Within the next 30 days, at least 60 ordinary Americans will become millionaires. They’re doing it through a unique real estate investment…
This real estate is the land that lies on top of thick layers of oil- and gas-rich shale rock. As you’ve heard from my colleague Porter Stansberry, these rocks hold so much oil and gas, the nation’s production could triple over the next 10 years. Our reserves could quadruple or more.
These massive energy deposits mean boomtimes for towns all across America… and they’re minting as many as 60 new millionaires a month.
David Brodsky is one of them…
Brodsky is a resident and landowner in Karnes County, in rural south Texas, in the heart of the Eagle Ford shale… one of the largest shale oil finds in the country.
[ad#Google Adsense 336×280-IA]He’s leased over 100 acres of land to oil companies. His latest deal got him $10,000 per acre, plus a 25% royalty on oil produced on the property. With his newly earned oil riches, Brodsky built a motor home park in Kenedy, Texas, called Pecan Grove. The Pecan Grove park is full, so he’s building two more.
Trip Ruckman lives near David Brodsky. As president of the Karnes County National Bank, Ruckman has the best vantage point to watch the millions of dollars pouring into the pockets of Brodsky and other residents. The bank’s deposits rose by $2 million a month last year, and are about double what they were five years ago.
You can see the same thing happening in North Dakota, home of the Bakken shale, the largest contiguous oil deposit in the country. Millionaires like David Brodsky are everywhere up there. Bruce Gjovig of the University of North Dakota has calculated the Bakken is creating two new millionaires every day.
And yes, the same thing is happening in the Marcellus shale area in Pennsylvania. The Marcellus is the biggest natural gas find in U.S. history, and perhaps the second- or third-largest in the world today. At about 95,000 square miles, it’s nearly half the size of France.
A Pennsylvania auto mechanic named Chris Sutton became a millionaire virtually overnight when he leased his 154 acres of land to Talisman Energy over a year ago. He got $900,000 up front, plus 20% of the revenue from natural gas extracted from his land.
Talk to anyone at a bank in this area and they’ll tell you stories about folks walking in the front door and depositing huge, six-figure checks for land lease payments. Lease and bonus payments for landowners in the Marcellus shale region (including Ohio) totaled $2.1 billion in 2010.
It’s raining money in all the big shale plays in the United States. Millionaires are coming out of the woodwork, and bank deposits are growing rapidly. Bank deposits in the top five Marcellus shale counties in Pennsylvania grew 6.7% last year versus 3.1% at the average Pennsylvania bank.
That’s where all the money winds up, eventually…
Enormous wealth is being generated by the rush to exploit massive new oil and gas finds around the United States – in places like south Texas, North Dakota, and Pennsylvania. And the local banks in these areas are a great way for risk-averse investors to profit as the new millionaires deposit cash.
You might think this is a terrible time to buy a bank stock. I disagree. Yes, the biggest banks in the country are all between 25% and 60% below their 52-week highs. And yes, investors are worried stressed European markets will destroy U.S. lenders.
But a bank’s performance is directly influenced by the success of the geographic region it serves. If the region does well, so will the bank. And right now, America’s oil- and gas-rich regions are booming.
Investors should pay attention to the regional banks with most of their deposits in places where they’re drilling for natural gas and oil. As more wealth gets created in those parts of the country, these banks are safe investments. They are cash rich and getting richer, which means they have the capital to grow the business and pay dividends.
Plus, the stocks are cheap. Their share prices were beaten to a pulp a couple years ago, and they are still depressed, due to lingering caution from the financial crisis.
As America’s “millionaire factories” boom, these banks will, too.
Good investing,
Dan Ferris
P.S. In the latest issue of The 12% Letter, I told my subscribers about a Pennsylvania bank that’s buying its way to market dominance across the Marcellus shale… This $1.4 billion market cap company is already paying a substantial 4.5% dividend… And it’s still growing. To learn more about The 12% Letter – and another big income idea I’m tracking right now – click here.
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Source: Daily Wealth