Energy was the top-performing sector in the S&P 500 in the first half of 2021 jumping 45.61%, nearly triple the S&P 500’s 15.24% gain over a similar holding period.
That represents the S&P 500 Energy Index’s best showing relative to the S&P 500 in the first half of the year since at least 1989 when the former index was created.
Indeed, energy has smashed all records so far in 2021 for performance relative to the S&P 500, the only comparable example was the group’s 28.51 percentage point outperformance relative to the S&P 500 in the 6 months ended February 2005, during energy (and oil’s) last big commodity super cycle.
Too many small owners lacking critical scale and unprecedented roadblocks to new energy pipeline infrastructure: That’s what was at the core of the unprecedented wave of US oil and gas midstream dividend cuts and bankruptcies of the past few years. Now those same forces are spawning something considerably more positive for investors
There may come a day when US transportation is 100 percent electrified and homes are heated with blended hydrogen. But in the here and now, oil and gas pipelines are essential infrastructure. Exhibit A is the havoc wreaked by the successful hack of systems at the Colonial Pipeline this month.
Even without a repeat of the company’s Q1 windfall, the benefits to Kinder Morgan Inc.’s (NYSE: KMI) underlying business and balance sheet are likely to continue flowing throughout the rest of 2021 and beyond.
Shale exploration and production (E&P) giant, Pioneer Natural Resources (NYSE: PXD) announced a deal to acquire privately-held DoublePoint Energy, but the reception on Wall Street has been less than enthusiastic.
Single digit temperatures, record snowfall, millions of utility customers without service, nearly one-third of the state’s power generating capacity shut down and spiking electricity prices: That’s the damage so far from the Great Texas Power Crisis of 2021, which continues wreak havoc across the Lone Star State.
In the final issue of Energy & Income Advisor for 2020, “Rock Bottom Prices Ready to Rise,” we outlined a constructive view for crude oil prices based on three primary drivers: The ongoing recovery in global demand, OPEC+ willingness to maintain historic production cuts and US shale producer discipline.
Over the next month and a half, all our Model Portfolio and High Yield Energy List members are slated to report Q2 2021 earnings estimates.
Bids and counterbids: Pembina Pipeline’s (TSX: PPL, NYSE: PBA) offer to swap 0.5 of its shares for each share of fellow Canadian midstream company Inter Pipeline Ltd (TSX: IPL, OTC: IPPLF) has provoked a new effort from rival bidder Brookfield Infrastructure Partners (TSX: BIP-U, NYSE: BIP).
There were no dividend cuts in our coverage universe since the previous EIA issue. That leaves the tally for the year at six, with only 12 names on the Endangered Dividends List. We continue to expect at the majority of this dozen to avoid reducing dividends this year.
Clearly we could have picked a better time to launch our High Yield Energy List than late May 2019—on the eve of a pandemic that briefly sent oil prices below zero, forced dramatic cutbacks in shale output and triggered an historic number of sector dividend cuts.
Elliott and Roger on Jul. 29, 2021
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