Valuations are stretched, inflation is high, billionaires are selling stock & the Fed is poised to raise rates.
As energy investors, should we be worried?
Currently fighting a cold but have a break from dad-duty so will do my best to explain why my answer is “Not yet”
👇👇👇
Despite the current efforts & hopes to de-carbonize our energy systems, the world remains heavily dependent on oil
And, surprising to many, we now find ourselves in an era of oil abundance
What does that mean for the future? Watch
@DoombergT
explain:
THIS is what the top of a commodity cycle looks like:
$BTU making the paper as a "burning buy" with a 31 PE.
A sub-2 PE with a few fintwit fanboi's is not how the cycle ends.
@Mark_Wylie001
@JunkScience
@IPCC_CH
That’s a good question, but the truth is there is no climate science field. People that publish climate research come from multiple backgrounds. Clauser has all the qualifications to discuss climate research.
Further, using "publishing peer-reviewed climate research" as a bar
Checking in on $NG and $NG E&P's like $AR $SWN $RRC $EQT - some commentary - probably more than you want to read - followed by charts.
Fundamentally, rigs and completions have come down considerably with big cuts beginning in May and accelerating from there to today where they
I just updated my list of LNG Export terminal plans. Do these look right?
Right now North American LNG export capacity on track to go up 65% in the next 3.5 years.
I previously thought that a recession could pose a big risk to energy stocks.
After reading assessments similar to below & revisiting how mid-cap producers fared during 2000-2002 I no longer think a recession HAS to hurt energy stocks that are excluded from indexing.
Spot / front-month $NG is spiking and it's obviously not going to stay here.
$NG stocks like $AR, $SWN, $EQT, $RRC are obviously going to fall when spot $NG falls, right? Right?
Well, let's take a look. 🧵
#EFT
#OOTT
@hkuppy
This is probably because - after initial reaction - people figured out reduced shallow investment by SA (which has zero impact on $RIG) will increase deepwater investment in Africa (which benefits $RIG).
Russia didn't sabotage the Nordstreams 🤦♂️. Zero benefit since they can control gas at the source & use gas as carrot in negotiation. Now that carrot is gone.
Who did it? Ask yourself who benefits from this and you'll have your answer.
COLUMN: Sure, three Nord Stream pipeline leaks in a day could be a coincidence (right, right?).
But most likely it means Russia is opening a new front in its energy war against Europe: attacking the infrastructure it once used to ship its gas |
@opinion
Remarkable review of Oil supply/demand fundamentals.
Shubham uses publicly available data to take you step by step through the oil bull thesis.
Highly recommend (it's worth the time)
Today's session on O&G Macro Outlook and update on US shale has been uploaded to YouTube!
Appreciate all who joined and for the great questions, and have an awesome rest of the weekend. Cheers! 🥂🛢💰
$RIG Selling off on clear insolvency, Permian perma-growth, and the slow realization that offshore assets, like coal, have zero terminal value.
Guys, it's not too late to pivot and buy $FSLR and $TSLA. Just sayin.
@contrarian8888
Wow so Corcovado was renewed at $399k (was previously $198k) & Orion was idle and contracted at $415k! This might take the ATM completely off the table.
$2 $NG is scary, but historically an elevated storage trough is the time to buy.
I shared a version of this chart on SA back in April 2020. It's just as true today.
Macro is scary and could affect stock prices but won't have much impact on NG demand.
wow
#Coal_Quality_Matters
the fact is.. it hs always been that way
#Coal
#China
Analysis: Quantity over quality - China faces power supply risk despite coal output surge
$PANR - Maybe I'm a moron but when I compare to expectations I put together in the spring, today seems like good news.
I think this is what happens when you get a ton of randos expecting 10X overnight.
My hopes for 23 are PANR tweets & tweeters ↘️ & price ↗️
Here's another visualization of how bonds, stocks, and commodities fit into the business cycle:
(Originally from Pring but in my case courtesy of KCI Research: )
▶️ Permian Productivity per foot down for two years in a row ◀️
Sure, they can start drilling 15k foot laterals, but that reduces inventory locations. From what I've read the EUR on the last 5k feet goes down as well.
Goldman on Permian: Increasingly tapped out. Consolidation, producer discipline, and drag of legacy wells = US production less elastic to increasing prices. OPEC+ leverage increases.
#oil
@nexta_tv
Next he'll be forcing citizens to declare the existence of any foreign bank accounts or foreign financial assets. He might even tax these citizens on income they earn while living abroad. True tyranny!
@marketplunger1
Well, first you have 6 Dune books to read before you venture into any of the recommendations.
Once that's done I would recommend CS Lewis' space trilogy Then start reading Asimov. I might start with some of his robot books before diving into the Foundation series.
I'm here today to tell you why EIA's LNG export estimate released in February is out of date and will have to be dramatically revised upwards (along with $NG strip pricing)
#LNG
#EFT
#OOTT
#NATGAS
👇🧵
$RIG Thought it would take until December to finish the pullback, but it got to the target quickly.
Was that it this morning or is there one more zag on the way?
I was buying but have some powder left if there's more to go.
#Charlatans
$NG, Coal, $WTI thoughts... Unfortunately quite busy lately and don't have time to roll up & share any in depth analysis but want to drop some thoughts here... Though now that there's some clarity from FERC I'll share updated LNG estimates as soon as I get the time to roll those
Really interesting podcast that went into some obscure elements of EU energy.
2 Key points:
🔘EU will be in short supply until at least 1H '25
🔘 2nd coal will be MUCH cheaper than gas during that time.
⏩elevated coal prices til at least '25? $BTU
I woke up, saw that all the commodities on my screen were green while all the bonds and equities were down and thought of this tweet from Paulo.
[Still trying to get my head around why this was the case btw - forced deleveraging from bond holders?]
Buddy: “Wait until long-end sells off into a recession.”
Me: “Wait until commodities rally during a recession.”
We are in the Alice in Wonderland market where you need to believe in 6 impossible things before breakfast.
"The most important driver of the oil market going forward will be the lack of non-OPEC+ supply. The oil energy crisis is here. Investors must be prepared."
--Goehring & Rozencwajg
it’s taking every ounce of discipline and self-control right now not to say something that would jinx the shit out of this.
I have the perfect GIF too. I’m just not gonna do it.
@NarenMenon1
@JavierBlas
It's pretty hard to find out info on him. Appears he was born /raised in Israel. Joined idf. Then immediately went to DC afterwards? Can't find out where he went to college or what his DC connections are.
Look at the explosive growth and falling costs of batteries, solar and wind in the chart below…the numbers are really impressive.
This is why I think we will have a near zero marginal cost of energy by 2030. The incremental cost of generating power will approach ~$0.005/kWh in
OP-ED: Joe Biden is confronting foreign crises nearly everywhere and his administration is, intellectually and materially, ill-prepared.
@HalBrands
|
@Opinion
Lots of talk about excess savings keeping the economy afloat, so when does excess savings run out? At current trend, mid '23
Assumes chart is correct. Various charts around, stole this one from
@OpenSquareCap
- not sure if it's the best/latest so will look for others.
I had speculated in private that oil production could be dropping off based off of three data points:
- NG from permian was below capacity
- NGL stocks depleting (Permian biggest NGL producer)
- Big bump in Permian completions
Was guessing the latter might be in reaction to
🇺🇲 oil production showing signs of distress to begin 2024, as well productivity continues degrading and rig + frac counts flatlined at lower levels!
Bakken/Eagleford DUC drawdown + GoM start-ups + Permian PrivateCo ramps kept barrels growing in 2023, yet no longer the case. 🛢💰
Lots of twitter accounts talking like a market top & recession are in the bag so I went back to the trusty recession indicators I shared a few months ago to see which way the tea leaves were floating ... short 🧵
Here’s what all these look like when rolled into a table.
If you throw out the Volcker double-dip-recession of 1981, the SOONEST a tightening cycle has led to a market top is 10 months.
Assuming the Fed hikes in March, adding 10 months puts us into Jan ‘23.
LNG Update
I've been getting granular on LNG and Permian takeaway additions 👇
Happy to share but also have requests 🙏
#1
: Any feedback on the below?
#2
Any visibility into Permian pipeline additions for 2025 and later?
Amazing the Energy sector was over 5% of S&P back in 1998 when the sector was completely left for dead.
That's higher than it is today, with $100 oil and $6 gas 🤷♂️
Observation
#27
In the first months of 2022, the Energy sector weighting in the S&P500 jumped from <3% to 4%. In 1980, at the height of the Iranian crisis, after advancing 83% during the year, it was 28%.
Even relative to the modest levels of the 1990s, the current weight is low:
As an $NG bull, forecasts like this make me want to sign everything over to my wife and roam the planet with a samurai sword...
..except I know my wife would sell it all and buy tech stocks. Homey don't play that so I guess I'll hang around here a while longer...
Here's the 🔑 we need to answer on oil now:
How much russian oil is really off the market? If it's >1m then we could go straight to $200+
If it's not really off the market then this is just geopolitical risk priced in & JCPOA & SPR releases could put a 🧊 on price for a bit
The "commercial" traders of silver futures (reported in the weekly COT Report) are nearly always net short, to varying degrees. The latest reading from Friday's COT Report shows one of the lowest net short positions ever. This is bullish for silver prices.
$BTU “At September 30, 2023, $733.6 million remained available under its share repurchase program. From October 1, 2023 through October 27, 2023, the Company repurchased an additional 1.1 million shares for $27.3 million.”
$24.82 avg buyback in Oct.
$BTU Twitter - can you all help validate these #'s as a mental exercise for me and some of my friends? Are these close? *I'm ignoring buybacks to keep the math simple.
144m Shares outstanding
$760m - Cash for Surety escrow
$936m - total restricted including surety -
Here’s what all these look like when rolled into a table.
If you throw out the Volcker double-dip-recession of 1981, the SOONEST a tightening cycle has led to a market top is 10 months.
Assuming the Fed hikes in March, adding 10 months puts us into Jan ‘23.
After seeing the crazy Taylor Swift concert ticket prices I decided to listen to a few tracks on Spotify to understand what the fuss was about.
She sounds completely unoriginal, unremarkable, and boring - like almost every female pop artist right now.
Am I missing something?
But you can also see that visually… We usually see the following cycle:
Bonds top → Stocks top → commodities top
Bonds have probably topped. Stocks haven't.
This means that - unless this time is different than every other cycle - energy is in the clear for 2022.
@BobEUnlimited
Per my understanding this is a bit of a misleading stat. Demand at the pump is fine.
The demand in this chart is between wholesalers and retailers and has more to do with summer/winter blend switchover and retailers delaying purchases as refining margins were expected to fall.
Antero just announced earnings and a twitter search for $AR still yields way more crypto results than for the company that just reported an additional $1B to buybacks.
Is it still early days for Antero?
Well, a twitter search for $AR yields more results for an obscure crypto alt-coin than for the 2nd largest NGL producer
And the breakout in NG yesterday couldn't make the front page of SeekingAlpha
Still early innings for $NATGAS $EQT $NG
Oh Canada
#COM
guys!
In his latest
@Energy_Tidbits
Dan said Montney producers will not ramp up production by a full 1.8bcf for LNG Canada.
Instead a full 1bcf/d could be diverted from export to the US to export via LNG Canada.
What do you think?
@PauloMacro
In general it's better to be very careful talking about your trades.
I remember hearing that if you talk about doing something you are less likely to do it, because the talking gives you the endorphins that would otherwise only come from making progress towards that thing.
This could be a 0 too. However I’m willing to take the risk given my extremely positive outlook for oil given the extreme underinvestment and where i think oil prices will have to get to. Finally $PANR massive u/p vs $OXY esp given drill results has convinced me to MACSIZE IT now
Today strikes me as an opportunity in oil.
Sentiment is death but the commodity and many stocks are well above December lows and experiencing normal corrections.
I'm giving NG & Coal a little more time, however.
That's why I've been digging into historical business cycles & indicators.
The most popular "leading indicators” or “predictors” of recessions that I’ve seen are:
Yield curve inversions
Housing Starts (Homes sold is also good)
Unemployment claims
Leading Indicator index
I've gone down the rathole of LNG export projects & there are 39 bcf/d planned or under serious consideration. That's 43% of current production!
We could leave '22 with more online, under construction, or financed than EIA's most bullish case.
👇👇👇
I've recently seen AAII sentiment data pointed to as an indication that everyone is bearish.
I've had mixed luck with AAII as an indicator historically so I took a look at some of data series I normally use for sentiment. 1/x