Every earnings season, we pay particularly close attention to commentary from the major oil-field service companies—Schlumberger (NYSE: SLB), Halliburton (NYSE: HAL), Baker Hughes (NYSE: BHI) and Weatherford International (NYSE: WFT)—because their extensive operations give them insights into key trends throughout the energy value chain.
Their conference calls also occur relatively early each earnings season; the read-throughs gleaned from the proceedings can provide insight into emerging opportunities and potential pitfalls.
Although we continue to pore over first-quarter results from the energy patch, comments from management teams in the upstream and oil-field-services industries underscore the potential for further efficiency and productivity gains in US shale plays.
Given the short development times needed to exploit these resources, drilling and completion activity in the US onshore market will continue to track oil price realizations and producers’ ability to hedge future output. These fluctuations will create investment opportunities in cyclical names, but timing will be crucial.
Our outlook for oil prices to remain lower for longer and the best US shale plays to take market share favors an overweight position in midstream master limited partnerships, especially those with the best-positioned assets, capable management teams and healthy balance sheets.
Expansions to the Gulf Coast refinery complex will translate into higher ethane demand in the US, creating opportunities for short-term trades and longer-term wealth building.
Enterprise Products Partners LP's acquisition of Azure Midstream Partners LP's gas-gathering and -processing assets marked the latest in a series of deals involving assets in the resurgent Haynesville Shale and the emerging Cotton Valley play. We explore what it all means and whether it's worth placing a bet.
Narrowing discounts on midstream MLPs' overnight equity offerings bode well for the group.
While reading through transcripts of master limited partnerships' fourth-quarter earnings calls, we compiled a series of quotes from management teams that provide insight into some of the macro trends that will continue to drive returns and opportunities in the space.
The Energy Information Administration recently hiked its estimates for US oil production in 2017.
Over the past month or so, we have added more cyclical exposure to the Focus List to balance our overweight position in midstream names.
First-quarter results and commentary from the Big Four oil-field services firms provide key insights into the potential for further efficiency and productivity gains in US shale and the cyclical recoveries in proppant and pressure pumping. See Oil-Field Services: The Tale of Two Cycles Continues.
In preparation for the MLP Association's annual investor conference, we went through the exhaustive (and frequently exhausting) process of digging into and updating our comments for all the names in our MLP Ratings table.
The latest additions to the Energy & Income Advisor Focus List have lagged of late, primarily because of the selloff in West Texas Intermediate crude oil. In light of these recent market moves, we we revisit our outlook and investment strategy.
The International Portfolio’s conservative sleeve posted an average total return of 24.2 percent in 2016, while our aggressive picks gained an average of 48.9 percent. Their fortunes have reversed this year: Our conservative holdings have gained an average of 4.9 percent, while our aggressive picks have lost 5.2 percent. This shift reflects investors taking a risk-off approach after last year’s big run-up in commodity-sensitive names. We highlight some of our favorite international stocks for conservative investors as well as a few interesting speculations.
Elliott and Roger on May. 30, 2017
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