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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

LNG Market Update: Near-Term Volatility, Long-Term Opportunity

When natural gas is cooled to minus 260 degrees Fahrenheit at a liquefaction facility, the fuel condenses to roughly 1/600th of its original volume, facilitating overseas transport in specially designed ships.

Regasification terminals heat the liquefied natural gas (LNG) to restore the delivered volumes to a gaseous state before pipelines transmit the product to end users.

This network of LNG carriers and import and export terminals effectively releases natural gas from the geographical constraints of the pipeline network, enabling producers to deliver their output to overseas end markets.

In recent years, investors have become obsessed with the wide price differential between US and Asian natural-gas prices and the potential for meaningful LNG exports to provide a much-needed release valve for the oversupplied North American market.

However, the start-up of Exxon Mobil Corp (NYSE: XOM) and Oil Search’s (ASX: OSH, OTC: OISHY) LNG export project in Papua New Guinea, coupled with lower-than-expected Chinese demand growth and a mild winter in Northeast Asia, has led to a regional oversupply in the spot market.

Over the next two years, the start-up of other massive LNG export facilities in Australia and on the US Gulf Coast will exacerbate this emergent oversupply, intensifying competition among suppliers and redirect flexible volumes from Qatar and other producers back to Europe, the market of last resort.

At the same time, most long-term LNG supply contracts with Asian buyers allow for regular price resets based on movements in the Japanese crude cocktail, or the monthly average price of a basket of imported crude oils.

Second-quarter results for LNG buyers and sellers that operate primarily in the Asia-Pacific region should reflect the full effect of the severe downdraft in crude-oil prices; the price reset mechanism included in these oil-indexed supply agreements usually occurs on a three- to six-month lag.

With the global LNG market shifting into an oversupply after a period of tightness, we’ve updated our macro outlook for this niche business and revisited opportunities on the supply side to identify the best bets for investors seeking exposure to this theme.

05/28/15: May Live Chat

Elliott Gue and Roger Conrad will host the Energy & Income Advisor’s  next Live Chat on May 28, 2015, at 2:00 p.m. ET. This is your opportunity to ask questions about the latest developments in the economy and energy patch.

Paddling Upstream, Part 2

The first issue in our two-part series on US independent oil and gas producers examined the opportunity set for these names in an environment where oil prices remain lower for longer, likely settling at a level that incentivizes rational development but not growth for growth’s sake. We also looked at some of the larger, diversified exploration and production companies.

This time, we shift our focus to the leading lights of the shale oil and gas revolution, the names that have captured investors’ capital and their imaginations. The best of these companies boast savvy management teams, high-quality resource bases, strong balance sheets and a number of levers they can pull to unlock value.

Over time, these names should be able to grow their production and win market share from higher-cost producers. Unfortunately, the best of the best still trade at elevated valuations that don’t reflect the challenges on the ground. Simply put, a good value is hard to find in the upstream space, if you focus on quality. Investors should maintain their discipline and patience.

Paddling Upstream

During our February and March Live Chats, we fielded a number of questions about specific US exploration and production companies, including Continental Resources (NYSE: CLR), a top producer in North Dakota’s Bakken Shale and leading proponent of the emerging South-Central Oklahoma Oil Province (SCOOP).

Readers’ interest in Continental Resources didn’t come as a surprise; as one of the preeminent players in the Bakken Shale, the name features prominently in many energy-focused investment portfolios.

Outspoken CEO Harold Hamm also appears regularly on financial television to tout Continental Resources’ story, argue for repealing the US ban on crude-oil exports and share his bullish outlook for a snapback in energy prices.

However, questions about SandRidge Energy (NYSE: SD) and Magnum Hunter Resources Corp (NYSE: MHR)—marginal producers with high leverage and dubious business models that struggled even with oil at $100 per barrel—took us aback.

This shift in sentiment in part reflects value-seeking tourists looking for bargains in a late-stage bull market. After all, the Bloomberg North American Independent E&P Index gave up almost 50 percent of its value in the back half of 2014—fertile hunting grounds for non-specialists who remember the snapback that occurred after energy prices collapsed in late 2008 and early 2009.

We prefer to stand aside on most upstream names, as valuations look full, especially when you consider that crude-oil prices will remain lower for longer now that service costs have started to go down, drilling efficiency continues to improve and Saudi Arabia remains committed to building market share by ramping up exports.

Investors interested in wading into the upstream space should consider easing into their positions and focusing on names with strong balance sheets, low production costs, a history of solid execution and franchise assets that can deliver production growth in a challenging environment. Names that can expand their output and win market share should outperform, as cash-strapped peers or those with inferior assets struggle.

With oil prices expected to be lower for longer, better buying opportunities will emerge in the future.

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  • Live Chat with

    Elliott and Roger on Jul. 26, 2018

  • 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

    • 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