Market Overview

ETFs For The Utica Shale


There's oil in Ohio. Well, actually some in Pennsylvania and maybe Michigan, too. And a few other surrounding states that are part of the Utica Shale area.

In a short amount of time (we're talking a matter of months), the Utica Shale has gone from almost unheard of by most investors to red-hot shale play. While Utica still isn't mentioned in the same vein as Marcellus, Haynesville or Eagle Ford, it could attain that status and do so very soon.

Chesapeake Energy (NYSE: CHK), the second-largest U.S. natural gas producer, said in early August its Utica acreage could be worth $15 billion to $20 billion in added value for the company. The company also said Utica could be more economically viable than the Eagle Ford Shale in South Texas and that's saying something because Eagle Ford may hold 3 billion barrels of oil reserves alone.

Here are the right ETFs for exposure to the red-hot Utica Shale.

First Trust ISE-Revere Natural Gas Fund (NYSE: FCG): The range of estimates for how much natural gas is in the Utica Shale is stunning. Anywhere from 2 trillion to 69 trillion cubic feet. Put another way, Utica Shale has a lot of natural gas and that makes the First Trust ISE-Revere Natural Gas Fund a pivotal Utica Shale play. Range Resources (NYSE: RRC), Chesapeake, Devon Energy (NYSE: DVN) and Talisman Energy (NYSE: TLM) account for over 16% of FCG's weight and all are major Utica players.

PowerShares S&P SmallCap Energy Portfolio (Nasdaq: PSEC): As is the case with the Bakken Shale, investors will do well to look at some small- and mid-cap energy equities and the ETFs that hold them. For Utica, the PowerShares S&P SmallCap Energy Portfolio fits the bill as Gulfport Energy (Nasdaq: GPOR) is a major Utica player and accounts for more than 6% of the ETF's weight. Swifty Energy (NYSE: SFY), another Utica company, accounts for almost 5% of PSEC's weight.

SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP): The SPDR S&P Oil & Gas Exploration & Production ETF makes all of our shale ETF lists and with good reason. The ETF's near equal-weight scheme provides for plenty of exposure to all of the up-and-coming U.S. shale plays.

Just look at XOP's Utica exposure: Chesapeake, Devon, Gulfport, Swift, Range Resources, Hess (NYSE: HES), Rex Energy (Nasdaq: REXX) and Forest Oil (NYSE: FST), just to name a few.

Market Vectors Coal ETF (NYSE: KOL): KOL makes the list for one reason: Consol Energy (NYSE: CNX). Consol accounts for 8.5% of KOL's weight and is a big-time Utica player. The company just sold some of its Utica acreage to Hess, but it still maintains enough of a presence there that the shares need to be considered a Utica play.

PowerShares Dynamic Energy Exploration & Production Portfolio (NYSE: PXE): PXE allocates almost 5% of its weight to Hess, more than any other ETF. With Hess making clear it wants to boost its Utica presence and do so quickly, the PowerShares Dynamic Energy Exploration & Production Portfolio is one to watch.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Specialty ETFs Commodities Small Cap


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