FT: Shale investing: sweet spot or sink hole?

The upward trajectory of the share price chart tracking Emerge Energy Services gladdens the hearts of long-time holders of the oilfield services partnership, which is among the firms that have benefited from the US shale boom.

Although it has fallen from its peak in recent weeks, it has moved from about $15 in May last year to more than $132 this week.

It is a stark contrast with Endeavor International, which acquires and develops energy reserves in the US and the UK, whose shares have fallen 90 per cent since February, sinking below $1 after it recently missed interest payments – even though analysts just upgraded their valuation of those reserves.

Energy investing has always been a binary proposition, the sweet spot for some and a sink hole for others. This is especially the case when it comes to investing in companies involved in the shale revolution, an extremely volatile class of stocks which can represent both opportunity and trap. Energy is also subject to a host of risks – geopolitical, geological, technological, execution, legal and regulatory – in no particular order.
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