Publicly traded oil and gas E&P companies (XOP) are known for a number of things. Historically, they have been excellent performing stocks, having way outperformed the indices in the past 10 years, albeit with higher volatility. The below chart shows this outperformance, and the performance is even more pronounced in the prior 5-year period, during which oil prices more than doubled.

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However, E&P businesses are very capital intensive. On the exploration front, capital is deployed acquiring leases, shooting 3D seismic, and then finally drilling exploration wells. And on the development side, drilling development wells requires significant development capital. Often these projects are equity and debt financed, rather than supported by internal cash flows.

Given the capital needs of the businesses, it is rare to see them buy back stock, particularly large quantities of stock. And when they do so, it is usually at or above the prevailing

Exchange traded funds are known for low fees, especially for long-term, buy-and-hold investors. Forbes recently compiled a list of ETFs aimed at helping investors preserve wealth through lower investing costs.

"Good news for savers: There's a price war in exchange traded funds. If you know where and how to get your hands on the bargains, you can enhance your wealth by tens of thousands of dollars. This annual survey of all-star ETFs, our second, will steer you to the best deals," William Baldwin wrote for Forbes.

Forbes ranked the ETFs based on a measure of cost-efficiency that considers expense ratios, securities lending revenue and trading spreads. In fact, some of the ETFs are so cost-effective they have a negative cost - meaning one is better off holding the ETF than component stocks.

The most popular segment of the market that is tracked is the S&P 500. However, the

Crude Oil prices experienced an unprecedented advance to over $140 a barrel in 2007 only to followed by an equally impressive collapse to a little over $30 a barrel in 2008. Since then the price has stabilized but still trades in a wide range between $70 and $110 a barrel. Natural gas has experienced similar volatility. In the earlier part of the millennium, natural gas spiked to over $15.00 per million British Thermal Unit (MMBTU), only to fall to about $2.00 per MMBTU in 2012.

Given the explosive nature of the energy market, it is no wonder that energy ETFs have become popular. My objective in this article is to analyze the risk-to-reward characteristics of this asset class.

There are over 50 energy ETFs but I will restrict myself to those ETFs that have a track record of at least 3 years and that are relatively liquid, trading an average