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There’s Deep Value in Energy

By  Roger S. Conrad
Issue No.148 . May. 22, 2019

For the past five years, it’s become an all too familiar refrain for energy investors: Oil and gas prices drop, but sector stocks fall harder. Then when prices rebound, the shares lag the recovery.

The pattern has also largely held this year, despite the fact that the S&P Energy Index has consistently shown up among the top performing S&P 500 sectors. No matter how positive underlying conditions have become, many investors still favor the commodities to energy stocks.

On the other hand, it’s much harder to ignore the good news that’s increasingly flowing from American energy companies. First quarter 2019 results once again showcased the recovery up and down the energy value chain. And as highlighted in the previous issue, the macro outlook strongly suggests this will continue.

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  • Seeking High Income Energy

    By Roger S. Conrad on May. 20, 2019

    The cheapest source of expansion funds is always internally generated cash. So it’s no great surprise that many energy sector management teams are still choosing to “right size” dividend distributions, rather than issue new debt and equity into what remain largely hostile capital markets.

  • Endangered Dividends List

    By Roger S. Conrad on May. 20, 2019

    Foresight Energy LP (NYSE: FELP) is eliminating its quarterly distribution. That follows a poor first quarter during which the coal mining MLP experienced sharp increases in transportation costs because of flooding and “an accelerated decline in export prices” for its output.

  • An Update on Oil Prices

    By Elliott H. Gue on May. 7, 2019

    In the December 19, 2018 issue of Energy & Income AdvisorOil: It’s Not 2014,” we took a deep-dive look at the global oil market and came to the following conclusion:

    “While it’s tough to catch the proverbial falling knife or call an exact bottom in crude, we believe oil is approaching a crucial bottom and will recover into the first half of 2019. Specifically, we could see Brent rallying back over $70/bbl and WTI reaching the mid $60’s by the second quarter of 2019.

  • Endangered Dividends List

    By Roger S. Conrad on May. 7, 2019

    Blueknight Energy Partners (NSDQ: BKEP) is cutting its quarterly distribution for the second time in a year, from 8 to 4 cents per unit. Unfortunately, even after that large of a reduction, the payout still isn’t safe. In fact, the consensus of analysts tracked by Bloomberg is the July distribution will be cut to just a penny a unit.

  • Endangered Dividends List

    By Roger S. Conrad on Apr. 18, 2019

    Amerigas Partners’ (NYSE: APU) merger terms with general partner UGI Corp (NYSE: UGI) imply a roughly 83 percent cut in the dividend when the deal closes. That eventuality has been known by investors for two weeks and is therefore baked into the price. Therefore, while we do advise moving on from Amerigas, the MLP is now off the Endangered Dividends List.

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    Elliott and Roger on May. 30, 2019

  • 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.


    • 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