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Elliott Gue knows energy. Since earning his bachelor’s and master’s degrees from the University of London, Elliott has dedicated himself to learning the ins and outs of this dynamic sector, scouring trade magazines, attending industry conferences, touring facilities and meeting with management teams.

Elliott Gue’s knowledge of the energy sector and prescient investment calls prompted the official program of the 2008 G-8 Summit in Tokyo to call him “the world’s leading energy strategist.”

He has also appeared on CNBC and Bloomberg TV and has been quoted in a number of major publications, including Barron’s, Forbes and the Washington Post. Elliott Gue’s expertise and track record of success have also made him a sought-after speaker at MoneyShows and events hosted by the Association of Individual Investors.

Elliott Gue also contributed chapters on developments in global energy markets to two books published by the FT Press, The Silk Road to Riches: How You Can Profit by Investing in Asia’s Newfound Prosperity and Rise of the State: Profitable Investing and Geopolitics in the 21st Century.

Prior to founding the Capitalist Times, Elliott Gue shared his expertise and stock-picking abilities with individual investors in two highly regarded research publications, MLP Profits and The Energy Strategist, as well as long-running financial advisory Personal Finance.

In October 2012, Elliott Gue launched the Energy & Income Advisor, a semimonthly online newsletter that’s dedicated to uncovering the most profitable opportunities in the energy sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.

The masthead may have changed, but subscribers can expect Elliott Gue to deliver the same high-quality analysis and rational assessment of investment opportunities in the energy patch.

Articles

05/28/15: May Live Chat

Elliott Gue and Roger Conrad will host the Energy & Income Advisor’s  next Live Chat on May 28, 2015, at 2:00 p.m. ET. This is your opportunity to ask questions about the latest developments in the economy and energy patch.

Paddling Upstream, Part 2

The first issue in our two-part series on US independent oil and gas producers examined the opportunity set for these names in an environment where oil prices remain lower for longer, likely settling at a level that incentivizes rational development but not growth for growth’s sake. We also looked at some of the larger, diversified exploration and production companies.

This time, we shift our focus to the leading lights of the shale oil and gas revolution, the names that have captured investors’ capital and their imaginations. The best of these companies boast savvy management teams, high-quality resource bases, strong balance sheets and a number of levers they can pull to unlock value.

Over time, these names should be able to grow their production and win market share from higher-cost producers. Unfortunately, the best of the best still trade at elevated valuations that don’t reflect the challenges on the ground. Simply put, a good value is hard to find in the upstream space, if you focus on quality. Investors should maintain their discipline and patience.

Paddling Upstream

During our February and March Live Chats, we fielded a number of questions about specific US exploration and production companies, including Continental Resources (NYSE: CLR), a top producer in North Dakota’s Bakken Shale and leading proponent of the emerging South-Central Oklahoma Oil Province (SCOOP).

Readers’ interest in Continental Resources didn’t come as a surprise; as one of the preeminent players in the Bakken Shale, the name features prominently in many energy-focused investment portfolios.

Outspoken CEO Harold Hamm also appears regularly on financial television to tout Continental Resources’ story, argue for repealing the US ban on crude-oil exports and share his bullish outlook for a snapback in energy prices.

However, questions about SandRidge Energy (NYSE: SD) and Magnum Hunter Resources Corp (NYSE: MHR)—marginal producers with high leverage and dubious business models that struggled even with oil at $100 per barrel—took us aback.

This shift in sentiment in part reflects value-seeking tourists looking for bargains in a late-stage bull market. After all, the Bloomberg North American Independent E&P Index gave up almost 50 percent of its value in the back half of 2014—fertile hunting grounds for non-specialists who remember the snapback that occurred after energy prices collapsed in late 2008 and early 2009.

We prefer to stand aside on most upstream names, as valuations look full, especially when you consider that crude-oil prices will remain lower for longer now that service costs have started to go down, drilling efficiency continues to improve and Saudi Arabia remains committed to building market share by ramping up exports.

Investors interested in wading into the upstream space should consider easing into their positions and focusing on names with strong balance sheets, low production costs, a history of solid execution and franchise assets that can deliver production growth in a challenging environment. Names that can expand their output and win market share should outperform, as cash-strapped peers or those with inferior assets struggle.

With oil prices expected to be lower for longer, better buying opportunities will emerge in the future.

  • Live Chat with

    Elliott and Roger on May. 28, 2015

  • Portfolios & Ratings

    • Model Portfolios

      Balanced portfolios of energy stocks for aggressive and conservative investors.

    • Coverage Universe

      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

    • MLP Ratings

      Our assessment of every energy-related master limited partnership.

    • International Coverage Universe

      Roger Conrad’s coverage of more than 70 dividend-paying energy names.

    Experts

    • Roger S. Conrad

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Elliott H. Gue

      Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor

    • Peter Staas

      Managing Editor: Capitalist Times and Energy & Income Advisor