A little over a year ago, we added three high-quality oil and gas producers to the model Portfolio. Our selection process targeted names with strong balance sheets, low production costs, a history of solid execution and franchise assets that can deliver output growth in a challenging environment. With oil prices a point of pain or profit for all upstream operators, names that can deliver on a volumetric growth story and take market share should outperform.
This strategy has played out to perfection thus far, with our positions in Anadarko Petroleum Corp (NYSE: APC), Concho Resources (NYSE: CXO) and EOG Resources (NYSE: EOG) up an average of 86.9 percent over the intervening months.
In light of this run-up and the risk of rising service costs, the Jan. 25 issue of Energy & Income Advisor suggested that readers consider taking a partial profit off the table, especially with hedge funds’ aggregate long positions in West Texas Intermediate futures reaching record levels and creating a significant liquidation risk.
Our Model Portfolios also contain four legacy upstream names that we held through the down-cycle: Noble Energy (NYSE: NBL), Occidental Petroleum Corp (NYSE: OXY), Eni (Milan: ENI, NYSE: E) and Total (Paris: FP, NYSE: TOT). Here are our latest thoughts on these positions.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Jul. 27, 2022