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We eagerly anticipate earnings results from diversified service giants Halliburton and Schlumberger each quarter because no companies have a better big picture 30,000-foot view of industry conditions and trends in all major oil and gas-producing regions of the world.

In fact, careful analysis of comments and industry “read-through” from these two companies were a major factor in our 2014 call for a major decline in oil prices. In the most recent quarter, comments on the conference calls for both companies have important implications both for existing Focus List recommendations and a new addition to our Focus List and Active Portfolio.

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  • A 30,000 Foot View of the Global Energy Industry Today

    By Elliott H. Gue on Aug. 8, 2018

    Oil services giants Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB) are two of the most important energy companies to watch during quarterly earnings season. That’s not because they’re the biggest companies in the energy patch; after all, super oil Exxon Mobil (NYSE: XOM) is nearly 4 times the size of Schlumberger by market capitalization. However, no companies have more insight into trends in the global energy industry, new technologies gaining traction in the field and producer activity levels than these two firms.

  • No Surprises: Earnings Reporting Season Brings Distribution Cuts

    By Roger S. Conrad on Aug. 8, 2018

    Our EIA Endangered Dividends List highlights companies in our coverage universe where dividends are at elevated risk of being cut for one or more of the following reasons:

    • Cash flow coverage of distributions is inadequate.
    • Elevated debt levels with imminent refinancing needs.
    • Revenue pressure triggered by weakness for at least one key asset.
    • Inability to access the equity market on favorable terms to fund capital spending, forcing management to utilize more internally generated cash flow.
    • Exposure to volatility in commodity margins from either rising or falling prices of raw materials.
    • Aggressive general partners anxious to buy in limited partners’ cash flows at discounted prices.
    • Regulatory reversals.
    • Expiring contracts with little hope for renewals at comparable rates.
    Since our last EIA issue, three EDL members have announced distribution cuts: American Midstream Partners (NYSE: AMID), Blueknight Energy Partners (NSDQ: BKEP) and Energy Transfer Partners (NYSE: ETP).

  • Canada’s Landlocked Energy Is Finding a Market

    By Roger S. Conrad on Jul. 21, 2018

    Surging US energy production from shale formations has been the bane of Canadian energy producers for more than a decade. The proof is in the prices. Western Canada Select crude oil recently sold for $26 less per barrel than the WTI US benchmark, and that differential has been as wide as $40 in recent years. Canadian natural gas at the AECO hub has fetched less than $1 per thousand cubic feet for long stretches and today is barely one-third the benchmark price at Henry Hub in Texas. WCS’ heavier oil mix accounts for some of its discount. But transportation constraints are by far the biggest contributor. And the more the US pumps, the more Canadian oil and gas is crowded off North American pipelines, rails and trucking networks.

  • Earnings Reporting Season Raises Risk

    By Roger S. Conrad on Jul. 21, 2018

    Our EIA Endangered Dividends List highlights companies in our coverage universe where dividends are at elevated risk of being cut for one or more of the following reasons:

    • Cash flow coverage of distributions is inadequate.
    • Elevated debt levels with imminent refinancing needs.
    • Revenue pressure triggered by weakness for at least one key asset.
    • Inability to access the equity market on favorable terms to fund capital spending, forcing management to utilize more internally generated cash flow.
    • Exposure to volatility in commodity margins from either rising or falling prices of raw materials.
    • Aggressive general partners anxious to buy in limited partners’ cash flows at discounted prices.
    • Regulatory reversals.
    • Expiring contracts with little hope for renewals at comparable rates.
    Most of the companies on our list suffer from more than one of these afflictions.

  • Oil Prices Lead an International Renaissance

    By Elliott H. Gue on Jun. 30, 2018

    The OPEC-Plus decision to boost oil production is one of the most bullish developments for the global oil market since the crude oil bear market kicked off four years ago. While it might seem counterintuitive to say that rising global oil output could be positive for prices, the key is to focus on spare capacity and the growing risk the world could face a real supply shortfall by early 2019. Spare capacity is defined as oil production that can be brought online within 30 days and sustained for 90 days. In other words, spare capacity represents mothballed fields or wells that are not currently producing oil but could be brought online quickly to meet “shocks” such as temporary disruptions in global oil supply or tanker traffic.

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    Elliott and Roger on Aug. 27, 2018

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    Experts

    • Elliott H. Gue

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

    • Roger S. Conrad

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