The Definitive ETF Shale List For 2012
Nor is news that Total (NYSE: TOT), Europe's third-largest oil company, is paying $2.32 billion to acquire 619,000 net acres Utica Shale acres from Chesapeake Energy (NYSE: CHK) a stunning revelation. And no one should be surprised that PetroChina (NYSE: PTR) gained complete control of a Canadian oil sands project.
The past two years have brought plenty of sales of U.S. shale assets to both domestic and foreign suitors and it appears 2012 will bring more of the same.
With that, here is the definitive list of ETF plays on shale M&A. And yes, we're talking buyers AND sellers. In no particular order...
Global X China Energy ETF (NYSE: CHIE) Definitely one to play shale buyers with, the Global X China Energy ETF doesn't seem to get the respect it deserves. PetroChina, Sinopec and Cnooc (NYSE: CEO) account for over 41% of CHIE's weight and that's good because the heavy weight to oil can buffer the ETF against its solar exposure. PetroChina and Sinopec aren't anywhere close to being done with oil sands and shale acquisitions.
Guggenheim Canadian Energy Income ETF (NYSE: ENY) Home to a yield of almost 2.6% (hey that's better than most CDs), the Guggenheim Canadian Energy Income ETF is also home to 34 stocks. Of that lineup, several are legitimate takeover targets and several more could easily be sellers of oil sands assets.
iShares S&P Global Energy ETF (NYSE: IXC) IXC can go months on end without getting any press, so we're pleased to say we've highlighted the ETF twice in a single day. Royal Dutch Shell (NYSE: RDS-A) and Total figure prominently in this ETF and those are companies with potentially large appetites for shale assets.
First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG) Whether it's through asset sales or rumored takeovers that may come true in 2012, the First Trust ISE-Revere Natural Gas Index Fund must be part of any shale ETF conversation. FCG gets a bum wrap because "natural gas" is in its name, but this isn't a futures play. In fact, many of the stocks FCG tracks are boosting oil production. Arguably, a couple of those names may not be independent companies by the time 2012 draws to a close.
iShares Dow Jones US Oil & Gas Exploration & Production Index Fund (NYSE: IEO) More a play on buyers and sellers of U.S. shale assets, IEO does have a few credible takeover targets further down its roster. Or investors can opt for the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP), which outperformed IEO last year.
IndexIQ Canada Small Cap ETF (NYSE: CNDA) The IndexIQ Canada Small Cap ETF is a play, though somewhat unrecognized at this point, on rising oil prices and increasing oil sands production. CNDA lost almost 25% last year, but as long as support at $24 holds, it might be worth a small position.
Investors should also note Van Eck's Market Vectors ETF unit filed plans last year for an unconventional oil & gas ETF. That ETF may debut this year and would certainly be worth a look for those hunting for shale exposure.
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