Despite the underperformance of SPDR Oil & Gas Exploration & Production (NYSE: XOP) this year because of concerns about the outlook for energy prices and surging US production, several upstream operators have completed initial public offerings and more remain on the docket. Here are our takes.
Given the uncertainty and volatility in the energy sector, we prefer midstream names that offer the best leverage to volumetric growth stories and have the balance sheet strength to pursue joint ventures with cash-strapped rivals.
In an environment where oil prices range between $40 and $55 per barrel, North American short-cycle plays will remain the growth engine for the oil-field services industry. Investors might want to consider nibbling on select US-focused service names while keeping some powder dry in case oil prices swoon once again.
The government’s war on coal may be over, but inexpensive natural gas and ongoing declines in the cost of renewable energy continue to drive the retirement of older coal-fired power plants in the US. Savvy investors should ignore the moribund coal industry and focus on energy storage.
Alberta plans to shut down all its coal-fired power plants by 2030, an ambitious target that will be a huge adjustment. This transition creates a massive longer-term opening for a few specific companies.
Volatility in oil prices and minor business bumps have contributed to pullbacks in some of our favorite master limited partnerships (MLPs). These companies’ underlying strengths mean now is a time to buy, not be shy.
US oil production appears to be bottoming, but investors seeking to profit in an environment where prices will likely range between $40 and $60 per barrel must pay attention to basin-specific trends as well as companies’ balance sheets and acreage quality.
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