Energy Prospectus

I highly recommend that all of you watch the interview with Eric Nutall at the link below.
Why? because his view is exactly what my view is. We both value upstream companies based on operating cash flow. Just like Eric says at the end, I have NEVER seen high quality upstream companies like our Sweet 16 trade at operating cash flow multiples under 4X this long. Even EOG and PXD, the two largest companies in the Sweet 16 with multi-$Billions of FREE CASH FLOW, are trading at less than 6X operating cash flow.

Watch video here: https://energynewsbeat.com/2021/07/eric ... -10-years/

Key Points:
> WTI should stay range bound in the $70 to $80 per barrel range for 6-9 months; then it could go A LOT HIGHER.
> The new OPEC+ agreement (adding 400,000 bbl per day of new supply per month) will result in OECD oil inventories moving to multi-year lows by year-end 2021. A year from now OPEC+ will be completely out of untapped spare capacity.
> U.S. oil inventories are already near the bottom of the 5-year range; just 27.3 days of supply per EIA's 7/21 update. U.S. gasoline inventories are at just 25.0 days of supply per EIA.
> Why is this happening??? > "The FEAR of 'Peak Demand' is leading to the reality of 'Peak Supply' "

Over the next two weeks all of our Sweet 16 and Small-Cap Growth Portfolio companies are going to announce Q2 results.
ALL OF THEM WILL STRESS THE FOLLOWING ON THEIR CONFERENCE CALLS.
1. They are fully committed to "Capital Discipline" with only small increases in drilling programs this year.
2. They will all stress a focus on FREE CASH FLOW FROM OPERATIONS being used for de-leveraging their balance sheets, dividends and stock buybacks.

Like Eric, I do not expect a significant increase in U.S. oil production until WTI is firmly over $80/bbl and maybe as high as $100/bbl when consumers and investors are screaming about high gasoline prices. U.S. shale oil production peaked in late 2019 at just under 13 million barrels per day and it won't return to that level anytime soon (if ever) and it will take a doubling of the active rig count from where we are today.

Of course, I hope you are correct, but Thurs and Fri sure showed a disconnect between oil price movement and share price movement.

That was Eric's main point. It is the FEAR of "Peak Demand" that is keeping a lid on share prices. The reality is that demand for oil is moving rapidly back to the long term demand growth chart and will soon be over 100 million barrels per day. The reality is also that outside of OPEC+ there is very little supply growth upside.

I am close to finishing my reading of "Unsettled" by Steven E. Koonin. It is an honest view of the Climate Change "religion" and why we need an unbiased group of real scientists without political agendas to focus on climate and what if anything we can do about it. I recommend that everyone read it.

FEAR of Covid-19 is still out there too and Dr. Fauci will NEVER quit the fear mongering because it has made him a multi-millionaire. CNN will also keep pushing the FEAR because it is their primary "click bait".