Market Overview

Four ETFs For The Shell/Range Resources Rumor


Royal Dutch Shell (NYSE: RDS-A), Europe's largest oil company, may keep denying it, and investors should note Range Resources (NYSE: RRC) has often been rumored to be a takeover target, but this rumor has been kind of sticky.

Truth is it is not out of the realm of possibility that the Anglo-Dutch oil giant would make a play for Range, which holds a dominant presence in the Marcellus Shale. For that matter, any large integrated oil company with deep pockets looking to boost its shale exposure could move on Range or any number of comparable companies.

With energy mergers and acquisitions expected to pick up in the fourth quarter and through next year, investors can start preparing themselves now with the following ETFs.

First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG): The First Trust ISE-Revere Natural Gas Index Fund is the ETF that devotes the largest weight to Range with an allocation of 3.83%, making the stock the ETF's second-largest holding. Shell is the ETF's fifth-largest holding with an allocation of 3.74%. Beyond that, FCG is loaded with potential takeover targets such as EOG Resources (NYSE: EOG) and Cabot Oil & Gas (NYSE: COG) and potential oil suitors.

Rydex S&P 500 Equal-Weight Energy ETF (NYSE: RYE): Range is the largest holding in this equal-weight play with an allocation of 2.78%. That might not be enough to significantly move the needle in the event Range gets taken out, but the ETF is worth considering for a decent looking chart that has seen the fund jump almost 25% in the past few weeks.

SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP): Since XOP makes practically all of our lists of shale ETFs, it certainly needs to be on this list, too. Range is the ETF's second-largest holding, but with a weight of just 1.56%. That's not what's important here. What's important is that if Shell or another firm does buy Range, it will generate “Who's next?” chatter and XOP is loaded with candidates that anyone that missed out on Range would find to be compelling consolation prizes.

SPDR S&P International Energy Sector ETF (NYSE: IPW): Shell securities account for over 17% of the SPDR S&P International Energy Sector ETF's weight and this fund is chock full of international oil companies that could be compelled to make a deal for a U.S. shale firm if they see rival Shell do the same. As a trade from $25, IPW offers good risk/reward with downside likely contained to $21 and upside potential of $32.

Posted-In: Long Ideas News Sector ETFs Short Ideas Specialty ETFs Rumors M&A Global Best of Benzinga


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