investing in oil stocks, one has to consider the company’s current level of production, future reserves, and potential for growth in terms of exploration and acquisition abilities. Halliburton is uniquely situated in that it provides oilfield services, offering extremely advanced technological know-how to many other oil stocks and creating a synergistic investment opportunity.

Chart courtesy of www.StockCharts.com

This is not to say that one should simply buy oil stocks immediately, as this type of investment opportunity takes many years to develop; it’s important to still wait for an attractive entry point. However, I would certainly add Halliburton to the top of my watch list when it comes to oil stocks.

Another one of the leading oil stocks to keep an eye on is Chevron Corporation CVX. Not only does Chevron have extensive knowledge in such areas as deepwater drilling, but it also has the capital needed to build and develop these oilfields. This type of investment opportunity requires capital, highly skilled workers, and advanced technologies.

Chart courtesy of www.StockCharts.com

Chevron is another one of those oil stocks that have shown an extremely strong performance over the past few years. I still believe there will be a tremendous investment opportunity for many oil stocks over the next decade, especially for firms that can increase their access to new reserves.

If Mexico does go ahead with reversing its ban on foreign firms, I think Halliburton and Chevron are two oil stocks that could be part of a new, multi-decade investment opportunity.

This article Landmark Ruling in Mexico a Boon for These U.S. Oil Stocks? was originally published at Investment Contrarians

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