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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

Evaluating Recent Energy IPOs

After a prolonged lull ushered in by the collapse in oil prices and reduced drilling and completion activity in the US, the flow of initial public offerings (IPO) in the energy sector has increased in recent months, with private-equity outfits seeking to monetize investments in the upstream and oil-field-service segments.

In particular, this year has ushered in a bumper crop of IPOs focused on pressure pumping—the horsepower that forces the fracturing fluid into the reservoir rock—and related downhole services. The timing of these deals coincides with expectations for increasing demand, as exploration and production companies ramp up their completion activity in prolific US shale plays.

However, not every prospective debutant made it to the market on time, with a difficult tape prompting Liberty Oilfield Services (NYSE: BDFC) to postpone its IPO. Investors should tread carefully with these highly cyclical names that specialize in highly commoditized products and service lines; near-term volumetric upside from stepped-up completion activity aside, history suggests that any pricing traction will prove short-lived.

Within the upstream space, the trend toward IPOs involving recycled acreage in the Eagle Ford Shale and revivified Haynesville Shale demonstrates how one company’s noncore assets can become a new holder’s crown jewel, with the appropriate attention and a reset cost basis.

These transactions underscore the scope of the resource base in the US and why the competition for market share will only intensify—an environment that favors players with the strongest balance sheets, highest-quality acreage and lowest cost basis.

Within the midstream segment, the recent crop of IPOs has come primarily from upstream operators seeking to monetize assets. Potential upside for these master limited partnerships usually hinges on a combination of drop-down transactions and increasing throughput volumes, with the market preferring names weighted toward organic growth.

Here, investor must remain laser-focused on the sponsor’s motivations, balance sheet and growth prospects in an environment where energy prices remain lower for longer.

Permania And MLP Madness

The Energy & Income Advisor team has recovered from the DUG Permian Basin conference, which we attended in Fort Worth, Texas. Readers can find our top takeaways and best investment ideas from the event in the slide deck and video presentation that we put together earlier this month.

As we mentioned in our presentation, we left the conference impressed with the quality of the stacked resource base in the Delaware and Midland basins, plays that we expect to continue to take market share over the long run because of their superior economics and ample midstream infrastructure. Our Focus List and Model Portfolios include a number of names that offer exposure to this growth story, though we prefer the midstream segment in the current environment.

With the DUG Permian Basin Conference done and dusted, our focus shifts to first-quarter earnings season and the MLP Association’s annual investor conference—an event that gives us an opportunity to put management teams through their paces and talk shop with analysts and portfolio managers. Historically, this conference has produced a good crop of investment ideas.

In preparation for earnings season and this event, we went through the exhaustive (and frequently exhausting) process of updating our comments for all the names in our MLP Ratings table. For your convenience, we have appended the results to the PDF of this issue.

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  • Live Chat with

    Elliott and Roger on Jul. 27, 2017

  • 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