"On an ongoing basis, we try to talk with the managers of the funds in our Best Buys portfolio; we recently spoke with Charlie Ober of T. Rowe Price New Era (PRNEX)," says Mark Salzinger in The No-Load Fund Investor. Here are highlights from his discussion with the resources manager.

"Ober has positions New Era not only to benefit from likely strong profits in the broad natural resources sector, but also to protect against rising costs within the sector itself. The fund continues to have a large position in energy stocks, which is now 70% of the portfolio.

"Ober has been gradually adjusting the mix of the fund toward oil and gas services and drilling companies, along with engineering and construction firms.

"These types of companies have pricing power, and they can serve the U.S. energy producers along with non-U.S. independent products and the many state-owned or affiliated oil producers overseas. As of the end of July, these types of companies represented six out of the top ten holdings.

"By contrast, many of the actual producers of oil and gas face rising costs for labor, services, technology, and access. There's a shortage within the energy industry of petroleum engineers as well as labor generally, and geopolitical considerations disqualify the U.S. majors from many of the most promising and economical new fields overseas.

"So among the actual producers, the foreign ones with the best access should be the superior investments, Ober says.

"While he thinks such large U.S. energy firms as ExxonMobil and Chevron should be "OK" for investors with a stable to slightly higher oil price over the next few years (which he expects), he generally prefers such large foreign producers as Total in France, Statoil in Norway, and even Lukoil and Gazprom in Russia.

"Total and Statoil boast superior inventories of future energy projects, Ober says, while Lukoil and Gazprom obviously have access to huge Russian reserves of oil and gas. All told, foreign stocks currently account for about a third of the fund's assets."

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