I've also discussed the strikingly similar trend occurring between gold and gold stocks. There's been a spectacular pop in gold stocks recently, but it hasn't been enough to catch up to gold's performance.
The disparities mean that the cheapest resources are not found in the ground -- they're listed, and it's been confirmed by recent energy company acquisitions.Chinese oil company Cnooc (CEO) put in a bid of $15 billion to purchase Canada's Nexen (NXY). This was at a 61% premium to Nexen's share price on July 20, according to Bloomberg. As you can see below, not only did the takeout announcement close the gap, now the company is outperforming the price of oil. If Cnooc's deal is approved, the state-run oil giant gets even bigger, gaining access to significant energy stores in several areas of the world, including Canada, the Gulf of Mexico, Colombia and West Africa, as shown below. With a rapidly growing middle class and rising urbanization, Chinese leaders know they need to fill their country's tremendous energy demands and are continually finding innovative ways to keep their country powered. Cnooc's acquisition is one way China continues to acquire not only the resources needed to power the country, but also the technological innovations that come from countries with free markets and lower barriers to entry. According to The New York Times, China "has been garnering advanced production technologies to better draw oil and gas from nontraditional areas like deepwater fields and hardened rock formations." The other announcement came from Malaysia's state-owned and natural-gas giant Petronas, which will purchase Canada's Progress Energy Resources. Petronas is one of the largest producers and shippers of supercooled LNG fuel in the world. According to the Vancouver Sun, the company is "anxious to increase its market share in Asia, where analysts expect demand to surge 75% by the end of the decade." After Petronas' original bid was announced, Progress increased 74% -- a record gain for the company, says Bloomberg. As shown below, Progress now dramatically outperforms the underlying commodity.
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