The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Goehring & Rozencwajg latest quarterly newsletter. Always worth a read. https://4043042.fs1.hubspotusercontent-na1.net/hubfs/4043042/Content%20Offers/2022.Q1%20Commentary/2022.Q1%20GR%20Market%20Commentary.pdf
"The biggest risk for investors is selling too soon. From the bottom in 2020, the ratio of commodities to the Dow Jones Industrial Average has rallied by 40%. Using history, we can compare this move to past cycles. The ratio bottomed in December 1968 and by November 1970 had advanced by 40% -- commodities by 10% while the market fell by 16%. Many investors may have wanted to sell at that point; however the rally was just beginning. Over the next nine years, commodities rallied another 156% and commodity stocks rallied another 400%. Had you sold in 1970 after the index advanced 40%, you would have missed 90% of the rally. In 1999, the index bottomed in June and advanced 40% over the next 12 months – commodities advanced by 33% and the market fell by 4%. At that point, oil was $32 on its way to $145, gold was $289 on its way to over $1,000. Over the next 10 years, commodities rallied 150% and resource stocks rallied by 325%. Again, if you had sold in 2000 once the ratio advanced 40%, you would have missed 95% of the rally."
"We are now beginning to understand what a world looks like as it runs out of spare oil pumping capacity. Even with the huge releases of oil from Strategic Petroleum Reserve, oil prices have hardly pulled back. Global inventories, now at record lows, continue to draw counter-seasonally and are reaching dangerously low levels. Even with all the dislocations caused by the Ukrainian conflict and COVID problems in China, global oil demand in Q4 will approach global pumping capability according to our modelling. Strong demand, declining production, record low inventories, and now no spare pumping capacity—all these factors will push oil prices higher in the second half of 2022. Even in the face of all these factors, investor interest in energy markets remains incredibly subdued. The advances we have seen to date have basically been short covering and active managers buying on the margin. Once investors and institutions realize the energy market has fundamentally changed and the decade of cheap, abundant energy is over, the amount of capital that rushes into this sector could be huge. The global energy crisis has just started, and it will take many years to fix. For those that make investments today, the rewards could be immense."
https://mobile.twitter.com/Josh_Young_1/status/1526581574506094592
I've posted Bison Interests research previously and would thoroughly recommend people check their research out.
https://mobile.twitter.com/Josh_Young_1/status/1526581574506094592
I've posted Bison Interests research previously and would thoroughly recommend people check their research out.
https://mobile.twitter.com/daChartLife/status/1526240789906477057
This reflects charts I've previously posted and shows there is a long way to go until O&G shares reach (and exceed) full value. Once the depleted tech and crypto money stops chasing bottoms in these and accepts their time is over for the time being, that money will move to chasing O&G shares as it did in the early noughties. This is the "Great Rotation" as Crescat Capital put it - out of growth stocks and into commodities and value stocks.
It also makes me wonder if the terrible recession the "experts" are predicting that will bring all shares down will really happen and whether we'll get a minor recession as we head in the early noughties, but where commodities shares didn't suffer that much. There is some rhyming going on with this point in economic history.
Separately before the GFC most "experts" weren't predicting a recession and most thought the good times would go on - that's the time to be fearful of a recession, not when your taxi driver mentions it as mine did last week.
Regarding inflation, charts I've seen of inflation in the 40s and 70s show 3 ever growing peaks interspersed with pretty low troughs. Now that the inflationary genie is out of the bottle I wouldn't be surprised if this decade rhymes with those. I also wouldn't be surprised if there is a mild downturn that central banks around the world start printing money and then inflation really gets going
This is just my opinion and is not an endorsement to buy or sell anything.
https://mobile.twitter.com/daChartLife/status/1526240789906477057
This reflects charts I've previously posted and shows there is a long way to go until O&G shares reach (and exceed) full value. Once the depleted tech and crypto money stops chasing bottoms in these and accepts their time is over for the time being, that money will move to chasing O&G shares as it did in the early noughties. This is the "Great Rotation" as Crescat Capital put it - out of growth stocks and into commodities and value stocks.
It also makes me wonder if the terrible recession the "experts" are predicting that will bring all shares down will really happen and whether we'll get a minor recession as we head in the early noughties, but where commodities shares didn't suffer that much. There is some rhyming going on with this point in economic history.
Separately before the GFC most "experts" weren't predicting a recession and most thought the good times would go on - that's the time to be fearful of a recession, not when your taxi driver mentions it as mine did last week.
Regarding inflation, charts I've seen of inflation in the 40s and 70s show 3 ever growing peaks interspersed with pretty low troughs. Now that the inflationary genie is out of the bottle I wouldn't be surprised if this decade rhymes with those. I also wouldn't be surprised if there is a mild downturn that central banks around the world start printing money and then inflation really gets going
This is just my opinion and is not an endorsement to buy or sell anything.
This trust is a bit like play on FAANG and Nasdaq stocks, unfortunately the Nasdaq has bubbled like in 2000 and will deflate over the next 1-2 years, but when the bubble has deflated and if the current men managing the company survive this may be a consideration for me in the future.
I reckon you could be spot on Moho. As many know CNPC have oilfields in Niger and the pipeline to Benin, whilst we should hopefully soon have the pipeline from Chad to Cameroon that CNPC's oilfields in Chad use. I've commented previously on the operational synergies between both companies and the liklihood that SAVE won't get ripped off in using the Niger pipeline because of the above. The desire from SAVE for employee(s) who speak Mandarin suggests how close both companies are getting.
The Chinese would see SAVE's desire to supply Niger with nearly half of their electric power as a very astute political move that buys them a lot of political influence and makes it harder for the Chinese to screw over SAVE. It kind of forces the Chinese and SAVE together.
I actually now see SAVE's green energy aspirations at scale as more of a play on obtaining significant power and political influence in the countries they operate / want to operate in than virtue signalling ESG nonsense. If you supply a country with nearly half of its power that gives you a lot of influence over your taxation, regulation and the regulation of your competitors. In such a scenario your competitors will be forced to do business with you and cut deals on more favourable terms with you - it tames their aggression towards you and makes win / wins more likely. It's almost akin to the robber barons antics in the US in the late 19th and early 20th centuries. It's also a sign to the majors offloading stock that you're a smart player and will become much bigger i.e. a deal with SAVE is more likely to complete rather than fall through therefore SAVE will be a more favoured purchaser as others have commented on.
https://www.aa.com.tr/en/economy/opec-does-not-have-capacity-to-boost-production-nigerian-minister/2558693#
The Organization of the Petroleum Exporting Countries (OPEC) is not in favor of high crude prices, but it does not have any extra capacity to boost production, according to the Nigeria’s state minister for petroleum resources.
“It is not something that you can open a tap for at this point. You must have the additional capacity, the idle capacity to bring on, but it takes a lot of work and a lot of investment for it to have additional production,” Timipre Marlin Sylva told Anadolu Agency.
The oil production of most countries, including Nigeria which is also an OPEC member country, is already at a peak, he said, emphasizing that criticism aimed at OPEC was misplaced.
“If there is anything we can do to produce more, OPEC will be the first to produce more. But unfortunately, this capacity doesn’t exist in most OPEC countries,” he said.
OPEC takes no pleasure in seeing high oil prices and wants them at a level that would be optimal for both consumers and producers, Sylva asserted.
A lack of investment in the sector was one of the reasons for the capacity limit, he said, defending a slower energy transition in a bid to ease prices.
Sylva underlined that investments were pulled out from the global oil and gas sector quickly without putting an alternative in place.
“We are not against energy transition, but let it be a gradual process. Let us carry on a little bit slowly. We will get there, but let’s make sure we are able to take all factors into consideration before we move,” he said.
Turning to ties between Turkiye and Nigeria in the field of energy, Sylva said Turkiye purchases a great deal of liquefied natural gas (LNG) from Nigeria thanks to agreements sealed in the past.
He said Nigeria is struggling to meet Turkiye’s request for additional LNG supply as its production facilities are not operating at full capacity.
In the meantime, though, Nigeria is in talks with other international suppliers to ensure that Turkiye gets the additional amount before the end of this year, he added.
“We are actively working on how we can move up the production capacity of LNG. There is also an expansion project that is going to increase the output capacity from 22 million tons per year to 30 million tons, so we will have enough LNG to give Turkiye some additional volumes,” Sylva said.
He also conveyed Nigeria’s desire to attract more Turkish investors, saying there is a dire need of investment in the field of oil and gas.
Sylva explained that Nigeria discovered 206 trillion cubic feet (tcf) of gas reserves accidentally while looking for oil.
“We want to increase our gas reserves from 206 tcf to about 600 tcf, so there are a lot of opportunities for Turkish companies that can come in and get involved in the exploration of gas or in the up-stream side,” he said
https://www.aa.com.tr/en/economy/opec-does-not-have-capacity-to-boost-production-nigerian-minister/2558693#
The Organization of the Petroleum Exporting Countries (OPEC) is not in favor of high crude prices, but it does not have any extra capacity to boost production, according to the Nigeria’s state minister for petroleum resources.
“It is not something that you can open a tap for at this point. You must have the additional capacity, the idle capacity to bring on, but it takes a lot of work and a lot of investment for it to have additional production,” Timipre Marlin Sylva told Anadolu Agency.
The oil production of most countries, including Nigeria which is also an OPEC member country, is already at a peak, he said, emphasizing that criticism aimed at OPEC was misplaced.
“If there is anything we can do to produce more, OPEC will be the first to produce more. But unfortunately, this capacity doesn’t exist in most OPEC countries,” he said.
OPEC takes no pleasure in seeing high oil prices and wants them at a level that would be optimal for both consumers and producers, Sylva asserted.
A lack of investment in the sector was one of the reasons for the capacity limit, he said, defending a slower energy transition in a bid to ease prices.
Sylva underlined that investments were pulled out from the global oil and gas sector quickly without putting an alternative in place.
“We are not against energy transition, but let it be a gradual process. Let us carry on a little bit slowly. We will get there, but let’s make sure we are able to take all factors into consideration before we move,” he said.
Turning to ties between Turkiye and Nigeria in the field of energy, Sylva said Turkiye purchases a great deal of liquefied natural gas (LNG) from Nigeria thanks to agreements sealed in the past.
He said Nigeria is struggling to meet Turkiye’s request for additional LNG supply as its production facilities are not operating at full capacity.
In the meantime, though, Nigeria is in talks with other international suppliers to ensure that Turkiye gets the additional amount before the end of this year, he added.
“We are actively working on how we can move up the production capacity of LNG. There is also an expansion project that is going to increase the output capacity from 22 million tons per year to 30 million tons, so we will have enough LNG to give Turkiye some additional volumes,” Sylva said.
He also conveyed Nigeria’s desire to attract more Turkish investors, saying there is a dire need of investment in the field of oil and gas.
Sylva explained that Nigeria discovered 206 trillion cubic feet (tcf) of gas reserves accidentally while looking for oil.
“We want to increase our gas reserves from 206 tcf to about 600 tcf, so there are a lot of opportunities for Turkish companies that can come in and get involved in the exploration of gas or in the up-stream side,” he said.???????
There must be a huge price shock about to slam the Vanadium market. In 2018 prices peaked as high as $140 a pound despite one year’s notice on new rebar standards requiring the use of more Vanadium. A sudden ~20% shortfall in the world ‘s supply that will (sanctions) last years in such a thinly traded commodity could drive the price of V way over this previous high.
Josh Young from Bison Interests and Harris Kupperman from Praetorian Capital discuss the problems faced in ramping up production from the lack of labour and piping required for drilling to lack of funding appetite from banks. Whilst I listen to a lot of podcasts on O&G (boy I live an exciting life!), I’ve not posted one in years - this one is well worth a listen.
https://m.youtube.com/watch?v=GAkupcU1G7I&feature=youtu.be
Josh Young from Bison Interests and Harris Kupperman from Praetorian Capital discuss the problems faced in ramping up production from the lack of labour and piping required for drilling to lack of funding appetite from banks. Whilst I listen to a lot of podcasts on O&G (boy I live an exciting life!), I’ve not posted one in years - this one is well worth a listen.
https://m.youtube.com/watch?v=GAkupcU1G7I&feature=youtu.be
https://www.spectator.co.uk/article/why-would-the-saudis-bail-out-biden
https://www.spectator.co.uk/article/why-would-the-saudis-bail-out-biden
Chart comparing this year with recent years and 2010-14 average. Looking rather bullish for oil.
https://pbs.twimg.com/media/FNa1LsZVEAYyN_C?format=jpg&name=large
Chart comparing this year with recent years and 2010-14 average. Looking rather bullish for oil.
https://pbs.twimg.com/media/FNa1LsZVEAYyN_C?format=jpg&name=large