Alexandro Rovirosa’s Guide to Energy Investing
How can you get involved in the action?
The energy sector is both lucrative and dynamic. Not only is it a hot industry to be a part of, it is a great industry in which to invest. There are several categories within the energy sector. Here is Alexandro Rovirosa’s complete guide to energy investing, as well as a few companies to watch in 2020.
Understanding Upstream, Midstream, Downstream, and Integrated Companies
Much of the energy sector is run by gas and oil. As such, understanding the investment landscape of gas and oil companies requires an understanding of the terms upstream, midstream, downstream, and integrated.
Upstream oil and gas companies focus on exploration, such as drilling and mining. Oil is pumped from the ground and then processed. Similarly, gas is drilled and extracted from the ground before processing.
Stock Opportunity to Watch: ConocoPhillips (COP)
Once pulled from the ground, gas and oil is in its crude state. Crude oil, for example, is not usable until it has been refined. Alexandro Rovirosa explains that therefore midstream gas and oil companies focus on processing the crude material into usual material, such as gasoline.
After extracted and refined, the finished product is ready to take to market. Firms focused on selling processed gas and oil are known as downstream energy companies.
Stock Opportunity to Watch: HollyFrontier (HFC)
Not every gas and oil company performs just one of the above activities. In fact, many of them focus on more than one or all the tasks from extracting the resources to selling a refined product. Companies that do not specialize in one part of the industry are called integrated companies and can be safer investment opportunities due to taking part in all aspects of the industry.
Stock Opportunity to Watch: Exxon Mobil Corporation (XOM)
Not all energy is generated from oil and then processed for use as a fossil fuel. In fact, another major part of the energy sector pertains to generating electricity for industry and the masses. Alexandro Rovirosa explains that as the energy sector moves away from some energy sources such as coal, much is changing in the realm of natural gas and renewable energy sources such as solar and wind.
Natural gas is extracted and then used for powering electricity. From a fuel emissions standpoint, it is one of the cleanest energy sources. The industry is also developing its extraction techniques to make gas drilling safer and more sustainable.
Stock Opportunity to Watch: Cheniere Energy (LNG)
Much has developed in the realm of renewable energy through hydro, wind, and solar power. Critical to the growth of this sector are upgrades in manufacturing, engineering, power distribution (infrastructure), and battery capacity. Currently, renewable energy sources face many difficult obstacles despite the ground gained in the last 25 years.
Stock Opportunity to Watch: Tesla Inc. (TSLA)
Uranium (Nuclear Power)
Another major source of electricity is nuclear power. The nuclear power industry depends heavily upon the mining of uranium. While the full extent of available uranium is not yet known, it appears to be an abundant resource and readily available.
Alexandro Rovirosa is not only the CEO of Roma Energy but a longtime veteran of the energy sector. His background in downstream operations (sales and marketing) merges with his skills in business development to make notable adjustments in fuel exploration and production. Learn more about Roma Energy online or connect with Alexandro on LinkedIn.