Energy Sector

[fareastwarriors]

On 10/13/2025 at 10:32 AM, Dalal.Holdings said:

Oil sell off was very predictable IMO outside of some black swan geopolitical explosions. I continue to avoid until I see some real pain in the sector

 

 

Oil’s Long-Awaited Surplus Arrives on Billion-Barrel Flotilla

[Eng12345]

On 10/18/2025 at 9:35 AM, fareastwarriors said:

 

 

Oil’s Long-Awaited Surplus Arrives on Billion-Barrel Flotilla

I just came over to post this article - certainly good article and the idea of the a 4 million barrel a day surplus is wild. Surely we will see more pain in the oil markets. 

 

[dipod]

I’ve been studying this relationship for a while (gold and how much oil it translates to) for the last 2 weeks or so and yes the relationship that obtains now is quite the head scratcher. I don’t have any fundamental reason why crude will go up but I will likely start building a position here in the next few days. Especially in issues that pay solid dividends. 

[Spekulatius]

21 minutes ago, dipod said:

I’ve been studying this relationship for a while (gold and how much oil it translates to) for the last 2 weeks or so and yes the relationship that obtains now is quite the head scratcher. I don’t have any fundamental reason why crude will go up but I will likely start building a position here in the next few days. Especially in issues that pay solid dividends. 

There is very little reason why Gold and oil prices should be correlated.

Edited October 20, 2025 by Spekulatius

[Spekulatius]

I think a better commodity to ratio against Gold would be copper. Copper is chemically related and it often occurred together with Gold. Both are mined which means the cost to operate Gold and copper mines should be correlated. One serves as store of value and the other one doesn’t.

https://www.longtermtrends.net/copper-gold-ratio/

 

[Dalal.Holdings]

52 minutes ago, Spekulatius said:

There is very little reason why Gold and oil prices should be correlated.

 

Other than that they both trade in dollars, there is no reason. Supply-demand is everything. Plus, oil is a consumable commodity while gold sticks around forever once you dig it up.

 

There is a lot of coincidence that fools people into thinking there is correlation when looking at charts

[Dalal.Holdings]

9 hours ago, Eng12345 said:

I just came over to post this article - certainly good article and the idea of the a 4 million barrel a day surplus is wild. Surely we will see more pain in the oil markets. 

 

 

This was something that was predictable long ago. OPEC has been signaling such for a while. The current President ran on keeping prices down and loves talking about low gas prices. That energy investors think a President like him is good for them is quite amusing.

[SharperDingaan]

Grey swan around EIA reporting ....

 

The US shut down has resulted in quite a few government workers not getting paid. Engagement is minimal, data isn't getting collected/submitted on time; many are simply waiting for their terminations and unemployment claims before they retire. Weekly reporting (EIA reports) still goes out the door .... but without the usual rigour.

 

US propane inventory showed a very large build this week .... just when it's cold/wet in the heartland, and the propane fuelled dryers are going flat out to dry harvested grain before it goes to storage ..... and there are actually heavy draws on propane stocks.

 

It would appear that two data streams go into this report; injections from producers/imports etc. .. and deliveries via the various distribution channels. Supposedly, one of those streams was corrupted. Where there is one cockroach .... there are usually others 

 

Opportunity! 

 

SD

 

 

Edited October 31, 2025 by SharperDingaan

[Dalal.Holdings]

https://foreignpolicy.com/2025/11/07/trump-maduro-venezuela-democracy-intervention/

 

https://www.latintimes.com/maduro-reportedly-open-leaving-venezuela-exchange-amnesty-comfortable-exile-report-591357

 

Quote

Venezuela's authoritarian President Nicolas Maduro would be open to leaving power in exchange for amnesty for him and his lieutenants, the lifting of the bounties on his head and a comfortable exile, according to a new report.

 

If the U.S. achieves a smooth regime change in Venezuela (the rightful ruler/Nobel Peace Price winner would take over), what does that mean for oil supply in the medium term? My guess is probably more downward pressure on oil prices...

 

Chevron would probably be back in a heartbeat...

https://www.reuters.com/sustainability/chevron-terminates-contracts-will-keep-staff-venezuela-sources-say-2025-05-28/

 

In fact, I think this prospect is probably a key reason Venezuela is drawing so much attention from Trump...

 

Edited November 10, 2025 by Dalal.Holdings

[Jaygo]

Posting this up. https://www.a16z.news/p/gas-fired-intelligence-part-2    I thought it was a great primer on the electricity and power situation developing under the growth of LNG and Data Centres. Despite all the talk of AI and the insane capex the fact is we are very early on in the development and power usage. LNG in Canada is literally in the first inning and most of the huge AI data centres are barely drawing power yet. 

Lets take a full buildout of Hyperion drawing some 750 Mcf/day, that alone is equivalent to 20% of tourmalines daily production. One data centre drawing the equivalent of 20% of Canada's largest gas producer's daily production is absolutely nuts. Naysayers will point to the scale of data centres being inflated and Hyperion will never see full buildout. I would paraphrase our WB and say I don't need to know how much someone weighs to see they are fat. I know a lot of power usage when I see it and I don't think the hyper scalers are spending billions only to let them sit idle 10 years from now. We are talking massive power usage for decades. My gas equities are starting to reflect that new demand but are only taking into account 10 years of usage based on their prices and reserves. 

 

The idea of energy translating into quality of life and projected world power is my investment thesis on gas. This has developed into having a high percentage of my portfolio in Canadian gas companies and pipelines. It has took the better part of two years with much averaging down lol. I am now around 20% natural gas weighting and I feel like I am set up really well for the 2030s to make very very high returns. I fully expect the roller coaster to continue and will not sweat another 50% drawdown in these equities should the global economy worsen

 

So if gas prices remain here in the basement the equities will do decent, say 6-8% per year based on the price to cash flow at damn near free AECO gas. That's my base case and I can live with it. I think the prices will likely rise to somewhere that better reflects the global prices due to LNG exports thus turning these gas plays into cash cows. My best guess is the market wakes up to this by 2030 and by 2035 I have 10x my money.

 

 

 

[lnofeisone]

23 hours ago, Jaygo said:

Posting this up. https://www.a16z.news/p/gas-fired-intelligence-part-2    I thought it was a great primer on the electricity and power situation developing under the growth of LNG and Data Centres. Despite all the talk of AI and the insane capex the fact is we are very early on in the development and power usage. LNG in Canada is literally in the first inning and most of the huge AI data centres are barely drawing power yet. 

Lets take a full buildout of Hyperion drawing some 750 Mcf/day, that alone is equivalent to 20% of tourmalines daily production. One data centre drawing the equivalent of 20% of Canada's largest gas producer's daily production is absolutely nuts. Naysayers will point to the scale of data centres being inflated and Hyperion will never see full buildout. I would paraphrase our WB and say I don't need to know how much someone weighs to see they are fat. I know a lot of power usage when I see it and I don't think the hyper scalers are spending billions only to let them sit idle 10 years from now. We are talking massive power usage for decades. My gas equities are starting to reflect that new demand but are only taking into account 10 years of usage based on their prices and reserves. 

 

The idea of energy translating into quality of life and projected world power is my investment thesis on gas. This has developed into having a high percentage of my portfolio in Canadian gas companies and pipelines. It has took the better part of two years with much averaging down lol. I am now around 20% natural gas weighting and I feel like I am set up really well for the 2030s to make very very high returns. I fully expect the roller coaster to continue and will not sweat another 50% drawdown in these equities should the global economy worsen

 

So if gas prices remain here in the basement the equities will do decent, say 6-8% per year based on the price to cash flow at damn near free AECO gas. That's my base case and I can live with it. I think the prices will likely rise to somewhere that better reflects the global prices due to LNG exports thus turning these gas plays into cash cows. My best guess is the market wakes up to this by 2030 and by 2035 I have 10x my money.

 

 

 

What equities are holding for this play? I've have (evershrinking) VET and PEYUF. VET accumulated an insane amount of gas acreage. 

[formthirteen]

44 minutes ago, lnofeisone said:

What equities are holding for this play? I've have (evershrinking) VET and PEYUF. VET accumulated an insane amount of gas acreage. 

 

Gas turbine manufacturers and shale gas?

 

This interview with the U.S. Energy Secretary, Chris Wright has some numbers on what is needed to compete with China in AI:

 

 

Spoiler

100 gigawatts of new capacity needed in the next 5 years:

• 50 gigawatts for data centers alone
• 50 gigawatts for reshoring manufacturing and other demand

But the total swing is actually 178 gigawatts:

The previous administration planned to:

• Shut down 100 gigawatts of existing firm capacity
• Add only 22 gigawatts of new capacity
• Net result: minus 78 gigawatts

Wright's new trajectory requires:

• Stop closing the 78 gigawatts (save existing plants)
• Add 100 gigawatts of new capacity
• Total U-turn: 178 gigawatts

 

[Jaygo]

Holding Topaz, Tourmoline, Arc, Pembina, whitecap, Pinecliff, and Logan in that order of weighting

 

As far as energy in general and related industries I also hold Strathcona and GFR and further afield from energy but still related i hold Velan, Terravest, Aecon and Exchange income Corp

[lnofeisone]

Thanks both. I'll watch the video. I also have some GEV (through wife's accounts). I do think Canadian gas is going to be a big theme 2028-2029 and positioning now makes sense. I just need to get over the VET debacle mentally as it hasn't played out as I hoped. 

[Jaygo]

Just now, lnofeisone said:

Thanks both. I'll watch the video. I also have some GEV (through wife's accounts). I do think Canadian gas is going to be a big theme 2028-2029 and positioning now makes sense. I just need to get over the VET debacle mentally as it hasn't played out as I hoped. 

 

I'm not sure you need to rush out and buy tomorrow, this is a long term trend anyway. I feel I got lucky in that i started buying a couple years ago and have the benefit of getting to average down small positions while doing research and getting a feel for who has the best acreage and management. Most recently i really increased the weightings in Topaz and Arc in the 24's and I feel those are really good places to be. Good value today but who knows it could be way cheaper next summer depending on weather and macro. 

 

My feelings are that all this stuff is going to slowly build so the industry has a solid tailwind but we will surely experience lots of hiccups. Aeco was negative just this past summer.

 

If you look out and see coal to gas switching, Sagd increasing, LNG exports and AI data centers you kind of cant help but see better gas pricing in western Canada and that's the big thesis. We go from the producers getting average AECO pricing of $1.50 CAD to somewhere closer to $ 6.00 or the bull case $ 8.00 per AER 2035 forecast and these companies who are earning good cash flow today become wildly profitable just like the gold companies are currently. 

 

The major bull would look at the possible gas prices and then factor in the idea of a company who earns 5 cents selling something at 1 dollar does not double their profits when the product doubles in price. they 20x their profits. The silver liner in investing in low cost operators in tough businesses. 

 

The conservative like myself would say the second realized gas prices go up so do the inputs so this will be tempered by frac sand increasing, rig rates increasing, labour and royalties and knowing Canada some other wildly stupid Government treachery all increasing along side gas prices so I am factoring a 5x in equities and 10 years of increased dividends. 

 

 

 

 

[SharperDingaan]

It's a solid thesis ... but a couple of caveats.

 

Gas pricing (& news headlines) are local, not global. WCSB gas is so cheap because there is ever increasing associated depletion related supply, limited egress, and only one big user (oil sands). Add to it than when a shale formation is not water flooded, a higher gas cut typically replaces the lower oil/ngl cut; and all that gas clears via a discounted price. Increase egress (via LNG export), there is less domestic supply to clear, and it sells at a higher domestic price.  As LNG sells at the much higher world price less transport cost less marketing discount; anything > domestic price is a pure value add to the patch.

 

Nukes will replace oil sands gas usage (the major CO2 source) as soon as it is practical. Most would expect the displaced gas to flow out via additional LNG exports, and oil sand profitability to rise as CO2 emissions materially decline. Hence, all of the BC dredging (tankers now loading to 100% vs 70% capacity), the tidewater LNG pipe, and Alberta/Sask CO2 pipe (Pathways Alliance), are game changers. Great future for WCSB.

 

Different story in the Permian. There is too much gas for the existing egress, it is significantly increasing as shale depletes, and without a big new user ... there will be more occasions when it is cheaper to simply flare versus transport it. Same commodity, different story line, but different location.

 

Good luck.

 

SD

       

Edited November 24, 2025 by SharperDingaan

[Eng12345]

On 11/23/2025 at 10:46 AM, Jaygo said:

 

I'm not sure you need to rush out and buy tomorrow, this is a long term trend anyway. I feel I got lucky in that i started buying a couple years ago and have the benefit of getting to average down small positions while doing research and getting a feel for who has the best acreage and management. Most recently i really increased the weightings in Topaz and Arc in the 24's and I feel those are really good places to be. Good value today but who knows it could be way cheaper next summer depending on weather and macro. 

 

My feelings are that all this stuff is going to slowly build so the industry has a solid tailwind but we will surely experience lots of hiccups. Aeco was negative just this past summer.

 

If you look out and see coal to gas switching, Sagd increasing, LNG exports and AI data centers you kind of cant help but see better gas pricing in western Canada and that's the big thesis. We go from the producers getting average AECO pricing of $1.50 CAD to somewhere closer to $ 6.00 or the bull case $ 8.00 per AER 2035 forecast and these companies who are earning good cash flow today become wildly profitable just like the gold companies are currently. 

 

The major bull would look at the possible gas prices and then factor in the idea of a company who earns 5 cents selling something at 1 dollar does not double their profits when the product doubles in price. they 20x their profits. The silver liner in investing in low cost operators in tough businesses. 

 

The conservative like myself would say the second realized gas prices go up so do the inputs so this will be tempered by frac sand increasing, rig rates increasing, labour and royalties and knowing Canada some other wildly stupid Government treachery all increasing along side gas prices so I am factoring a 5x in equities and 10 years of increased dividends. 

 

 

 

 

I've been thinking along the same lines, though I'm not sure Canadian natural gas is the best way to play it. 

 

It's truly staggering the amount of LNG capacity being built off on the US gulf coast. As @SharperDingaan notes pricing is very localized for natural gas.

 

I'm pretty uninformed on the nat gas pricing dynamics, but I'm of the understanding that once the LNG capacity is built out because of the large supply base it won't necessarily result in higher Permian prices either. So permian producers don't seem like an obvious play. 

 

I am an owner of some of the LNG builders (though small positions VG and NEXT) but not because I expect higher LNG spot prices (I expect lower) rather I think the market over estimates the risk in building these facilities with proven contractors and doesn't credit the forward cash flows enough. 

 

Perhaps LNG tanker operators is the obvious play, but I doubt that's easy money as it seems the fleet is already scheduled to double to match the supply. 

 

What I do know is this - Serious trouble for coal producers. After all it wasn't environmental regulations that "killed coal" rather the prevalence of cheap natural gas. 

 

Edited November 30, 2025 by Eng12345

[SharperDingaan]

Lots of opportunities, but experience/strategy should drive the choice ....

 

> Most all of the engineering on these projects will be Canadian .... benefit via engineering employment.

> Pipeline, wires, carbon capture ... utilities for their income to service a growing family/mortgage.

> Oil sands, small/mid caps ... the big gains funding the RRSP/TFSA/etc and paying off the mortgage. 

 

Keep in mind that the existing Trans Mountain Pipeline corridor houses 2 pipelines; the 300K b/d 1953 pipe, and the 590K b/d 2025 pipe. It is highly likely that the new 1,000K b/d pipe is actually a rip out and replace of the existing 1953 pipe .. with a 2nd new pipe of 700K b/d + related loops. Continuation of existing permitting, transit in an existing corridor, and the main environmental concern being around how the hazardous old 75 year pipe is removed/recycled; hard for an environmentalist to argue against.

 https://en.wikipedia.org/wiki/Trans_Mountain_pipeline

 

Then keep in mind that down the road, a success could well result in smaller dimension additional pipe in the same corridor. State of the art refining has moved to Asia; and security of supply dictates existence of an alternative NA large scale state of the art refinery. Alberta/Sask is an obvious choice, with new pipe carrying refined product.

 

SD

 

 

  

 

 

Edited December 1, 2025 by SharperDingaan

[Jaygo]

19 hours ago, Eng12345 said:

I've been thinking along the same lines, though I'm not sure Canadian natural gas is the best way to play it. 

 

It's truly staggering the amount of LNG capacity being built off on the US gulf coast. As @SharperDingaan notes pricing is very localized for natural gas.

 

I'm pretty uninformed on the nat gas pricing dynamics, but I'm of the understanding that once the LNG capacity is built out because of the large supply base it won't necessarily result in higher Permian prices either. So permian producers don't seem like an obvious play. 

 

I am an owner of some of the LNG builders (though small positions VG and NEXT) but not because I expect higher LNG spot prices (I expect lower) rather I think the market over estimates the risk in building these facilities with proven contractors and doesn't credit the forward cash flows enough. 

 

Perhaps LNG tanker operators is the obvious play, but I doubt that's easy money as it seems the fleet is already scheduled to double to match the supply. 

 

What I do know is this - Serious trouble for coal producers. After all it wasn't environmental regulations that "killed coal" rather the prevalence of cheap natural gas. 

 

 

My gas idea is to take advantage of the local pricing becoming more regional or global. Many of the Canadian gas names sell into the very cheap AECO. With more domestic use and higher export capacity you are giving these companies outlets to higher pricing. I'm not expecting a rocketship to $14.00 gas like in Japan or TTF but some minor divergence will bring massive gains in profitability. Even if average realized prices increase to say $4.00 vs the $ 2.70 5 year average you are talking about a 3 fold increase in cash flows ( all rough numbers btw ) 

 

Remember when gold was 2k and oil was $ 80.00 good companies has AISC of $1300 an OZ . In 4 years gold has moved to $4K and oil to $60 and good companies have an AISC of $ 1300 an OZ. Prices doubled but profits did not. And more importantly their share prices did not merely double either. Profits went from 700 an OZ to 2700 an OZ or almost 4X in profitability and the companies with the largest reserves are now being evaluated at this level of profitability so have 5-10X in price per share. This is my sometime in the next 10 years forecast for Canadian gas, so today I just lie in wait clipping decent dividends paid out at some of the lowest average energy prices in history. 

[SharperDingaan]

16 minutes ago, Jaygo said:

 

My gas idea is to take advantage of the local pricing becoming more regional or global. Many of the Canadian gas names sell into the very cheap AECO. With more domestic use and higher export capacity you are giving these companies outlets to higher pricing. I'm not expecting a rocketship to $14.00 gas like in Japan or TTF but some minor divergence will bring massive gains in profitability. Even if average realized prices increase to say $4.00 vs the $ 2.70 5 year average you are talking about a 3 fold increase in cash flows ( all rough numbers btw ) 

 

Remember when gold was 2k and oil was $ 80.00 good companies has AISC of $1300 an OZ . In 4 years gold has moved to $4K and oil to $60 and good companies have an AISC of $ 1300 an OZ. Prices doubled but profits did not. And more importantly their share prices did not merely double either. Profits went from 700 an OZ to 2700 an OZ or almost 4X in profitability and the companies with the largest reserves are now being evaluated at this level of profitability so have 5-10X in price per share. This is my sometime in the next 10 years forecast for Canadian gas, so today I just lie in wait clipping decent dividends paid out at some of the lowest average energy prices in history. 

 

We do a similar thing around small/mid cap SAGD oil sands extraction. Today's players benefiting from expanding production, lower differentials and eventual acquisition by larger players. In the meantime, there's a healthy cash dividend and ongoing share buybacks to help with taking your capital back.

 

SD

 

[Jaygo]

I did not expect such a ramp in forward gas pricing like this to happen this fast. Obviously the cold snap is responsible and by next summer we will be back to low gas prices. More importantly for anyone interested we get to see the cash flow potential of some of these companies. Most are hedged so the torque won't be fully apparent but we will now get a little look into future cash flows 

 

AECO sits just over 3 cad, it was negative this summer

 

This little bump in prices will surely dissipate just as quickly as it arrived but the thing i'm banking on is that in 5-7 years time todays prices are the average and the lows and highs are meaningfully higher than the past couple years.

[NnnnotSoSmart]

Doomberg can be an interesting listen.

 

Doomberg Predicts Global Energy Shift in 2026!

 

"Doomberg, our resident energy expert behind one of Substack’s top financial newsletters, returns to In It To Win It with Steve Barton to deliver a sharp, data-driven look at global energy, economic stability, and geopolitics. He explains why the world is currently awash in hydrocarbons, with oil drifting toward a long-term equilibrium of 55 dollars per barrel and coal showing minimal movement. Natural gas, however, is gaining momentum as AI-fueled demand from new data centers begins shifting to regions like the Permian Basin.

 

Doomberg breaks down how this rising demand for gas could paradoxically drive oil prices lower due to the economics of co-produced hydrocarbons in shale drilling. Doomberg makes the case that the United Kingdom is becoming a failed state, struggling with energy dependency, industrial decline, and internal unrest. He raises the possibility of a behind-the-scenes peace deal between the United States and Russia that could bypass Ukraine entirely, reshaping the geopolitical landscape. The episode wraps with a discussion on how advancements in deepwater drilling are unlocking new reserves and why the long-term trajectory of oil prices is downward in real terms. Viewers interested in global energy trends and macro investing are encouraged to like, share, and subscribe for more expert interviews."

 

 

 

Edited December 5, 2025 by NnnnotSoSmart

[jfan]

@NnnnotSoSmart There was a podcast (Thoughtful Money with Adam Taggart) January 2024 with Doomberg and Gorozen discussing peak cheap oil which was really interesting. Doomberg was arguing cheap oil for longer and G&R was arguing the opposite. The difference really had to do with time horizon. They both think there is plenty of global reserves that can be mobilized relatively easily if the politics get out of the way. After a couple years, looks like Doomberg was more correct but worthwhile reading G&R latest paper, which discuss their modeling errors on the permian wells.  

[thowed]

I'm. not familiar with Doomberg, but by the name, presumably he's always bearish?  Or not?  I struggle when you know in advance what the person's view is. 

[jfan]

not sure. I've heard of his name in the past but never really paid attention. I think he focuses on energy and geopolitics. Pretty active on X, and runs a consulting/media business. 

 

I thought the debate was actually decent. It was cordial, professional, factual. Not sure if he is a permabear, but it didn't come across so. He did mention he invested in an AI start-up, so maybe not so bearish in our brave new world.