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Feature Article

Oil Prices Lead an International Renaissance

The OPEC-Plus decision to boost oil production is one of the most bullish developments for the global oil market since the crude oil bear market kicked off four years ago.

While it might seem counterintuitive to say that rising global oil output could be positive for prices, the key is to focus on spare capacity and the growing risk the world could face a real supply shortfall by early 2019.

Spare capacity is defined as oil production that can be brought online within 30 days and sustained for 90 days. In other words, spare capacity represents mothballed fields or wells that are not currently producing oil but could be brought online quickly to meet “shocks” such as temporary disruptions in global oil supply or tanker traffic.

Endangered Dividends List

Energy & Income Advisor sifts through literally hundreds of energy companies from around the world to separate the best from the rest. You can check out key metrics for each along with our comments and advice in the tables under the “Portfolios” tab on the EIA website.

The current issue features an updated look at the stocks we cover. Unfortunately, we found a large number of companies we track are still at risk to dividend cuts, along with a handful that are genuine bankruptcy risks.

Many of these weaklings have already cut their distributions at least once since oil prices peaked in mid-2014. As a result, they trade at much lower levels than just a few years ago.

In an unforgiving market like this one for energy stocks and particularly MLPs, however, another cut would still set off a selling wave. And that’s at the same time stronger companies that have taken their lumps are making gains.

The upshot is we want to avoid at risk dividends now as much as ever. To provide an early warning system, we’re initiating ourEnergy & Income Advisor Endangered Dividends List with the 16 companies in our table.

Picks, Pans and Takeaways from the 2018 MLP & Energy Infrastructure Conference

General Takeaways from the MLP & Energy Infrastructure Conference (MEIC)

Roger Conrad (RC): The first thing I think both of us noticed was how much smaller this year’s event was than last year’s, and certainly than it was four years ago in Jacksonville. That was really the peak of the boom for MLPs and I remember how uncomfortable you and I were then about how popular the sector was.

What Drives Performance for Exploration and Production (E&P) Companies?

When I analyze any industry group I like to start by attempting to answer one simple question:

What are investors looking for?

In other words, it’s crucial to understand which quantitative metrics and/or stock characteristics drive stock market returns over time. Answer that one question and you’ll be well-positioned to select stocks that outperform their peers and the broader market.

Portfolio Makeover

Simplification transactions—where the general partner and limited partnership merge to eliminate incentive distribution rights—have become all the rage among master limited partnerships (MLP). As part of our efforts to make Energy & Income Advisor more user-friendly, we’ve undertaken a simplification push of our own, consolidating the three model portfolios into a single, actively managed strategy that includes specific position sizes.

Updated Outlook for Oil Prices

Although we became bullish on oil prices last summer when the commodity slipped into the $40s per barrel, our forecast for West Texas Intermediate (WTI) to average between $60 and $65 per barrel appears conservative—especially in an environment where involuntary supply disruptions and robust demand growth could result in short-term spikes to $80 per barrel. We now expect WTI to spend most of its time between $60 and $70 per barrel in 2018 and Brent to range between $65 and $75 per barrel.

Electric Vehicles: Best Investment Ideas for the Transition

We run through a number of industries with leverage to the electricification of transportation, highlighting potential pitfalls for investors to avoid and the businesses that offer the most near-term upside.

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  • Live Chat with

    Elliott and Roger on Sep. 27, 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