Revisiting Oil & Gas
Removing the paywall on our Oil & Gas report
My formula for success? Rise early, Work hard, Strike oil.
J. Paul Getty
Did you know that peak oil theory would have been correct if not for the growth of Shale in the last 15 years?
Due to popular demand, we have removed the paywall on our Oil & Gas report.
We are generalists and and this report is written for generalists who want to understand the sector as well as the cyclical and secular forces driving oil prices.
Since our report was published in December 2022, crude price is up 21%. We presented four of our favorite oil & gas investment ideas (PSK, MEG, WCP, and RIG), which are up 44% on average (excluding dividends).
Global oil demand has hit a record-high of 103 mb/d in June 2023, despite persistent concerns of the Chinese economy. Supply continues to be hampered by extended production cuts by the Saudis and Russians, with global crude inventories projected to decline through to the end of the year.
Meanwhile, US shale producers continues to battle the inevitable - declining inventory quality - pursuing a disciplined approach under ‘Shale 2.0’:
“We are capital disciplined and what that means for us is we don’t increase oil significantly in a market where we don’t see the balance…it would only be in a market where we see the balance that we would increase the production and that’ll be at a moderate pace. We are much more focused on returns than production volumes.”
Vicki Hollub, CEO of Occidental Petroleum (Bloomberg interview Sep 2023)
We have discussed all of this, and they seem even more pertinent today.
Remember, this is not about bottom-ticking the oil price. It’s about having an appropriate exposure to the most important commodity in the world - one that will be demanded in increasing quantity for a long time to come. Whether as a core position or hedge, we continue to believe that there is a spot for oil in most investors’ portfolios today.
See below for our O&G report.
If you are new to the space and looking to efficiently get up to speed on the key industry fundamentals, be sure to check it out!
