In general, 2006 was an awesome year for oil and gas investors worldwide. They saw capital appreciation of more than $500 billion across the more than 400 energy-stock performances reviewed by independent research firm John S. Herold Inc. Investors experienced a fifth straight year of gains and a median total return of 6.4%, according to Herold analysts Robert Gillon and Kathryn Berger. In their year-end review, the analysts note that larger oil companies moved into the limelight and ahead of the smaller producers from prior years. Also, savvy investors wanting acceptable returns from the E&P sector had to leave North America to get them, they add. This amazing growth comes with a cost, the analysts warn. The sharp increase in the industry's value "has been noticed by the taxman, all of the service providers, and most company employees," they report. "All have a valid claim on part of the incremental wealth, along with a certain amount of greed in their souls, and will be pressing for their share. The costs of doing business will continue to mount, slowly if prices remain level, and like a rocket if quotes move higher." For more on this, see the February issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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