Feature Article

One of the most important lessons to learn about earnings season is that the market’s reaction to the news can be more important than the news itself.

In other words, if a company reports weak earnings and issues cautious guidance for the quarter ahead; yet, the stock rallies, that’s a sign that market expectations were already low, and the bad news was priced into the stock before it released earnings results.

Is the Hess Midstream Partners (NYSE: HESM) transaction a good deal for unitholders, or should we take this opportunity to cut and run before there’s real damage? We think the positives outweigh the negatives of this deal. With Hess Midstream converting to a corporation, those who hold it outside of an IRA will probably pay higher taxes on distributions going forward. 

What are some of the new technologies North American shale producers are using to drive their costs lower? What’s their potential? Most people don’t think of electricity as a cost of operating energy infrastructure. 

Talking Point #1: What’s the risk of recession and a demand led collapse in oil prices over the next 12 months?

EG: I continue to believe fears of recession are overblown in the US. In fact, I’m seeing some tentative signs the US economy is stabilizing and we may see some improvement in data over the next few months.

Talking Point #1: How much should we worry about the possibility of stalling or even falling production growth in North America for producers, drillers, midstream and downstream companies we own?

EG: Ironically, I think falling US production would be a huge positive for most of the upstream (producers) and services companies we recommend.