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  • Roger S. Conrad

The Revolution is (Almost) Over

By Elliott H. Gue on Mar. 18, 2019

Change in the US energy industry has been dramatic over the past decade.

Sentiment has shifted from a culture of energy scarcity to one of abundance and the US overtook Russia and Saudi Arabia as the world’s largest oil producer.

And, not long ago, you would have been laughed out of a room for predicting that the US would ever export meaningful quantities of oil. Soon however, the nation looks on track to overtake Saudi Arabia as the world’s largest exporter of crude oil on a full-year basis.

We’d argue the shale revolution has also been one of the most important positive developments for the US economy in recent years, helping to reduce dependence on energy imports from politically unstable countries, revitalizing vast swathes of the US manufacturing industry and giving us all a break in the form of lower gasoline prices.

The end of the shale revolution does NOT mean that all of these positive changes and economic trends will reverse, nor does it mean that US energy production will fall again. It does mean that the industry is maturing and that has profound implications for investors.

Gone are the days of growth for growth’s sake, access to seemingly unlimited pools of capital at ultra-low prices and boom-or-bust shale drilling cycles. The winners in the next phase of the shale boom will be disciplined producers that can generate reliable free cash flow with moderate oil and gas prices and services and equipment firms that focus on driving efficiency rather than simple providing basic, commodity services to their customers.

1| Feature. Part three of our top takeaways from earnings numbers and guidance calls we’ve been tapping into the past several weeks.

2| Portfolios. Actively Managed Portfolio recommendations have continued their strong start to 2019, following what have universally been solid results and guidance. The merger of the former Antero Midstream GP and Antero Midstream Partners has closed to form Antero Midstream Corp (NYSE: AM), now an Actively Managed Portfolio member.

3| Endangered Dividends List. There have been no new dividend cuts since our last issue, though several companies in our coverage universes may be edging closer to them. We expect another round of actions in late April and early May, when we see calendar first quarter 2019 results and updated guidance for capital spending and distributions.

4| Updated Coverage Universes. We’ve updated numbers, comments and advice for our three coverage universes. To access, click on the Portfolios tab on the Energy and Income Advisor website. The “Coverage Universe” highlights producers and services companies, with a major focus on US shale. “MLP Ratings” presents US master limited partnerships and energy midstream corporations. “International Coverage Universe” has the latest on Canadian, Australian and other non-US energy companies.

Energy & Income Advisor

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.

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  • Live Chat with

    Elliott and Roger on Oct. 29, 2019

  • Portfolios & Ratings

    • Model Portfolios

      Balanced portfolios of energy stocks for aggressive and conservative investors.

    • Producers and Drillers

      Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.

    • MLPs and Midstream

      Our assessment of every energy-related master limited partnership.

    • International Coverage

      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