Having oil is great, but when its refined into gasoline, it's even greater. And Valero is the largest refiner in the US - even larger than Exxon Mobil, Chevron and ConocoPhillips individual refining capacities.

To diversify across the oil sector, you'll need to own one of the Majors (verically integrated oil company). Although Exxon Mobil is the largest, dwarfing it's fellow Majors, I like what Chevron's been doing.

To diversify across the oil sector, you'll also need to own one of the Independents. Noble's operations are diversified 55% US and 45% International, with operations in South America, Africa, The Mediteranean, The North Sea, China and Suriname. Also, whenever the M&A topic comes up - Noble is always mentioned as potential M&A target.

To diversify across the oil sector, you'll also need to own an Upstream operation - like offshore drilling. In the drilling sector, Diamond Offshore (DO) and Transocean (RIG) get all the attention, which is good - because they can have all the speculation ups and downs that come with everybody watching your every move.

To diversify across the oil sector, you'll also need to own an Upstream operation - like offshore drilling. In the drilling sector, Diamond Offshore (DO) and Transocean (RIG) get all the attention, which is good - because they can have all the speculation ups and downs that come with everybody watching your every move. They also provide advanced technologies and services to the sector, such as welding and inspection - so they're not just an offshore driller.

To diversify across the oil sector, you'll also need to go even further Upstream - like as in seismic analysis activities - the real search for oil. Schlumberger is the leader in this area with a proven track record.

CVRD (RIO) is primarily involved in iron ore mining and logistics activities, however they are also in on copper, nickel, coal exploration, energy, aluminum and steel activities. They hail from Brazil, but their operations are spread across Brazil, Argentina, Chile, Peru, Gabon, Angola, Mozambique, South Africa, Australia, Guinea, and Mongolia. In 2005 there was a bidding war for Inco (World's largest nickel miner), RIO decided to jump into the bidding war and came ou the winner - a major coup.

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