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'Texas of Italy' Shows Strong Energy Potential

Stocks in this article: COP HAL E XOM

NEW YORK (TheStreet) -- About 5,685 miles east of Houston, land of ConocoPhillips (COP) and Halliburton (HAL), is Rome, the headquarters of ENI SPA (E), the largest oil and natural gas company in Italy. While no one will ever confuse Texas with Italy, the government is now moving to allow for ENI SPA and others to produce greater quantities of oil and natural gas in the finest tradition of the "Lone Star State." The potential is tremendous.

For investors, the European energy sector offers publicly traded companies ranging from prominent blue chips such as Holland's Royal Dutch Shell (RDS.A), the second-largest in the world behind ExxonMobil (XOM), to Octagon 88 (OCTX), a small cap operating from Switzerland with promising holdings, and SeaDrills Partners (SDLP), another small cap exploration firm based in London with robust margins.

Oil and natural gas companies pretty much move together based on the price of crude. There are not opportunities to profit from arbitraging an oil company operating around Paris, Texas, as opposed to one based in Paris, France, such as Total SA (TOT). Where investors can gain is from European governments moving to be more of an advocate for oil and gas operations, rather than some presently acting as an adversary.

One example is France's refusal to allow fracking in the country.

That is a loss to the government, its citizens and investors as France, along with Poland, has the second largest supply of recoverable natural gas in Europe, according to the International Energy Agency (headquartered in Paris). The French Government could certainly use the tax revenues. More jobs are needed in the country. With unrest in the Middle East and other oil producing areas, the global investment community needs more politically stable energy operations to finance in Europe to assure a secure supply.

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