NEW YORK (TheStreet) -- I was talking to Stephanie Link today about the recent fourth-quarter results of Pioneer Natural Resources (PXD) and some other domestic oil and gas exploration and production (E+P) companies and trying to figure out where the sector is headed.
One thing that occurs to me is 2014 will be in no way like the previous year.
In 2013, we had a clearer path making consistent money with domestic E+Ps: just find the latest hot play in shale oil fracturing and follow the company with the largest dedicated exposure to it. When the Bakken was the hot story, Continental Resources (CLR) rocketed skyward. In the Eagle Ford, we saw EOG Resources (EOG) rise more than 40%. But nothing compared to the parabolic move of Pioneer in the Wolfcamp area of the Permian basin, nearly doubling in 2013.
Now, we'll need to be a little more selective on price before paying for growth in the still growing shale oil game. While PXD missed on earnings, it still projected a strong 14% to 18% production growth for 2013 and for 2014, a number I think they will easily beat. But with shares already priced above $180, I'm not as hot to just pay up and wait as I might have been last year. I want to own domestic E+P, but at a price.
That includes the other shale players, including Permian oil play Cimarex (XEC), and Niobrara players Noble (NBL) and Anadarko (APC). Each has its own complex of assets and problems, but each also has a price where I think there is value and deserves to be bought. I want to own Cimarex under $98 and Noble anywhere close to $60. Even Exxon (XOM), which is selling natural gas assets in the Utica to make capital available for a larger Permian exposure, is a great long-term hold under $90.