Feature Article

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.

Midstream: The Strong Get Stronger

Chances are you’ve seen the disqualifier “past performance may not be predictive of future results.” But while that’s perfectly apropos for financial products and services, the opposite is increasingly true for midstream energy companies and MLPs.

Since I began covering the energy industry in depth some two decades ago, one of the quarterly events I look forward to most is Schlumberger’s earnings release. There have now been three different CEOs since I began covering this company and market conditions for the company have changed dramatically over the years.

Q: Oil and gas prices in Canada remain deeply depressed relative to US prices. What’s the timetable on closing that gap? How critical is that to the prospects of Canadian oil and gas companies?

A: Discounted Canadian prices for oil and natural gas are generally the result of insufficient takeaway capacity, which is most effectively dealt with by building new pipeline capacity.