August 29, 2011 - The Wall Street Transcript has just published 2011 Global Energy Review offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.

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Pavel Molchanov joined Raymond James & Associates, Inc., in June 2003 and began work as part of the exploration and production research team, becoming an Analyst in January 2006. He initiated coverage on the alternative energy sector in fall 2006 and the integrated oil and gas sector in mid-2009. Mr. Molchanov has been recognized in the StarMine top analysts survey, the Forbes Blue Chip Analyst survey and The Wall Street Journal's Best on the Street survey. He graduated cum laude from Duke University in 2003 with a B.S. in economics, and he wrote his senior honor's thesis about OPEC's oil-output policies.

TWST: As you look at the space, what are investors focusing on?

Mr. Molchanov: Day to day the stocks still trade predominantly on oil prices. And because oil has been linked almost one to one with macroeconomic dynamics, unemployment, the dollar exchange rates, consumer confidence - things like that - the stocks have generally been drifting in recent months ever since oil prices peaked at around 115 and began to decline. These stocks really have been drifting.From a more substantive, longer-term standpoint, there are couple of interesting themes in this space. One is that, after neglecting North America for about a decade to focus entirely on international opportunities, these companies are engaged in a big homecoming.

And we're seeing that overwhelmingly in their investments in unconventional resource plays, mainly the shale plays. Just yesterday we saw Marathon Oil (MRO) plunged down 3.5 billion for some acreage in the Eagle Ford shale. And that's only the latest example. In fact, in the last 12 months, there has been over 30 billion of M And A by integrated majors in U.S.-based unconventional resource plays such as the Eagle Ford, the Bakken, the Haynesville and the Marcellus - that's theme number one.Second theme is frontier exploration.

TWST: These are names we've never really heard before in this field.

Mr. Molchanov: Places you've probably never heard about when talking about the oil market. So the exploration activity going there today. Outside of Africa, New Zealand, little bit of oil production, but hope to find a lot more, the Philippines. In South America, there is Suriname. And my personal favorite Greenland - which in terms of climatic conditions and geography, just the remoteness is just about the harshest environment you could imagine - there has been exploration activity there as well.

So if the name of the game is getting hands on resource, the majors have figured out that simply hoping that a smaller a player will make a discovery and the big player can use their balance sheet to just buy them out. They can still work by, but there are many factors which can impede that from happening. A good example that we saw last year was private exploration company called Kosmos Energy (KOS) made a very large discovery in Ghana as a matter of fact called the Jubilee Field. Exxon (XOM) tried to buy Kosmos' stake in Jubilee for 4 billion, which is no small change even by Exxon standards.

TWST: Was it accessible with the old technologies?

Mr. Molchanov: It was not accessible with the old technologies. So with fracturing and well-stimulation techniques, just night and day versus what they were five years ago, areas like the Bakken and the Marcellus shale both oil and gas are getting developed very aggressively. So here the M.O. of the majors is to partner up with independents. The companies, the majors, would love to get their hands on the acreage from day one, which is of course the custody entry ticket.

It's a lot cheaper. Unfortunately, because they have been late to the party, they have to pay up for the ticket and that needs buying acreage or in some cases producing assets from independent companies that were there as the first mover. So Marathon yesterday - buying 3.5 billion of acreage from a private-equity-backed company called Hilcorp Resources - paid a very rich multiple, almost 25,000 an acre, which sets a new high watermark or the new high watermark for the Eagle Ford shale.

TWST: In the domestic market, are we seeing these international non-U.S. players come in or is that not happening yet?

Mr. Molchanov: Absolutely, because the resource booms has not been lost on companies from overseas. So we have seen first of all the European majors - that is to say, BP, Shell (RDS-A), Total (TOT), Statoil (STO), Eni (E) - coming in, all of this typically happening in the last 18 to 24 months. Then, what we're also starting to see is Asian players coming in, and this would include Mitsui (8031.TYO) from Japan, CNOOC (CEO) from China and Reliance (RNRL.BO) from India. So just as they are competing with the Western majors for scarce resources overseas in places like Ghana and South America, they're also becoming a forceful competitor in North America, competing on the other companies' home turf, so to speak.

TWST: What are you telling investors to do in this space at this point?

Mr. Molchanov: Focus on the companies that have visible growth opportunities and visible catalysts. Hess would be my top pick based on its very strong exploration portfolio, as well as its position in the Bakken and the Eagle Ford shale plays in the United States. Murphy (MUR), similar story. A lot of international exploration opportunities together with sizable acreage portfolio in the Eagle Ford, as well as an emerging play in Alberta, Canada, called the Exshaw/Bakken.

And then looking at the mega caps, BP as a deep-value play stock has still not recovered fully from its trivials. Last year, in the wake of the oil spill and that, less than seven times earnings - I think the entry point is very interesting. And then Chevron (CVX) is just a good high-quality company that also happens to have significant exposure to the Asian LNG market with its Australian resource developments that of course benefit directly from the increased LNG demand following the Japanese earthquake.