Behind Natural Resource ETF's Hot Performance | ETF Trends

The oil spill has been all but forgotten and the energy industry has been able to rebound remarkably well, with one natural-resource related exchange traded fund (ETF) returning double-digit percentages in the last three months. What gives?

The iShares North American Natural Resources Index Fund (NYSEArca: IGE) has been up 15.6% in last three months and 8.5% in last six months. Top holdings include: Chevron Corp. (NYSE: CVX) 7.94%, Exxon Mobil (NYSE: XOM) 7.85%, ConocoPhillips (NYSE: COP) 5.67% and Schlumberger N.V. (NYSE: SLB) 5.6%. [New ETFs: Natural Resources, Emerging Market Consumers.]

The fund has benefited from its large holding of oil and gas corporations after a slew of good earnings reports from the sector, higher oil prices and a weaker dollar, which triggered more global fuel purchases. You can see it in their earnings:

  • Schlumberger Ltd.’s net income surged in the third quarter after the company switched to increased land-based drilling operations, and revenue jumped a better-than-expected 26% to $6.85 billion, according to BusinessWeek.
  • Exxon Mobil Corp.’s third-quarter profits increased a better-than-expected 55% on increased production and higher oil prices, reports Steve Gelsi for MarketWatch.
  • ConocoPhillips stated that profits increased to $3.06 billion, or $2.05 a share from $1.47 billion, or 97 cents a share, year-over-year while revenues hit $45.5 billion, writes Isabel Ordonez for The Wall Street Journal.
  • ApacheCorporation (NYSE: APA) announced that its net income rose to $765 million in the third quarter, or up 74% year-over-year, as worldwide production increased 10% year-over-year, according to MarketWatch.

Analysts at Wood Mackenzie believe that oil & gas companies will spend $380 billion in finding and developing potential fields this year and spending levels will fully recover to 2008 levels by 2012 or 2013, says Christopher Helman for Forbes. To put the money in perspective, if the world continues to consume roughly 85 millions barrels a day at around $90, the industry would cash out at a tune of $3 trillion on crude oil alone. [Oil Exploration ETFs: A Bargain-Hunter’s Dream?]

But it’s not just the oil producers driving the fund. IGE has also been lifted by its allocation to gold miners, which have done well in this age of record-high gold prices thanks to bigger profit margins. Goldcorp (NYSE: GG), Newmont Mining (NYSE: NEM) and Barrick Gold (NYSE: ABX) are among the largest holdings in the fund.

For more information on the oil & gas industry, visit our oil & gas exploration category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.