The coronavirus outbreak and the effects of COVID-19 have gone deeper and wider than most people would have expected. That applies just as much to markets as anywhere. Whether it’s a tech sector that is supporting our new work from home or re-rating as expensive EV/Sales multiples make less sense; a healthcare industry under the spotlight to find a vaccine, a cure, or provide treatment to patients; or various parts of the financial sector that have shown acute strain as the economy goes into the freezer for a few weeks, at least, there are no real safe havens or quiet zones.
We shared a three-part Marketplace Roundtable a week ago that covered the immediate reaction and the high-level takeaways. But as news moves faster than ever, it’s become clear that this is going to be a long-term issue and needs more review. So, we will be assembling regular roundtables on specific sectors and topics to share Marketplace authors’ insights on what’s going on and how they are handling it.
We start with the energy sector, which has been one of the hardest-hit sectors. As if the drying up of demand from the economic shutdown wasn’t bad enough, the sector also took a hit when Russia and Saudi Arabia ignited a price war. The 2014-15 lows look attractive compared to the current climate. Does that mean it will stick? And what should investors focus on? We asked the following panel of energy-focused authors for their thoughts:
- Michael Boyd, author of Energy Income Authority
- Long Player, author of Oil & Gas Value Research
- Laura Starks, author of Econ-Based Energy Investing
- Laurentian Research, author of The Natural Resources Hub
- Andrew Hecht, author of Hecht Commodity Report
- KCI Research Ltd., author of The Contrarian
- Power Hedge, author of Energy Profits in Dividends
- The Value Portfolio, author of The Energy Forum
Seeking Alpha questions are in header font, and disclosures for each author are at the end of the article.
Michael Boyd, author of Energy Income Authority: Yes and no. I do not think it was either the Saudi or Russian intent to send oil down to the $20.00/range, and there is a happy medium where both can “punish” shale and yet not impact the balance of their fiscal budgets. I think we’ll see them walk back the aggressive stance, especially given the COVID-19 outlook, but not so far as to step off of shale’s neck altogether. For either to make their point, the pressure has to extend into 2021 where most shale E&Ps are unhedged.
Long Player, author of Oil & Gas Value Research: Saudi Arabia probably cannot. But you really have a war between two egos here. Once both players get over themselves, then there may be a sensible solution.
Laura Starks, author of Econ-Based Energy Investing: The two countries can maintain their positions long enough – from three to six months – to decimate the small companies in the U.S. shale industry, which is Russia’s intent. (Saudi Arabia tried the same tactic in 2015-2016, but U.S. capital markets came to the rescue then. They won’t this time.) Both countries, especially, Russia, want to regain market share from U.S. shale. It is likely they will because both have lower production costs than does U.S. shale.
Laurentian Research, author of The Natural Resources Hub: I believe Russia can sustain the oil price war longer than Saudi Arabia thanks to its diversified and sanction-tested economy. Both countries may soon realize they have been squabbling over mere 1.5 MMbo/d cuts while the coronavirus-induced demand shock may be 10X worse. Barring a war or a coup d’etat;tat in the Mideast, OPEC and Russia will have to return to the negotiation table eventually, because none of them can sustain lost oil revenue of such a great magnitude.
Andrew Hecht, author of Hecht Commodity Report: I believe they did not count on the current crisis. Behind the scenes, I would not be surprised to see the world’s leading oil-producing nations, the US, KSA, and Russia, word out a deal as these are unprecedented times.
KCI Research Ltd., author of The Contrarian: I think both countries, meaning Saudi Arabia and Russia, have the wherewithal to continue their market share grab for longer than the market thinks right now. Now, both countries do not want these lower oil prices indefinitely, however, they are willing to take the short-term pain to put the nail in the coffin of U.S. shale 2.0, specifically U.S. shale oil assets. Importantly, U.S. shale oil assets cannot compete on a global basis, as we are seeing now, while the best U.S. shale gas assets are true world class assets and can compete on unrestricted global pricing.
Power Hedge, author of Energy Profits in Dividends: Following the energy crash in 2014, Russia changed its government budget to be much less dependent on oil prices than Saudi Arabia did. Saudi Arabia needs prices to be in the mid-80s before its Federal Budget starts hurting. Russia can withstand prices much lower than that. Russia might be able to withstand it, and I believe that this is their goal. By keeping oil prices this low, Russia plans to get revenge on the United States for the sanctions (which have not hurt it very much) and wipe out American shale and hopefully the Saudis while they’re at it.
The Value Portfolio, author of The Energy Forum: Both countries definitely cannot maintain this stance, although Russia’s diversified economy can allow them to maintain it much longer than Saudi Arabia. I expect the long game to involve some shale bankruptcies, so that each can feel like they won, before they announce a production cut. Saudi Arabia was willing to negotiate before and is definitely willing to come back to the table.
Michael Boyd: At sub $30.00/barrel, long term is little to no viability. $40.00/barrel, a case can be made for much of the core acreage in the major basins, particularly the Permian and Eagle Ford. But those inventories are not long lived and pricing will have to rise over time. But I think the point to be made here is no one expects sub $30.00/barrel to be the norm. At least as of this writing, while front month pricing is $24.00/barrel, $30.00 barrel is indicated on the futures curve by October, likely due to the view that COVID-19 demand impacts normalize then and inventories will cease building at the rate they are.
Long Player: This depends upon the company. There are many strong significant companies out there. You have to remember that companies like ConocoPhillips (COP), Exxon Mobil (XOM), and Chevron (CVX) all have significant investments in unconventional. None of them are in any danger, and they are a significant part of the industry. Even smaller ones like EOG Resources (EOG) have great balance sheets. Plus, there is a huge difference between well breakevens and corporate breakeven. Many wells at $40 do decently, so there will be cash flow for the corporation.
Laura Starks: Yes, but not all shale companies and not at the current 13 MMBPD of production. Volumes will fall because capital budgets have on average already been cut 40% relative to 2019 and shale declines quickly. However, as analysts point out, Permian rock isn’t going anyplace. The reserves will be there, whether they are produced next month or in five years.
Laurentian Research: No, the US shale producers cannot survive sustained WTI price below $40. They already started to cut 2020 capital budget. They will announce bankruptcies and massive layoffs soon. Shale production will crash, naturally or through production curtailment mandate by the Texas RRC.
Andrew Hecht: No, but the current administration views energy production a matter of national security. Equity could be wiped out, but the leading companies may survive with government assistance.
KCI Research Ltd.: U.S. shale oil cannot survive at sub $30 $WTIC oil, and only the best operators can survive at sub $40 oil. Going further, if low oil prices continue, we will lose all the liquids production growth accumulated in the U.S. since 2016. In contrast, the collapse in oil prices is extremely bullish for U.S. shale gas companies, and we saw this real-time, with the largest U.S. shale gas producer, EQT Corp. (EQT), surging 49.1% during the week that oil prices had their worst single day since 1991, on Monday, March 9th, 2020, and oil equities had their worst day and week in modern market history. Long story short, the leading domestic natural gas producers are the primary beneficiary of the collapse in oil prices as I wrote about in this recent article.
Power Hedge: No.
The Value Portfolio: US shale can definitely survive sub $40/barrel pricing, especially for the majors. Exxon Mobil has reported Permian Basin breakevens at $15/barrel thanks to its efficiency. Occidental Petroleum has lowered its breakeven to low-$30 / barrel. American companies are always finding ways to lower costs even further. However, a prolonged stretch will definitely cause many bankruptcies in the sector.
Michael Boyd: Demand impact forecasts here shift day to day. While I think investors are a little spooked with how things are proceeding here in the West, lower demand here will be partially offset as China, Korea, and Japan get back to a more normalized environment. Personally, I view this is a couple quarter deal, and while it will disrupt the economy, 2021 ought to be a fairly normal year, all things considered. There will be some aftershocks (e.g., inventory builds will have to get absorbed), but I’m not in the camp that this is a long-term issue, at least beyond the fact that governments will have to better prepare for the inevitability that this happens again.
Long Player: If any history of SARS and the like are to be considered, this bug should not be an issue within a few months. That means that the second half of the year will be a recovery period. Now, there certainly can be significant differences to that scenario. But for now, I am going with history until its proven otherwise. Yes, I am aware that some are saying POSSIBLY as long as 18 months.
Laura Starks: Absolutely enormous. Saudi Arabia and Russia seem to have believed that, given normal oil elasticity of demand, much increased supply (say 5 MMBPD) leading to price cuts will stimulate increased demand. Au contraire. What’s reduced demand is government actions worldwide: government shutdowns of ENTIRE economies over coronavirus containment and mitigation. Trillions of dollars.
Laurentian Research: I think the coronavirus-induced oil demand decline has been underestimated. The oil price war is the repercussion of a failed attempt to respond to the negative impact of the virus with a 1.5 MMbo/d cut. But 2Q2020 crude oil demand is now projected decrease by 10-20 MMbo/d, thanks to a recession. That’s 1-2 Bbo surplus looking for storage, which can drive the price of some oil below zero.
Andrew Hecht: The world’s economy has ground to a halt. Demand destruction is ubiquitous.
KCI Research Ltd.: No question, demand destruction is going to be unbelievable, as we see already from what has happened in China, and now in Europe, with the U.S. behind their peers in the spread of COVID-19, though the catch-up has been quick. Watching China’s recovery in demand is going to be a key factor to keep track of right now, in my opinion, to try to quantify how long demand destruction persists. Importantly, natural gas demand has not been impacted nearly as much, as people are still using power, heat, and cooling in their homes, and this highlights the fact that we are in the immediate inflection point of a secular bullish shift on the entire natural gas sector.
Power Hedge: Minimal. This will not be a long-term problem. Demand for oil will return as soon as the nationwide quarantine is lifted. We may even see more demand for oil as all the pent-up demand for traveling resurfaces among Americans.
The Value Portfolio: COVID-19 is definitely the largest source of demand drop, and I don’t expect that to change for the next several months. However, with that said, many companies can handle a few months downturn, and I expect this demand drop will begin to recover after 3-4 months. At that point, markets will begin to recover, potentially rapidly as the drop in production has a larger effect on the markets.
Michael Boyd: Highly relevant. Everyone needs capital markets access, even if they are free cash flow positive. Debt has to be rolled as it comes due, and that has to be done at rates that are reasonable. This is true of any company in our economy. Granted, some shale plays got credit even with poor well economics, and those will fold. But, that’s all part of the process.
Long Player: Several companies such as Baytex (BTE) and Laredo Petroleum (LPI) (as well as dry gas producer EQT) did a fair amount of refinancing before this hit. As to whether or not this is the nail in the coffin, the ones you need to worry about are the ones that were in big trouble before this hit. Notice that California Resources (CRC) was in big trouble before all this, and this may do it in. Plus, it is not even an unconventional producer. Other likely candidates are Denbury Resources (DNR) and Unit Corporation (UNT). Of those three, only Unit is an unconventional producer. Therefore, the headlines as usual have things a little bit different than reality.
Laura Starks: Capital markets carried oil and gas through the last downturn in 2015-2016, but private equity and banks have since fled the sector due to its poor returns. Many smaller companies merged, strengthened their balance sheets, and hedged production, but the lack of capital availability in the very capital-intensive ‘manufacturing mode’ for shale has and will hurt generally. This time, it could wipe out or force mergers of remaining debt-heavy companies. And when equity shrinks as much as it has, many more companies can become debt-heavy.
Laurentian Research: Somewhat irrelevant for this year. The equity market has been completely closed to the oil companies even before the current malaise. The weaker oil producers will probably fold in the next few months. With budget cuts, fire sale of assets, layoffs, hedging, and revolving credit facilities, most companies will survive to the next year, when they run into the 2021 debt wall. If the financial market does not improve by then, there will be a second wave of defaults. Simply put, this is armageddon for the U.S. oil producers.
Andrew Hecht: The nail in the coffin is for equity holders, not necessarily for the companies.
KCI Research Ltd.: U.S. shale 2.0 was already rolling over, before the widespread outbreak of COVID-19, and the Russia/Saudi Arabia oil war. The proverbial debt wall was fast approaching. The impact of the combined demand shock (COVID-19) and the supply shock of the oil war, which together, alongside the broader stock market decline, have collectively caused a historic spike in bond yield spreads, putting the final nail in the coffin of U.S. shale oil.
Power Hedge: Any company that needs to go to the markets is in trouble. This is a problem for things like Tesla (TSLA), and it is why I suspect Elon Musk is releasing constant tweets about the coronavirus being a scam. None of the midstream MLPs are in this boat. Their sell-off was totally unwarranted. They changed their business models in 2015 so that they don’t have to depend on the capital markets anymore.
The Value Portfolio: Financial markets are definitely concerned, but they’re also being fed (no pun intended) liquidity like candy. Bankers aren’t unintelligent, for the most part, and given how low interest rates are, most will jump on the chance to issue debt at 4-5% to a company they’re confident can pay it back.
Michael Boyd: I think natural gas was oversold to begin with, but I think the pop based on lower associated gas production was a bit premature. Production in the Permian is just expected to flat line and not grow at this point in 2020; that is not enough to change the math. And, as shale wells age, they produce more natural gas as well. There are still some tough choices that have to be made by the dry gas players to respond to this environment.
Long Player: Obviously, the scenario is long-term bullish for natural gas. It looks like the long delayed natural gas rally has finally begun.
Laura Starks: After the announcement and the expectation that U.S. oil production would decline in the face of excess supply, many concluded this would take pressure off natural gas – so to speak – since less oil-associated gas would be produced. However, the coronavirus demand drops are a bigger factor: key markets for U.S. natural gas are LNG exports and utility generation. LNG demand is down. It will return at some level as overseas business, especially in Asia, returns. Utilities are more problematic. They tie in directly to their regional economies. With so many people staying home from work and school, residential gas and electricity use is up but commercial and industrial use is way down, much more than offsetting the gains in residential use.
Laurentian Research: The market cheered the anticipated decline in associated gas output as a result of the supposed decrease in shale oil production. But North America has too much natural gas even if associated gas drops significantly. Globally, it is a buyer’s market with or without North American natural gas. So, the picture looks gloomy for natural gas in the long run.
Andrew Hecht: Gas is also in trouble as demand is falling at a time when stocks are at the highest level in years. Natural gas spiked in risk-off because speculators were on the short side of the market. As the number of shorts declined, the price fell to the lowest level since 1995. Natural gas production could decline as debt-laden companies cut output. Eventually, it will reach a bottom, and slowing production could hasten that process.
KCI Research Ltd: Natural gas is the prime beneficiary of everything that has happened. Again, U.S. natural gas production and U.S. liquids production were both rolling over prior to COVID-19 and the Russia/Saudi oil war. These two events served to amplify the trend already in progress. Specifically, Wall Street research shops like Morgan Stanley (MS) and Goldman Sachs (GS) had long-term bearish natural gas price forecasts, and this was due primarily to the assumed growth of associated gas production from the byproduct on increased U.S. oil production. This narrative was dying, and it is now effectively dead. A market participant can monitor this by observing the longer-term natural gas futures prices, which have been slowly increasing.
Power Hedge: There has been one constant trade in the energy markets for the past several years. It was long oil and short natural gas. That may have been unwound following the Saudi/Russia announcement and what we saw was simply traders unwinding their positions. This will not hold long term. The long-term future of natural gas is better than that of oil simply because of the fears of climate change. Countries all over the world have been working to reduce carbon emissions, and one easy way to do that is to convert to natural gas and away from oil.
The Value Portfolio: Natural gas is important not just in its pricing but in its customers and how it ties to the oil supply chain. For example, Utica natural gas, a significant percentage of which goes to provide power on the Northeast cost, will likely not see demand decrease. In fact, people spending more time at home could cause demand to even increase. Companies that are intrinsically tied into this process, that have strong contracts with utilities, like Williams Companies (WMB) (98% fee-based cash flow) can benefit from this. However, alternatively, a significant amount of natural gas is subsidized by oil production from the same wells – so this is also important to keep in mind – very few producers are pure natural gas based.
Long Player: Until there is proof of long-term damage remember Louis Rukeyser’s (from the show “Wall Street Week”) famous saying about the market getting “11 of the last 7 recessions correct”. This market was juiced by a very poor execution of a tax cut when the economy was going full blast. That enabled far more speculation and “froth” as the accompanying larger budget deficit stimulated an economy already near full employment and the cyclical peak. Economics 101 will tell you what will happen after that, and we had a good example back in 2008. Now, the oil price war and the coronavirus exposed things before they got to the point of 2008. Let’s see if we can fix it or we are determined to rerun 2008. The whole conversation has a lot more involved than that simple start. But we need to straighten ourselves out before we repeat a bad mistake. We could get out of this and be on the way to recovery by the second half of the year. The question is will we finally begin to be consistent as a country?
Laura Starks: Utilities have done well in the last year, but investors should back away from them until the coronavirus-reduced demand fallout is known. With stock prices so much lower, companies that pay dividends (and, importantly, can sustain them) merit another look. Partnership distributions are very strong, of course, but I give my usual caveat about tax issues for individual investors. In the energy sector, high dividend yields at Friday’s closing prices include BP (BP) at 14.5%, The Williams Companies at 13.9%, Marathon Petroleum (MPC) at 12.2%, Valero (VLO) at 10.1%, Chevron at 8.7%, and ConocoPhillips at 6.3%. I also like west Texas producer Diamondback Energy (FANG), which is waaay off its highs and is yielding 8.1%. With yields so much above treasuries, we have a good indication that the market is pricing in considerable risk. Small oil-patch companies that don’t pay dividends may also be incredible bargains – the challenge is that some of them, like indebted Callon Petroleum (CPE), may drop off the map at less than $1/share. Among these small companies, I like Magnolia (MGY), among others. Investors should note that Magnolia’s CEO, Steve Chazen, formerly the CEO of Occidental, has been recalled to Occidental as its new board chairman, presumably to assist (his hand-picked) CEO Vicki Hollub through its debt challenges. Chazen is keeping his job at Magnolia, however.
Another factor investors may miss is that while low oil prices usually help consumers and refiners, this time, the demand drop is so substantial it doesn’t matter if one is making gasoline, jet fuel, or petrochemicals – refining margins are shrinking because the end product prices are falling. Investors should keep this in mind for refiners like Marathon Petroleum, Valero, Phillips 66 (PSX), HollyFrontier (HFC), and Delek (DK). Delek faces two other interesting issues: one of its primary retail markets – west Texas area near Midland – is slowing down dramatically due to the reduced oil drilling activity, and Carl Icahn has just bought 15% of the company’s stock.
Laurentian Research: I have been trying to inform The Natural Resources Hub community members about the possibility of a one-two punch and an ensuing KO as far as energy investing is concerned. Beware of another round of oil price crash, once demand dry-up hits the oil market in the 2Q and 3Q(?), which can eliminate starry-eyed permabulls. Having survived the first 60% of oil price decline, you don’t want to be wiped out in the next 60% rout. So, protect your principal before thinking about any profit making.
Andrew Hecht: Keep stops tight and expect the unexpected. During an unprecedented period, anything can occur. If the US, KSA, and Russia cannot coordinate, we could see oil even lower. In natural gas, fundamentals will locate the bottom. The key take-away to remember is that US energy companies may survive, but equity shareholders could be left holding the bag with no value left.
KCI Research Ltd: Everything that most investors thought they knew about the energy complex, and really the broader markets, has changed. Energy was already a historically small component of the S&P 500 Index, and most current energy investors have been focused on yield, through the major integrated energy companies, pipeline operators, and related companies. However, there were hidden risks in these strategies that are now becoming apparent, as energy markets recalibrate pricing based on new supply and demand inputs. Bottom line, natural gas, which has been in an epic roughly 14-year bear market, and is the most contrarian investment and speculation in the entire energy sector, a contrarian idea even among contrarian investors, is poised to be the biggest winner going forward.
Power Hedge: There are a lot of good values in the sector right now, but make sure that you are not investing in someone too exposed to shale oil companies or BB or lower companies. Stick with the guys that have all of their customers as top-notch institutions that won’t default on contracts. I wouldn’t touch anything upstream right now. Stick to midstream or the major vertically integrated companies from Europe. I’d avoid the American ones. If the world tries to shift more towards renewables, the European majors are better equipped to handle that.
The Value Portfolio: It’s important to constantly evaluate your portfolio and sector allocation to make sure you’re not overly concentrated in any one sector, regardless of the potential you feel that that sector has.
Long Player: As above, I personally believe that this will be a memory by fall. Past bugs have lasted until spring. This one has a decent chance of following that pattern. As far as the oil price war goes, any recovery should sop up the excess supply. Then, we go on to demand growth as usual back to the usual industry cycle. The last big oil price drop in 2016 lasted a few months. This one should not be a different deal.
Laura Starks: Oil cycles so much. On the supply (oil price war) side I’m encouraged somewhat by the proposed SPR purchases but more by the fact that the Texas Railroad Commissioner Ryan Sitton is talking to OPEC Secretary General Mohammed Barkindo. I can see a carrot-and-stick: U.S. shale volume reductions that accommodate OPEC, and sanctions on Russia. Thus, U.S. shale production may shrink and more of it may wind up in the hands of the large international companies than is the case now. When someone recently asked me about the price war, I noted that Saudi Arabia and Russia are two government-driven (single decision-maker) behemoths, whereas the U.S. shale producers are like the world’s best team of soccer players. So, the battle shapes up as less David (US)-and-two Goliaths (OPEC/Saudi Arabia & Russia) and instead, two Goliaths versus, say, Real Madrid.
On the demand side, since energy forms the very spine of industrial and commercial activity from steel mills to sports arenas, malls, and schools, the effects on energy use will be profound. I’ve heard estimates for oil of drops of 7-20 million BPD (out of 100 MMBPD). We can hope that these will be short-lived and the snapback huge and immediate. There is probably more friction in the demand return than we like to think: it takes a while for planes to ramp up their schedules, restaurants to re-open, etc. Moreover, the duration of the pandemic and the actions taken in response in Europe, the U.S., and Canada are still highly uncertain.
Laurentian Research: Eventually, a new oil price support mechanism (OPSM) will have to be hammered out by OPEC, Russia, and possibly North American producers as well, to avoid an outcome of mutually-assured destruction. In an age of sustained oversupply, ‘managed decline’ of oil demand, and rising movement of ‘de-fossil-fuelization’, such an OPSM is imperative if oil prices at an acceptable level, not too low but not too high, are to be had. I believe a solution can and will be found, as I discussed here, so that the oil price can return to the $50-60 ((WTI)) window. Until a new OPSM emerges, intelligent energy investors will be sitting out on the sidelines, mulling over which energy stocks may offer the best risk-reward profiles in the coming days.
Andrew Hecht: It depends how long before scientists and health professionals find treatments and a vaccine. The future is in the hands of science. The markets are a symptom of the most significant threat in our lifetime. I believe that science will find the answer, but it moves a lot slower than markets, unfortunately. Economies will spend years digging out of the ruble created by financial markets. I could be the Us deficit rising to $30, $40, $50 trillion or higher as the government will do whatever it takes.
KCI Research Ltd: When something is as historically out of favor, and as loathed as the energy sector, that is the perfect starting point for future outperformance. Said another way, the energy sector is where REITs were 20 years ago, unloved and undervalued. The major surprise over the next decade, in my opinion, is going to be that the energy sector is the best performing subsector of the market, and natural gas equities, which have been among the most loathed equities in the entire U.S. stock market, are poised to be the leading performing stocks over the next decade. A specific area of opportunity is the Appalachia natural gas equities, specifically, the core Marcellus players, who have a basin advantage over most of their peers, with lower decline rates, more tier-1 drilling locations, and the most prolific production per well. These Marcellus producers have grown production at impressive CAGR the past decade, and they now dominate the list of the largest natural gas producers, EQT Corp. producers more natural gas than Exxon Mobil, the number two domestic producer, who I like as a large-cap play here as well for the reasons articulated above. Going down the top-10 current producer list, Cabot Oil & Gas (COG) is number four, just behind BP (BP), Antero Resources (AR) is number five, and poised to grow into the second-largest dry natural gas producer, alongside already being the second-largest natural gas liquids producer. Chesapeake Energy (CHK) is the current number six producer, and they have terrific natural gas assets, however, they have invested all their growth capex in oil the past 5 years, and that is going to be a problem with lower oil prices. Southwestern Energy (SWN), Range Resources (RRC), and CNX Resources (CNX) round out the list of top-10 independent natural gas producers, who are core Marcellus producers, and these equities are poised to be among the best performing U.S. stocks over the next decade. Why? As natural gas prices rise, growth capex tails out, and lower breakeven costs shine through, the ability of these companies to generate attractive free cash flow yields is massively underappreciated right now.
Power Hedge: Weak shale companies will go under. Strong European majors like Equinor (EQNR), BP, Eni (E) will be fine but they may report a couple weak quarters. Midstream companies like KMI, MPLX, and WMB won’t see their cash flows affected much even if the stock gets obliterated.
The Value Portfolio: I think that there will be some bankruptcies – especially among the higher cost producers that have been consistently struggling and rolling over debt. Capital spending dependent companies, like Schlumberger (SLB), will be particularly hard hit as capex falls off of a cliff. However, at the end, the giants and midstream companies that have been punished harder than most will emerge stronger than ever.
Thanks to our panel as always. We hope it’s useful for you amidst a wild energy sector run. If there are other areas you’d like to hear more about, let us know below or at premiumauthors at seekingalpha.com, we expect to be posting at least one of these a week for the foreseeable future.
See also The LGL Group, Inc. (LGL) Management on Q4 2019 Results – Earnings Call Transcript on seekingalpha.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.