Wednesday, February 15, 2012

"Market Vectors Launches First Unconventional Oil & Gas ETF" (FRAK)

What America has been clamoring for.
Or not.
The marketeers may have inadvertently gotten the timing right on this rollout see rambling link below the jump.
From those wonderful folks who brought you MOO, press release via MarketWatch:
Market Vectors Unconventional Oil & Gas ETF (FRAK) seeks to tap vast potential of fast-growing energy sub-sector 

Market Vectors ETFs announced today the launch of Market Vectors Unconventional Oil & Gas ETF (nyse arca:FRAK), the first U.S.-listed exchange-traded fund (ETF) designed to provide investors with pure play exposure to this fast-growing segment of the energy sector, which can include efforts in coal bed methane, coal seam gas, shale oil, shale gas, tight natural gas, tight oil and tight sands.

FRAK comes to the market as rising global consumption and the quest for energy independence is driving many nations to seek additional supply sources for oil and natural gas. Unconventional technologies--which include hydraulic fracturing, lateral or deep sea drilling, high pressure gas injection, and advanced 3D imaging--may have potential to transform the global energy landscape by dramatically increasing supply and altering import needs. During the past several years, new extraction techniques applied to traditional resources have led to significant, "game changing" increases in North America's natural gas supply capacity. More recently, these same techniques have been utilized by oil companies striving to produce similar results. Companies located outside North America, in countries such as China, Australia and Argentina, have also begun exploring the potential of unconventional energy. Technological advancements and cost efficiencies have attracted interest from major global energy companies that are eager to participate, as evidenced by rapidly increasing M&A activity. 

"We're pleased to add FRAK to our family of hard assets ETFs," said Allison Lovett, Vice President of Marketing at Van Eck Global....MORE 
Here is Van Eck's FRAK page and here are the top ten names:

Market Value (USD)
% of net assets
Occidental Petroleum Corp OXY US2,042212,368
Canadian Natural Resources Ltd CNQ US5,224190,206
Eog Resources Inc EOG US1,632185,640
Devon Energy Corp DVN US2,400160,560
Hess Corp HES US2,062127,638
Noble Energy Inc NBL US1,106115,013
Williams Cos Inc/The WMB US3,766109,892
Chesapeake Energy Corp CHK US4,17094,701
Encana Corp ECA CN4,69890,603
Pioneer Natural Resources Co PXD US77085,308

Form our April 2007 post "Indexes, ETF's and Global Warming":
A few weeks ago Mark Gongloff had a post at the's EnergyRoundup with the cautionary title "Alternative Energy’s “Cover” Moment?". He ended the post with this humble line "And that could be one reason why the alternative-energy boom might continue for a while after all. Or at least, there’s a 50/50 chance of it."

Of all the "Cover Moments" the most infamous is the Aug. 13, '79 BusinessWeek "The Death of Equities" with the DJIA around 875. Paul Kedrosky has a great chart at Infectious Greed. If you note that date, it was three years before the Big Bull started, with the Dow closing at 776.92 (I think; That day was a lifetime ago) on Aug. 12, 1982. My personal favorite cover moment was the Oct. 4 1999 BusinessWeek "The Internet Age". Both of these pale before Prof Irving Fisher's timing of his Sep. 4, 1929 statement "There may be a recession in stock prices, but not anything in the nature of a crash." (the DJIA had peaked the day before at 381, it would bottom at 41 in 1932), or his more famous Oct. '29 "...permanently high plateau".

All this history came welling up (from an admitedly strange mind) because of a line--"Cleantech: The New Biotech" that Richard Kang used a few months ago in a posting to Seeking Alpha: "Tree Huggers Unite! A Survey of Cleantech ETFs".

The Amex rolled out the BTK biotech index in October 1991 and a very astute trader told me that was a top, get flat or short of the biotechs. Good call-see chart. The biowrecks fell 50+% over the next three years....