Not sure about $300 oil or the price required to create demand destruction, but $180 has been bandied about.
If only oil could trade between $90-$110 forever....., economies would continue to function, everyone (well almost) would make good money, everyone would carry on as normal - life would be great....you get the idea - sadly not goi…
Not sure about $300 oil or the price required to create demand destruction, but $180 has been bandied about.
If only oil could trade between $90-$110 forever....., economies would continue to function, everyone (well almost) would make good money, everyone would carry on as normal - life would be great....you get the idea - sadly not going to happen.
The current bull market is North America - even more specifically Canada trades at further discounts.
If you look at the charts for all the upstream cos, they look like they are at the peak of the cycle (perhaps they are - the easy money has been made), BUT, look at their valuations compared to FCF and consider that their debt is getting wiped out & with that, the hedges are rolling off. 2021 was the year of recovery & debt repayment - 2022-23 will see shareholders rewarded (dividends), possibly at expense of future CapEx - after years of suffering, management know the market is demanding returns. (I'm not such a big fan of share repurchases though - and definitely NOT at elevated valuations).
By 2023 North American E&P is going to be largely DEBT FREE! and little to zero growth plans - that free cash will be coming back to shareholders.
How to play it??? Personally, I've gone for a basket of small equity positions + some larger ones in Suncor, Cenovus, Antero Resources + a variety of dividend paying pipelines.
The basket of smaller names I'm talking about, is relatively new .....and still in progress...
I was hoping that we might see a small pullback during this summer as inventories build, particularly in Europe - before the reality of winter 2022/23 begins to approach.....
(Note, in the US, SPR inventories are falling - fast).
Good call! That's one of the recent (small) purchases in my basket I was talking about - so I've missed a lot / most of the appreciation. That said - they have no hedges!
There just isn't enough time to spend on all these cos - hence the small positions.
I also own Tourmaline oil, TOU.TSX and was thinking about increasing position size, but might have missed the boat on that one, unless there is a summer pullback.
The other questions, will they have sufficient takeaway this autumn / winter to benefit from possible European demand surge? They produce more gas than oil (80%). Canada's 2nd largest gas producer - they recently signed a deal with Cheniere LNG.
Not sure about $300 oil or the price required to create demand destruction, but $180 has been bandied about.
If only oil could trade between $90-$110 forever....., economies would continue to function, everyone (well almost) would make good money, everyone would carry on as normal - life would be great....you get the idea - sadly not going to happen.
The current bull market is North America - even more specifically Canada trades at further discounts.
If you look at the charts for all the upstream cos, they look like they are at the peak of the cycle (perhaps they are - the easy money has been made), BUT, look at their valuations compared to FCF and consider that their debt is getting wiped out & with that, the hedges are rolling off. 2021 was the year of recovery & debt repayment - 2022-23 will see shareholders rewarded (dividends), possibly at expense of future CapEx - after years of suffering, management know the market is demanding returns. (I'm not such a big fan of share repurchases though - and definitely NOT at elevated valuations).
By 2023 North American E&P is going to be largely DEBT FREE! and little to zero growth plans - that free cash will be coming back to shareholders.
How to play it??? Personally, I've gone for a basket of small equity positions + some larger ones in Suncor, Cenovus, Antero Resources + a variety of dividend paying pipelines.
The basket of smaller names I'm talking about, is relatively new .....and still in progress...
I was hoping that we might see a small pullback during this summer as inventories build, particularly in Europe - before the reality of winter 2022/23 begins to approach.....
(Note, in the US, SPR inventories are falling - fast).
What happens after the US Midterms????
Absolutely right. I rec'd MEG.TO in Moneyweek about 2 years ago and it is in such a bull market
Good call! That's one of the recent (small) purchases in my basket I was talking about - so I've missed a lot / most of the appreciation. That said - they have no hedges!
There just isn't enough time to spend on all these cos - hence the small positions.
I also own Tourmaline oil, TOU.TSX and was thinking about increasing position size, but might have missed the boat on that one, unless there is a summer pullback.
The other questions, will they have sufficient takeaway this autumn / winter to benefit from possible European demand surge? They produce more gas than oil (80%). Canada's 2nd largest gas producer - they recently signed a deal with Cheniere LNG.