Our first two written posts of 2024 focused on the Big Themes and Tactical Questions we see for the traditional energy sector. In this video we bring those together with an expanded discussion on a number of sub-sectors including the international oil companies (IOCs) & Canadian “Big-4” oils, US “Big-3” downstream, midstream (includes pipelines and MLPs), and gassy E&Ps. Traditional energy exhibits a massive and diverse set of opportunities and one of our 2024 aims is to provide our perspectives on where differentiated opportunities exist.
The world has now recovered from the deep COVID trough. The recovery trade in traditional energy ended in 2022. Balance sheets are fixed and profitability structurally improved (versus last decade). The challenge now is for individual companies across the various sub-sectors is to articulate and demonstrate a differentiated approach to meeting the world’s massive unmet energy needs through a strategy that is both profitable and durable, or, recognizes a lack of durability by liquidating, selling, or otherwise distributing essentially all cash back to investors.
If this week’s video is not enough for you, Arjun also appeared on Lykeion’s Geopolitics of Commodities podcast hosted by Scott Smitson. The 55-minute discussion (link) covered global energy, Europe’s energy polices, under appreciated aspects of the energy transition, the role of government in energy policy, near-term geopolitical risk and spare capacity, and more.
Arjun also joined Tom Loughery and Reed Barrett of FLOW for a 54-minute webinar (link, password: S4Pz0+4v). Key topic items included our SuperVol framework, Tom’s view on the “second-half” of shale, the role of early versus late stage private equity, exploration, Super Major/large-cap E&P vs SMID-cap E&P strategies, and what our “phasing-in profitable growth” theme really means.
As always, we appreciate and look forward to your comments, critiques, and, if you wish, praise.