Pitch Summary:
Cineplex Inc. has recently sold its Digital Media business for C$70 million, which is a strategic move to deleverage and position the company for capital returns. The sale aligns with management’s focus on unlocking value and potentially embracing activist suggestions. Despite a decline in theater revenue due to a soft slate, the market is optimistic about upcoming releases that could boost box office performance. Cineplex’s ability to raise prices and its shift towards premium offerings enhance its economic model, making it an attractive investment with potential upside.

BSD Analysis:
Cineplex’s strategic asset sale not only strengthens its balance sheet but also signals management’s commitment to enhancing shareholder value. The company’s focus on premiumization and its monopoly-like position in the Canadian market provide a competitive edge. Upcoming blockbuster releases are expected to drive significant box office revenue, further supported by structural improvements in pricing and revenue per patron. While the LBE segment offers diversification, its potential sale could further streamline operations and support deleveraging efforts, positioning Cineplex for sustained growth and shareholder returns.

Pitch Summary:
Northern Ocean Ltd. has announced the sale of its Deepsea Bollsta rig for $480 million, significantly reducing its net debt and de-risking its balance sheet. This transaction positions the company to negotiate better contracts for its remaining asset, Deepsea Mira, which is undervalued compared to Bollsta. The market environment is tightening, suggesting that securing backlog for Mira is a matter of timing. The management’s incentives are aligned with shareholder interests, aiming to unlock value and initiate capital returns.

BSD Analysis:
The sale of Deepsea Bollsta is a strategic move that not only strengthens Northern Ocean’s financial position but also enhances its negotiating power in securing future contracts. The company’s focus on high-specification rigs, which are scarce in the market, positions it well for future demand. The potential sale of Deepsea Mira at a discounted price further underscores the upside potential, especially with the management’s commitment to capital returns. The reduced debt burden minimizes financial risks, making Northern Ocean a compelling investment in the offshore drilling sector.

Pitch Summary:
Miami International Holdings (MIAX) is a holding company that owns a variety of exchanges, with a focus on derivatives and listings. The company went public in August, and its shares have appreciated from $23 to $43. MIAX benefits from the secular trend of increased trading activity, with little capital reinvestment needs, leading to high incremental margins and outstanding free cash conversion. The company is well-positioned to capitalize on the growth in derivatives, particularly with the rise of ETFs and 0DTE options. MIAX’s options segment is a crown jewel, earning nearly double the spread of CBOE on multi-listed products. The market is underestimating the potential of MIAX’s futures segment, which could become a significant contributor. The company also has a technical overhang due to its capital structure, presenting an attractive entry point for patient investors.

BSD Analysis:
MIAX’s options segment has shown impressive growth, capturing a significant market share in a competitive landscape. The company’s strategy of offering different pricing and allocation models across its exchanges has allowed it to create a closed-loop ecosystem, attracting a diverse range of market participants. The futures segment, though currently loss-making, holds substantial potential with the upcoming Bloomberg partnership, which could be transformative. The exclusive license to list futures and options on Bloomberg indices positions MIAX to capture high-margin revenue streams. Additionally, MIAX’s international segment, with its listing businesses, provides hidden growth optionality. The company’s insider alignment and strategic acquisitions further strengthen its long-term prospects.

Description:
We’re branching out for this episode. Today, it’s all about energy. As metals markets have moved violently higher across the board …

Transcript:
And I guess just very specifically, the one thing that I think matters maybe more for oil markets than any other thing right now is if the US bombs Iran in terms of what the oil market will look like in a year. I know it sounds sort of dramatic. >> Travis Ricardo, we’ve got a somewhat different style of conversation. We’re talking about energy today. >> Energy? Yes. I mean, we talked about energy in the past. We talked about coal. We talked about uranium mostly, but >> different forms. The world of energy is much bigger than the metals that uh we talk about in our mining world. In fact, the world of energy is much much bigger than that. Dominated by oil and um we’re looking around for I suppose for value opportunities like what where like what what commodities haven’t run yet? What can you what thesis can you come up with that something which is pretty beaten up could have you know it’s its time to shine in in the near future, the medium term. And um you and I kind of are getting increasingly interested in the energy space. We’re looking at the energy space thinking that you know oil and the services plays around there uh could could have their their time to shine in the in the future. >> That’s exactly it. We’ve got some homework to do and the best way to do it is to get people to teach us. So we’re going to chat with a few people and we’re going to release some conversations about energy, the the whole broader world, the services space as well. I think it’s particularly interesting and what the basic fundamentals are and a whole heap more. So, we hope you like the uh the conversation we’ve got with Josh Young coming up. Before we jump in, we need to talk about Exceed Capital, mate. The preeminent property group from Queensland. >> Exceed Capital. Exceed my expectations with this, mate. What have you got? >> We’re talking about the SP property trust. So, I bet a bunch of money miners out there would have felt the stomach churning volatility in the resources portfolios over the past few months, over the past few years. It’s always sort of been that way in the resources space. And a natural diversifier is property. So, we’re talking about commercial property in Queensland, Gradea A tenants. You’ve got people like the Queensland government in there. They’re paying monthly distributions and targeting an 8% peranom cash return over a 5-year period. What’s not to like, mate? >> This is a specific property and there’s a a specific trust set up to to enable participation in this specific investment. Um, it’s interesting, mate. Yeah, I think diversification is very important. Lots of people like their property. Lots of people love property in Australia. We love mining stocks and property. Check out Exced Capital. >> And here we go with the interview. >> JD, we’re uh we’re joined today by Josh Young of Bison Interest. Josh, you have been intimately following the the you know, oil and gas energy complex for many many years. You’ve been a contrarian in your calls in in that sector for a long time. One thing that we know following mining stocks is it pays to be a contrarian. you know, it pays to be patient and um and as we’re looking at the mining metals and mining complex right now, everything is kind of just going limit up in in a lot of um a lot of a lot of the metals. So, we’re looking for we’re looking for areas where there might be value, where where are the cyclical markets that might still be unloved and um and and yet to really really like really move. And we’re looking to oil and gas despite being mining tragics ourselves. We’re hoping that you can help us make sense of um make sense of the oil and gas world because I think it’s similar. I think there’s a lot of similarities and um yeah, just delighted to have your expertise to help us and our our audience kind of unpack what the what the landscape looks like and and what the opportunity might be. >> Yeah, thank you for having me. So, um first of all, I I uh hadn’t heard of you guys and then I looked and saw that you’ve had a number of really great folks on here. So, I really appreciate coming on. And I was actually listening to one of the interviews you did a little bit earlier. So, uh, thank you. Thank you for having me on. And then also, no promises in terms of explaining oil and gas thoroughly. I’m still trying to figure it out. So, uh, I’ll just maybe help you, uh, along the journey. >> Appreciate it, Josh. We’re coming from a low base. I’m sure you’ll help us out. But why not start like we uh, like we kind of do with all commodities with with the fundamentals, the the supply demand narrative. everywhere you go right now, you you hear about an oil glut. You you you see it on Bloomberg, on on every other mainstream media channel, and you see it in some of the data as well with ultra bearish positions from hedge funds in oil. So, I’m curious to to hear what you make of this and to sort of set the table for us in in terms of the the basics of where the oil market is in its cycle. Well, it’s a funny time to be talking about this because we’re we came into the year with everyone really really bearish on oil and positioned very sort of negatively, but then um there’s been we’re sort of in I think our fourth or fifth uh mini cyclical geopolitical risk escalations. And so um right now um as we’re talking uh energy stocks are up a lot for the year and oil is actually up I think what 15 or 20% or something like that for the year. And so there’s sort of this weird um extreme bearishness on fundamentals and then rising bullishness on geopolitical risk which people are all saying they’re really looking forward to fading and shorting against and so on. So, it’s a very sort of odd moment. And then one of the other things I’ll highlight before we get into sort of the specific supply demand numbers are that there’s actually this sort of weird um uh cone of uncertainty almost. I was trying to figure out what the right way to describe it is, but um for a market that’s as big and as important as oil and gas, particularly the oil market and oil products and NGL’s um the data is abysmal. And the accuracy on the data is astonishingly low. I’ve looked at all the different providers, looked at all the different folks, and I mean, you see what makes it into the investment bank research and into, you know, Bloomberg and various other spots, and it’s just it’s just wrong all the time. And so, I wanted to highlight that one, as you’re trying to figure it out, this is a thing to watch out for. And then two, as we talk through stuff, my own numbers are going to be just as flawed as everyone else’s. And what I try to do is just focus on a few of the key elements. Um, but I think it’s important to highlight that like you said, as we journey into the oil market, um, knowing that we’re in very muddy waters, I think is really helpful in figuring out what’s actually going on. >> I’m glad glad you f framed it that way. But it is it’s also surprising just given the like the very physical nature of what we’re what we’re talking about. It should it shouldn’t be an impossibility to get the right numbers. But I I want to just kind of like zoom out and and talk about like the the cycle of capital starvation that that has um has been parallel with the sector like like where did that capital starvation begin and where are we now and also why why despite that capital starvation you know is there is the the narrative at the moment that there’s this oil glut. Yeah, I think it’s a good a good spot to start and I think it’s helpful to come at it from I think a sort of generalist commodity perspective. I think that is sort of the easiest to understand both for you guys and and your general audience as well as anyone else that might be listening to this. So if you look back at the last commodity cycle, you had um a boom that no one believed in in the late 90s, early 2000s with demand coming from China, um demand growth coming from China and um sort of grade degradation, whether it was oil where the Saudi oil fields, their core oil fields were running out, um or whether it was with, you know, copper or whatever commodity you look at, there was sort of these problems from underinvestment for a long time. And so you had a huge commodity cycle, a huge capital cycle where um arguably way too much money was spent in that bull market for commodities. And it sort of peaked out around 2012 and you started to see commodity investment collapse. Frankly, you saw some of the precious metals start to fall in what was it 2011 2012. You saw oil hang in there sort of because of geopolitical risk and a couple other factors and then collapse in 2014. And so I think you always want to know I think for cyclicals what the last cycle was to understand sort of where where you are now and whether you might be in a next upcycle or whether you’re just sort of in for more uh persistent bare market pain. So I think that’d be sort of how I’d start framing it and then I’m happy to sort of keep answering that or happy if you had sort of it looked like you might have a specific question around that. One one of the things I just find amazing here when you look at the oil price you look at you look at Brent or WTI and you see call it 60-ish bucks maybe a bit over that right now if you take inflation into account where where we kind of are and you compare that with 15 years ago 20 years ago and and further it’s it’s relatively extremely low and and you see that in the in the profitability terms with with a lot of the producers right >> prices are really low on an inflationadjusted basis And part of why I wanted to go back to the last cycle is that if you frame what’s happened so far versus what happened in the late 90s and early 2000s and then how that cycle progressed, you had some of these other commodities lead to some extent. You had gold baffle everyone and start rising. Um and so here you are very very similarly where you have um oil prices quite low at prices that really are sort of um below I think full cycle break evens for most producers especially for the marginal producers and um you know you have these other commodities that have spiked and I think this one’s a little different because you actually got to these extremes in some of these other commodities while still having oil quite low on an inflationadjusted basis and so I I think some of that’s political, some of that’s related to sort of futures positioning, and some of it’s related to this particular downturn for oil, which was, I think, more severe, maybe some uh basic metals commodity folks might get mad about this, but I think more severe than most other commodity downturns that that were experienced in the last decade. I think the biggest thing was that there was this giant um investment boom despite the price signal to not do it in US shale development and Canadian shale development as well as actually sort of people don’t like to talk about it but there was sort of this offshore persistence of investment where um you should have seen a bunch of projects canled and instead they just sort of went through with them anyway and so you’ve had this much longer sort of tale of production and investment from the last cycle that was sort of held over and huge losses because of this. I mean, astronomical losses by oil majors, by private equity, by public equity investors, by debt investors. I mean, just, you know, astonishing amounts of money that’s that was lost. And so, we’re we’re at the tail end of that. And I think the real question, most I think oil market observers that don’t believe in sort of this net zero fantasy that oil’s going away and whatever, I think it’s just a debate of, hey, is oil going to go up a lot this year or next year or the year after. And so that’s I think where a lot of the sort of specifics of the barrel counting come in. And then it’s a question of hey, how much do physical shortages weigh in versus how much do um you know sentiment and futures market positioning weigh in? >> In in the mining world, we um we’re well acquainted with the phenomenon of of of grade decline. You mind the highest grade part first and then um as time goes on, uh yeah, you’ve got to spend more and more capex to expand the mill as the grade goes lower to kind of maintain the production that you you’re doing before. What kind of parallels to to Greg decline are there in into the oil and gas world and and how are those like decline rates different by the types of projects? >> Yeah. So from what I’ve seen on mining equipment and mining technologies, there’s been nothing close to what’s happened in the oil and gas space in terms of the innovations in shale uh drilling and completions and some of the other sort of aspects of getting oil to market. And so um the first thing that comes to mind is that it used to be let’s say if you go back to 2014 that a long lateral so the amount of uh wellbor that was exposed to the zone that was being produced from a long lateral would be one mile through the formation horizontally. And these days a long lateral is four miles and there are some wells on the gas side that are five or six miles. And so if you just think about the gains just purely from not having to drill let’s say five wells or six wells to reach that zone just to drill one well. The efficiency gains purely from longer laterals are astronomical in oil and gas for shale development. And they’ve way overwhelmed for much longer than you would have expected the grade degradation sort of core depletion as they call it in in shale development. um way more than you would have thought. I think from sort of a mining perspective, the global decline rate for oil is somewhere between five and 8% a year. So, um shale, it’s sort of hard to properly I think consider it in the context of other commodities because you have to grow a lot just to sort of stay flat and you have to drill a lot just to sustain existing production levels. And so there’s this huge amount of activity that’s persistent even at very very low price levels just to keep US oil production let’s say around 13 million barrels a day of crude oil or around let’s say 21 or 22 million barrels a day of crude oil plus natural gas liquids. So there’s this huge amount of sort of persistent production growth just to stay flat in shale and shale has only very recently started to roll over. I actually made this mistake a few years ago where it looked like it was starting to roll over and then there was this next hit from improved well productivity from much longer laterals and then much more intense uh well completions. And so um it’s only been a problem to have to replace shale in let’s say 2026. And so we’re just hitting that wall now. And so, you know, the the common, I think, bearish critique on the oil bull thesis would be, hey, well, there’s Gana where you’ve had oil go from zero to a million barrels a day. And there’s Brazil where you’ve had oil production growing recently after, you know, a decade of promises. Eventually, Brazil delivered in one year. Um, and then you have a few other spots where there have been big discoveries and there was uh some growth last year in offshore Kazakhstan. And so, um, I think it’s an open question in terms of where’s the oil production going to come from next. But I think it’s important to understand where we’re at, which is there was all of this production that was promised to grow that actually showed up for the most part. But it’s not so clear how you get from the million barrels a day in Gana to, let’s say, three million barrels a day. You probably don’t. And it’s not so clear how you get from the close to four million barrels a day in Brazil that you’re at right now to anything more than that. And you probably don’t at least anywhere close to current activity levels and taking into account current discoveries. And so it’s a real open question. And I think that’s part of what has me so bullish on oil is just really I don’t know in when you when I look at sort of global development plans and global models by all these banks and consultants and so on, it’s just not clear. It it’s known sort of where there’s going to be incremental oil in certain countries, but it’s not clear where there’s going to be incremental oil that offsets global declines. And that’s really I think the the big question. And then the one other question I’m sure we’ll get to this in more detail is just getting demand levels right and demand growth levels right and even OPEC I think was shocked in the last year by how much demand there’s been for oil at these ultra- low prices that we’ve been experiencing on an inflationadjusted basis. I mean there were months where we had I think the highest JOD number I saw which is one of these different groups that collects oil they’re sort of more OPEC affiliated rather than more sort of IEA type affiliated. So more oil producer country versus more oil consumer country affiliated. Um and they showed a number I’m going off memory. It was either 2.1 million barrels a day of growth for a year or 2.4 million barrels a day of growth for a year. And I’ve been called a crackpot for saying I think that oil demand is going to grow by a million barrels a day a year for a while around 1% you know plus or minus a little. Um, and here we have demand, measured demand growth at twice that in the last year. And, you know, it looks like even some of the preliminary numbers for January look like they’re well over a million barrels a day. Whether they’re a million and a half or two, I think we’ll we’ll get final numbers in six months. Uh, at a point where it’s less relevant, but it’s somewhere in that in that range and it’s pretty pretty remarkable. >> So, so the part of supply there that I’d love to understand more is the US. You said 13 or 14 million barrels a day. I think oil is roughly 100 million barrel a day market. What is the consensus for that to be in say 5 years time? And and how do you kind of differ with the consensus outlook? >> Yeah. So, so crude oil I think is like 88 or 89 million barrels a day and then oil plus natural gas liquids is um closer to I think we’re at something like 106 million barrels a day. And so um and US production again crude oil is around let’s say 13 million barrels a day plus or minus a little bit and then NGL’s um are another let’s say 9 million barrels a day right now. Um, so I think it’s important to mention that because I think a lot of the uncertainty has to do with double counting NGL’s where natural gas liquids which come frequently but not always with oil, particularly with oil that you’re producing from shale and sometimes from gas you’re producing from shale. Um, they can be produced directly from the formation, but they can also come from the refining process. They’re outputs from refining crude oil, but they’re also outputs from producing shale oil or shale natural gas or some combo wells, which are sort of a mix of oil and shells and natural gas. And so, um, that that sort of makes the whole thing a mess in terms of counting. There’s a number the EIA, the US Energy um administration, uh put out recently where they claimed that there were 24 million barrels a day of liquids being produced in the US. And there’s just no way to come to that figure. That’s just wrong unless you include the uplift from refining oil, which is very clearly, I would argue, double counting because how can you count the inputs and the outputs towards your production number? just seems, you know, um, like you you count your iron ore and your steel, like pick one. Um, and so, so I think that’s been sort of one of the big problems. And so I I would say the biggest difference right now is that is actually on the demand side where I think that demand is going to continue to grow by a little over let’s say 1% a year under normal economic conditions and there are zero forecasts in this sort of set of numbers that OPEC assembled recently along with the IEA and whatever from a bunch of different agencies and banks and so on. There are zero forecasts through to 2050 showing 1% annual demand growth, which is astonishing to me considering one that recent demand was actually well in excess of that uh demand growth was in excess of that and two that the 40-year trend of oil demand growth is in excess of 1% a year. So everyone in the world is assuming that we just stop growing our oil production when all the evidence that I can tell at least in the current market and the current environment is to the contrary. And so I think that’s probably the biggest single driver of my variant view is just I just think that things aren’t different this time and they’re not changing until there’s evidence that they’ve actually changed. And I haven’t seen I yeah there’s electric vehicles but they have plastic as inputs and yeah there’s XYZ thing but there’s some offset to that and then there’s just the reality which is how much oil is actually being consumed right now versus what the forecasts were for how much oil is going to be consumed and then those same folks that were wrong on that are forecasting that out to 2050 and claiming some high degree of um accuracy. >> And and how does China fit into your your FO forecast? They’ve obviously invested a tremendous amount to to build out energy capacity, be it coal or or new energy and and these sorts. And obviously they’ve got a real drive on on energy independence that is top of the list for for China and where they want to be in the future so that they’re not reliant on on anyone else. But what sort of hit does that do to to the demand numbers in your mind? >> Yeah, I mean China is fascinating. Um the the number of people I’ve heard who are bullish copper I I can’t actually remember hearing or reading anyone who’s been bearish copper in the last let’s say three years other than people who are really worried about a global economic collapse. I haven’t seen anyone bearish copper and I’m looking 15 years. >> Sure. Sure. But I’m looking at these charts of China exporting copper and importing oil as on a net basis and it’s like okay well this is interesting right? like what what is going on that um you know this consumer that everyone’s sort of very concerned about uh running out of demand on the oil side um exporting copper and um importing more oil. So uh I don’t have exact numbers for you on China and I think anyone that has exact numbers uh for you on China for oil consumption is exactly wrong. Um, and I just don’t know which direction uh that’ll be. And I think the the most interesting thing to me on China in terms of oil demand and oil numbers that people show with a very high degree of sort of bizarre to me conviction is that China economic statistics are not believed by anyone in any category except for their oil consumption. And so um it’s a very weird thing where just the the rule is that you just don’t believe any economic numbers about China but everyone believes their oil consumption numbers whether it’s from them or from the sort of third parties and the the degree of um humility I think on those numbers is astonishing just how poor the numbers are on China generally and how confident people are on their numbers on Chinese oil consumption and oil storage. I mean, you just don’t see any room in the reporting and the there’s just no room for error or for uncertainty. And the reason I point that out is that um when I’ve chatted with like oil physical oil traders who deal with Chinese uh buyers and various other folks and run this by them and say, “Hey, is it possible that they’re actually using more oil than they’re saying and just messing with the satellite data providers who they hate because they call them liars every day in their lives and they anyone domestically that does that, they get sent to re-education camps or worse. And so, um, the, uh, the physical traders all are like, “Hey, yeah, they’re probably lying to us. They do this all the time on our physical trades with them.” And so, of course, they would if if this would be advantageous to them, they would lie. And so, again, like, are they definitely making up their storage numbers? I’m not sure, but it looks most likely to me that they’re probably using a little more oil than people are thinking. Uh, because it doesn’t make a lot of sense that they would want to store I think the numbers are like 1.6 billion barrels of oil. like what are they doing with it and why would they do that? Uh but if they have people think that they’re doing that then they can potentially buy their oil for let’s say $10 a barrel less because there’s sort of this perceived extra storage and um embarrass these satellite data providers eventually when uh when this does sort of become better understood. It’s like the American Express salad oil scandal, right? No one could imagine that they would mess with these tanks and stuff and then they mess with it and there’s this huge huge economic benefit. And I think the benefit would acrue in terms of tens of billions of dollars a year if they were doing this. And so anyway, that’s probably the craziest theory that I have. Uh, but also like I tried to chase it down by talking to the folks that actually are engaged in this physical market and trying to they all think it’s hilarious and they’re like, “Yeah, this is basically like how they negotiate with us on buying individual cargos and stuff where they’ll like pretend like they’re not interested and then show back up last minute to buy stuff or various other sorts of practices that you don’t normally do with regular trade partners.” I’m curious to understand the um the the cost curves uh just just from a general perspective in um in mining. There’s there’s there’s so many undeveloped copper projects, but the the the party line forever was you need $5 copper for for these things to actually get to FID and um now at $5 copper, but but I’m waiting for the FIDs to come. I think it’s it’s now $6 copper that we need or something like that. But if I just to like understand as as the oil price goes higher like what are the what are the new sources of supply that kind of come online or or or even just like if I if I think of the lowest cost kind of category of oil versus higher cost by the different buckets of production. How should I conceptualize that? So everyone thinks they’re the lowcost producer and so um it becomes a little complicated because the lowest cost producers on an operating cost basis are probably US shale producers just on an operating cost basis. But the problem is they have to go reinvest a lot. >> Yeah. Capex issues, royalties, various other issues that they have. But the just pure production cost once you have a shale well on it costs astonishingly little money to actually produce it. Especially if you’re let’s say in the Eagleford like near the Gulf Coast. I mean really it costs very very little money. Um and some of the highest cost oil um is I’m going to get so much flack for this in Saudi Arabia and certain other countries where people say oh it’s like so cheap. But you look at their actual numbers and their fiscal break evens and so on on an operating cost basis is astonishingly high. And so um the incremental barrel to bring on would be probably Canadian oil sands, you know, heavy oil. Um and there it’s a little complicated because there’s a little oil they can bring back on um or add that’s very very cheap and then there’s a lot of oil that would require much higher prices for a long time. probably similar to the copper thing where you need to be able to lock in, let’s say, $100 plus oil and then have five years to be able to bring on some of these bigger projects. >> These oil sands look, they just look awesome. It’s like the intersection of mining and and oil all at once. It’s so cool. >> Yeah, I think these days people aren’t building new oil sand mines anymore. They’re doing uh steam assisted gravity drainage, which is basically I think people do this similar sorts of stuff with like lithium and certain other um certain other uh minerals where they’ll they’ll they’ll brine extract essentially deposits rather than try to um and this is this is sort of steam brine extracting uh oil. Um, but yeah, it’s it’s fascinating and I actually I don’t have a lot of exposure to that, but I have some exposure and it’s a it’s a very interesting it’s sort of its own world, but Canada has their own issues which are are hard to express in terms of dollars per barrel of let’s say OPEX or you know various other costs because um they won’t build new pipelines and it’s sort of this country that I mean the US is a little like this where we’re trying to pretend like we’re this big oil consumer but we’re a net exporter of oil. So, we have our president running around trying to keep the oil price down when we’re basically like not that different from some other oil net exporters who really need a higher oil price to have a thriving um to have a thriving economy. And Canada’s like that, too, where they’re they’re sort of in denial. They basically steal all the the uh royalty money from Alberta and Saskatchewan and redirect it towards social welfare programs and various other uh government priorities uh in Eastern Canada. And they at the same time as they’re sort of redirecting those revenues, they’re also blocking pipeline projects and then nationalizing them and of course making them three times more expensive because when you get the government involved in trying to help, um that obviously leads to predictable consequences. And so, um, it sort of the oil in Canada right now after it grows by another, let’s say, few hundred thousand barrels a day is going to be landlocked or at least you they’re going to need to rail it out rather than pipe it out, which dramatically increases the transportation cost. So, Canada has some real non uh not purely cost related issues with uh getting its oil production higher. So if we look to the market now, I think um I think a lot of people would be fascinated to to kind of hear that a lot of the the super majors, the Exxons of the world are trading at or near all-time highs, which is pretty remarkable. And I think to your point, it’s it’s reflective of the previous capex cycle and the consequences of that getting getting sharp, you know, starting to focus on on um capital returns to shareholders and all these sorts of things. But I’m really curious, Josh, if we if we go through the kind of baskets from the the big producers to the smaller producers to the offshore services names and um the the royalty names, how you kind of think about relative value and and value against other parts of the market through through those and if anything’s kind of screaming out at you right now. >> Yeah. Um, so the oil majors are really expensive and it looks like it’s sort of this combination of um just the passive market sort of moving um those stocks higher along with sort of this broad um general stock market bull market that we’ve had. Um and then I think part of it’s also that chemicals margins have been terrible and refining margins really fell off a lot from where they were a few years ago. And so you have sort of this lagging sort of historical high earnings, but the earnings have been falling for these oil super majors as their stock prices have been rising. So um I think the optimist would look at them and say, “Hey, they’re pricing in much higher oil prices.” And the pessimist would say, “Hey, these things are massively overvalued. The market’s wrong. It’s broken and these things need to collapse.” And so, um, I’m probably more of an optimist than a pessimist, but I think that’s sort of the the way to frame it. Um, there’s weird claims that have been coming out from these companies that aren’t new, by the way, that they every year or two or whatever, Exxon or Chevron or Shell, whatever, they’ll say, “Ah, we have this big innovation and it’s going to lead to way higher production and way lower costs and it’s magic.” And um, for most of my career, people just didn’t believe this stuff. But in the last year or so, I think as the stocks of these companies have risen, they’ve started to take them way more seriously. And so, um, I’ll pitch my newsletter for a second. I launched this newsletter sort of as this like fun side project. And one of the benefits is I can go through and say what I think about stuff without getting completely, you know, attacked and, you know, called all kinds of names or whatever on social media. And so one of my projects is to sort of go through and and um mythbust on some of this stuff and show hey okay you know you say you’ve developed as a producer this massive advantage on something that services companies do um and services companies are providing you and really it’s actually a disadvantage and you’re doing it to get rid of some waste product that you couldn’t dispose of for example or whatever. So anyway there’s very weird stuff that happens when stock prices go up a lot. I mean, I would point to the um silver miners and silver recently where you had this, you know, I had a I had a view on silver, which is like very rare to have a view on, you know, stuff outside of oil and gas. And I thought that silver would go up a lot. When, you know, once it got over 50, I thought it would go to 100. Once it got to 100, it was like, okay, this is it got a little crazy in terms of the supply demand balances and break evens on new supply and so on. Um, but what I thought was so interesting there was that there were these narratives that showed up that were radically different from what I’ve been hearing about silver and silver miners and so on for a very long time. And I think there’s sort of a parallel here on some of these oil super majors where there’s these narratives from the investor community that are showing up that are just very hard to reconcile with reality and then with like my relationships with the service providers and other producers and friends that own interests and their wells and you know the pipeline companies. I mean, there’s just there’s a way that I’ve stayed in business over the last decade investing in this terrible oil bare market that we’ve had for, you know, eight out of the last 10 years, and it’s through being able to diligence this stuff. So, anyway, so, uh, I guess you can put me in the category of very much not finding value in the oil super majors here, um, and hoping that they’re just pricing in higher oil prices. Yeah, that’s that’s the like is part of their their relative outperformance their like the rotation into hard commodities that you know rotation out of out of out of high PE stuff into lower PE stuff that’s finding its way into into harder commodities be it metals be it the the energy complex but also are they are the equities already pricing in higher higher oil prices which sometimes the equities do do lead first but they’re they’re sometimes right in doing that as well Like I remember the the lithium equities like running before like the the spot price ran and it was right, you know. So sometimes there’s some informationational advantage that gets expressed in the equities before the commodity. >> Yeah, I think so. I mean, I’m like I said, I’m more in the optimist camp on this, but I I would note that there’s some of these weird narratives around some of these oil majors that are just very detached, I think, from reality. So if we keep going through the chain services providers is one I’m really keen to get your take on. We saw the transaction with Trans Ocean and um and Polaris just just yesterday and that’s one of a number of um consolidation type M&A deals we’ve seen in in the space. What was your take on it? >> Yeah. Um, so I have exposure there and I love the deal and I think it’s good for both companies and it’s good for the sector and um, uh, ironically it’s sort of bad for these oil super majors because um, there is going to be price pressure from this. I think it’s appropriate. Hopefully it doesn’t have too much pressure from antitrust folks or whatever. But, you know, I think Valeris was um a little too much of a price taker and Trans Ocean has been more of a price setter. And so, it’s great to see that team going and um you know, getting control of this. And I think generally oil field services has consolidated a lot as has uh oil and gas production, but the oil field services companies have been way better about consolidating and there’s way fewer of these companies at scale um doing these critical services. And so I think we’ve seen this phenomenal move in some of these oil field services stocks. Some of them I own and it’s been wonderful and some of them I don’t own. And it’s always funny how it’s rational for the ones you own and irrational for the ones you don’t own. But um you know some of these services subsectors have gone parabolic. Like if you didn’t know the have the stock ticker you’d think it was a gold miner or a silver miner or something or silver junior um and not a you know chemicals company or something like that. So there’s been real moves in some of them and I think there’s big moves coming in some of them. I think I think the bulk of the move maybe has happened maybe not in some of the largest services names that are sort of in the you know S&P 500 or whatever some of the biggest indexes. Um and then some of the specialty providers I think maybe have outrun themselves a little bit. Um, but you know, some of the drilling rig stocks, some of the completion companies, some of the offshore drillers, I think there’s a lot of upside potential there. And I’m I’m really excited about it. And I think the the specifics around that are generally in services for equipment heavy companies, you either get to buy them at a big discount to replacement cost or at a low earnings and cash flow yield type multiple. And so right now you can buy them actually at reasonably cheap cash flow multiples and at very big discounts to replacement cost. And when I saw that and did enough work on it that I now uh maybe know more about some of these onore drilling rig companies and some of the other ones than people that have like focused on it for a while just like go down the the rabbit hole to the nth degree get to meet a lot of the consumers of these services and understand what’s going on. Um, I think they’re wildly compelling and even though my primary focus is on upstream oil and gas, I actually think some of these services names, some of the smaller ones that haven’t run as much are just phenomenally compelling. And I think you’re seeing that in the the ETFs where, you know, the OIH ETF or whatever is starting to move. And I think I think some of these subsectors and some of these specific companies are just astonishingly cheap. There’s reasons why they’re cheap. And I think that those reasons are moving into the rearview mirror. And um yeah, I think that’s probably if I had to pick a sector, um services sector is probably my favorite here. >> Trav, we’re talking about value, good value. We’re talking about services companies. My mind just jumps to Sanvic ground support. >> Sanvic ground support is great value because it’s best-in-class ground support and they are a service provider to the resource industry. In our case though, mining companies, what we’re talking about with Josh, oil companies, but Sanvic at the forefront of the innovation when it comes to ground support. >> Couldn’t agree more. Our beloved industry, mate, I’m going to tell you about two of their latest innovations. Some of these are tried and tested and just brought to the forefront. Some of these are very modern. So, the convergence monitoring system, mate, chuck these in every underground mine and you can go from manual testing to automated testing. That is 2026 in an underground mine. You learned about this on Derek Herd’s LinkedIn profile, didn’t you? >> I did. I highly recommend giving Derek Herd a follow on LinkedIn. >> What else did you find out there? >> Plates. Plates are the unsung hero ground support. >> Much more advanced than a dinner plate. We’re talking about galvanized steel plates that you need underground at your mind. We talk a lot about the cables, the bolts, these sorts of things. They they grab all the fanfare, mate, but it’s the plates you need. You want them to be strong and you want them to endure forever there so that you have a reliable and safe underground operation. So get in your orders, download the app or give Derek Herd a call today. >> Go Sanvic ground sport. Go Sanvic >> the offshore like it’s not it’s not hard to comprehend how a lot of these a lot of these service providers they they benefit from a capital cycle of investment and it’s it’s so easy to to conceptualize how how their earnings can explode as a capital investment cycle you know returns with a with a with a with a more constructive oil price. Um >> yeah the the mining services names here in in Australia have just gone gang busters and maybe we’re going to see the same with with these kind of services names. um that that you look at Josh if if we um there’s two other kind of dynamics on the um on the valuation front I’m curious to know about. One is um the royalty companies. I think for a lot of people who are new to the space that’s a that’s a kind of go-to one given the um the dynamics you have being protected against costs and these sorts of things. How do you see value there at the moment? So, I’m pretty biased on that in the sense that um I get to see a lot of private oil and gas deals sitting here in Houston and I get to see friends go and assemble these royalty and minerals and non-op portfolios and then vendor them to public companies at 3x or 5x or whatever the total cost of assembling these portfolios and then those public companies trade at twice the value that they’re paying for these assets. So, it’s like accretion all the way up, but um it sort of looks more like uh trading sardines than eating sardines. And I think the devil’s in the details on a lot of these specific companies in terms of what I would avoid. And I don’t know that I want to go into sort of the extreme negatives about some of them. But I think just the broad observation would be if I wanted to go start let’s say Trans Ocean, which again I have a beneficial exposure to and I’m not recommending or uh one of these onshore landri rig companies or some of these specialty services companies. It would be almost impossible even if I had a lot of access to capital to go and create a viable competitor to some of these companies. Um it is extraordinary. It’s not easy anymore to assemble a replacement for some of these publicly traded mineral companies, but for my purposes, if I really wanted minerals exposure that was broad, I could just go buy it. Um, and I could underwrite it and I could probably buy it for a third of the cost of what most of these publicly traded minerals and royalty companies trade at. And so I don’t know that that’s true on the mining royalties side. And I think people just don’t really pay too much attention to it. I will say that they’re a lot cheaper now than they were three years ago. there was sort of this like weird almost bubble in minerals and royalties and that sort of popped a little and now I’d say there’s more of that on the oil super majors. Um but it’s still just not you know if it’s not at a big discount to replacement cost I don’t know why I do it in the commodity space. I wonder if one of the big differences between the mining royalty codes and the the oil royalty codes. The the mining royalty codes have have been tremendous outperformers. Um and what one of the reasons for that is because the they capture mispriced optionality. A lot of the large the large prospective you know mines their reserves life might only say that that it’s um it’s X but in reality the deposit is it continues. they find more stuff really approximate to it and none of that’s kind of captured in the in the um you know in the reserves case that you that the the royalty guild is struck on. But that optionality can can be enormous in the most prospective deposits. There can be three, four, five, 10, 12, 20 times more reserves that were um that were ever reported. So and the royalty companies are a wonderful mechanism at capturing that and not getting the cost. So they’ve outperformed. But I wonder if in the in the oil world there’s there’s a much more kind of concrete understanding of what the the geological reserves are and then that depletes over time and it’s not like there’s this new approximate discovery that’s that’s huge. So So I don’t want to miscommunicate. I love royalties. I think they’re fantastic. And I actually think there may there’s maybe a case even more to own oil royalties or oil and gas shale royalties than owning mining royalties because the technology improvements and improved recovery factors and then um zones going becoming more economic as prices rise over time or you know technology improves um may actually be better in some areas. I mean, the the first thing that came into mind was a friend who bought land for, let’s say, I think it was like $1,000 an acre. And it wasn’t even I think it wasn’t even a royalty. I think it was just non-op, you know, just picked up a few acres as a part of a deal and resold them for something like a hundred times that recently despite the oil price being I think it was at like 55 or something where he sold there. uh and just a few acres and you know not you know um earthshattering but hey you know it doesn’t take very many acres to sell at that price uh to pay for a lot of mistakes and to you know um have a lot of money in your pocket. Uh so I don’t know I think I think uh it’s not it’s not an observation that these things aren’t good. It’s more of an observation of, hey, if I want to be in oil and gas for, let’s say, inflation protection and for cash flow and distributions, does it really make sense to own something at a 3% cash flow yield or 2% cash flow yield? Especially if I can go buy minerals at, let’s say, an 8% yield or 10% yield. And yeah, it’s smaller, but in many ways that’s actually better because I could actually know it more and I can choose to buy those minerals in a place where there’s let’s say 10 potentially economic zones versus a place where there’s let’s say one or two potentially economic zones. So I think there’s a lot of um specific uh diligence and sort of specific variation and potential value which I think is actually quite similar on the mining royalties and stream side where you know it really matters which mine you’re in or so on on those. So I I I I didn’t want to come off at all as a negative. I mean, similar to the oil super majors, I think it’s fantastic to be integrated. I think it really if you do it well, um you can really benefit from that integration. I just don’t like paying a lot for it. And I don’t like it when they’re actively destroying value, uh, bidding up assets that are non-core to their business model and having to pay, you know, again, in a sort of like three or 4% free cash flow yield type uh, price in order to buy them. >> You want that that cheap or free optionality that that totally stacks up and and makes sense. Your your perspective as well on 3, four, 5% free cash flow yields versus higher actually brings me to to the last question I had on on valuation as well. when we’ve kind of screened and looked around the world at some of these energy names, a lot of the ones that are presenting kind of 10% free cash flow yields and and even higher and and in some cases even on a dividend yield basis, it’s not in the US, it’s on weirder and more eclectic exchanges like in in Norway or in on the LSE and these sorts of parts of the world. How do you see the value um divergence across different markets and across different parts of the world? >> So the last category we didn’t talk about were the small cap oil and gas producers um and large cap. And so the large caps I think a little more expensive. The smaller caps are quite cheap and I really like them. They’re probably my second favorite category here uh second to some of the smaller uh service companies. And um I mean we own I’ve written about from a newsletter I own for my fund um a number of producers at double digit free cash flow yields here in the US in Canada um and various other jurisdictions. Um I I’m pretty worried about um the risk of having exposure to various European countries where a number of them have imposed drastic taxes and other sorts of regulations and um you know exposure even in countries in Europe that have been less extreme um the political leanings in many of these countries are such that it would not be it might be a surprise to the let’s say investors and industry participants ants in XYZ oil rich country in Europe that they would impose a large additional tax or tariff or whatever on their you know uh whether it’s a CO2 emissions or you know uh whether it’s a additional production tax or so on um it might be a shock to those folks that that would happen but I would think that should be a baseline right that these people that don’t like the thing um say they don’t like the thing but make money from the thing would want to make more money from the thing from a government perspective for their social programs and have these evil oil producers that they’re making all their money from uh keep a little less of their money. So, I see a lot of risk in some of those jurisdictions that others don’t share. And I hope I’m wrong, but um I just I I have trouble getting comfortable with investing in places where they hate the thing. I mean, frankly, like Canada is hard enough for me, but um they just have some structural issues in terms of punishing these oil companies too much where some of these European countries don’t have those those issues with uh with doing that. So um you know I I actually see a lot of benefit to investing here in the US to investing in Canada to investing in certain let’s say South American or West African or various other um countries that from a um jurisdiction perspective you know they might be a little dangerous to let’s say go visit on vacation at least parts of them but um from a jurisdiction risk perspective they seem very very unlikely um to dramatically change the fiscal deal essentially on the production. So, um that’s what I’m looking for. >> Looking ahead, Josh, the what what do you think your um your your reflections will be 12 months from now? How do you expect the the next 12 months to look in oil? So, I’ve been very bad at short-term stuff. Uh I used to I actually I bought this little crystal ball and I like to like show it. My short-term crystal ball is broken. Um and uh you know when I look back we launched uh my investment firm about 10 and a half years ago and um I think we’re up something like 100% net versus the small cap oil producer index is down 65% or so net you know via like PSE this uh small cap ETF. Even the large cap ETF for energy I think is up like 30 or 40% from where we launched. So, we’ve done really well over a decade plus, but there have been many individual, let’s say, six month to 18month periods where we’ve materially underperformed. And so, um, I would not rely too heavily on any of my short-term observations. I try to come up with them. I try to think through things as carefully as I can and have as accurate forecast as I can. And I think there’s just so much uncertainty in the oil and gas markets that they just sort of embarrass everyone over time. And so, um, when I think about what I’ll be looking back on, I’m sure I’ll be like, “Hey, how could I have gotten X, Y, or Z, you know, price prediction wrong or missed this local price differential blowout or tightening or this big discovery or, you know, this discovery that people were excited about, you know, turning out to be not there.” And my goal is to just try to catch as much of that as possible. But those are the sorts of categories where I’d expect which is basically everything um to expect to be wrong on and therefore starting with the you know the Charlie Munger style inverting just start with like hey okay here’s what I think here’s let me go find the 10 reasons why it might be wrong and then try to kill as many of those as possible and if I can then maybe I’ll talk about it and express it financially. Um, and if not, then uh then not. And I guess just very specifically, the one thing that I think matters maybe more for oil markets than any other thing right now um beyond sort of just the basic demand question of, hey, does demand grow by a million barrels a day or not is if the US bombs Iran. And I know it sounds sort of dramatic, but the US president did promise repeatedly to intervene in these protests in Iran and people went out and died. And the US has been building up uh equipment, military equipment in the area. And so, you know, I think it’s not too much of a leap to say that that might happen. And if it does happen, I think it could spiral and lead to a very different if we were talking at this time next year. I’d say that’s probably the biggest single difference in terms of what the oil market will look like in a year is if the US gets proactively physically involved more than just what we did in June of last year where we bombed one thing or a couple things, declared victory and and went away. And so I think that’s really that’s why the geopolitical risk is sort of getting priced in a little despite um what people are worried about from a short-term fundamental perspective. And I think that’s probably the big question. And I think I think the US does it. Um I wasn’t you know I I would definitely not say for sure but you know I’d say let’s say 60% chance that we do it. And uh I think the world might look very different especially from an oil market perspective a year from now on the back of that. That’s a that’s a fascinating perspective and and something for for everyone to kind of think through. Josh, um appreciate you you making your time available for us and sharing your perspectives. I think you’ve you’ve helped us get up to speed on on energy on on oil and what the landscape looks like and and we’re grateful for that. So, thank you. >> Yeah, thanks uh thanks for having me on. Uh you’ve had a a great set of folks on here, so I appreciate getting included in that. A massive thank you to our fantastic partners, Sanvic Ground Support, Intrlinks, Exceed Capital at the top of the show, and Focus, the platform by Market Tech. Check them out. >> Go Australia. >> Now remember, I’m an idiot. JD is an idiot. If you thought any of this was anything other than entertainment, you’re an idiot and you need to read our disclaimer.

Pitch Summary:
Tigo Energy, a small-cap solar hardware company, is positioned for growth in the alternative energy sector, particularly in solar. The company has shown impressive top-line growth and improving margins, with a trajectory towards profitability within a year or two. Tigo’s technology, including its Flex MLPE and solar optimizer, offers significant advantages such as universal compatibility and cost-effectiveness compared to competitors like SolarEdge and Enphase. The company’s recent entry into the energy storage market and its new GO Battery product provide additional growth opportunities, especially in the rapidly expanding Virtual Power Plant (VPP) sector. With a strong presence in Europe, Middle East, and Africa, Tigo is less reliant on the US market, which is beneficial given the competitive landscape. The company’s recent financial performance, including 115% YoY sales growth in Q3 and positive adjusted EBITDA, underscores its potential.

BSD Analysis:
Tigo Energy’s strategic focus on flexibility and cost-effectiveness sets it apart in the competitive solar hardware market. The company’s MLPE technology, which allows for selective deployment of optimizers, reduces costs and offers flexibility in installation, a key advantage over competitors. Tigo’s expansion into energy storage with the GO Battery positions it well in the VPP market, which is gaining traction as a solution to grid challenges. The company’s strong sales growth, particularly outside the US, and its improving financial metrics, such as a 42% gross margin and positive GAAP operating income, highlight its operational efficiency and market potential. Tigo’s valuation, with a price-to-sales multiple of 2.8, appears attractive given its growth trajectory and path to profitability. The company’s focus on innovation and strategic partnerships, such as the domestic manufacturing partnership with EG4 Electronics, further enhances its competitive position.

Pitch Summary:
GAMCO Investors, Inc. is currently trading at a low multiple of 5.2-5.7x trailing operating income, presenting a potentially attractive investment opportunity. The company has a clean balance sheet with zero debt and excess cash and securities of approximately $150 million. GAMCO is aggressively returning capital to shareholders through share repurchases and dividends, having returned 19% of its market capitalization in 2024. The firm’s AUM appears to have stabilized, and the rate of outflows is expected to decline, potentially enhancing intrinsic value. The dual-class share structure and Mario Gabelli’s leadership provide strategic stability, while the potential for a future leadership transition could unlock further value.

BSD Analysis:
GAMCO’s strategic focus on share repurchases could lead to a scarcity of public shares, potentially driving up the share price. The company’s disciplined capital allocation strategy, under Gabelli’s leadership, has historically balanced productive investments with shareholder returns. However, the asset management industry faces ongoing challenges from the rise of passive investing and market volatility, which could impact GAMCO’s performance. The firm’s defensive equity strategies offer some protection against market downturns, but liquidity risks remain due to the low float of A shares. Investors should consider the implications of Gabelli’s eventual departure, as his compensation structure significantly impacts the firm’s profitability.

Pitch Summary:
Vopak, a leading liquid storage company, has faced recent market challenges due to concerns over fossil fuel demand. However, the company is adapting by focusing on natural gas and low-carbon fuels and securing long-term contracts with inflation-linked pricing. Vopak’s joint venture, Aegis Vopak Terminals, IPO’d in June 2025, and its stake is now a significant portion of Vopak’s market capitalization. Despite market neglect, Vopak’s strategic shifts and share repurchase program suggest undervaluation, presenting a compelling investment opportunity.

BSD Analysis:
Vopak’s strategic pivot towards natural gas and low-carbon fuels positions it well for future energy transitions. The company’s long-term contracts provide revenue stability and mitigate market volatility. The successful IPO of Aegis Vopak Terminals, a joint venture with Aegis Logistics, underscores the value of Vopak’s Indian operations, contributing significantly to its market capitalization. Vopak’s share repurchase program indicates management’s confidence in the company’s undervaluation. With a strong operational foundation and strategic focus, Vopak is poised for growth, making it an attractive investment in the energy sector.

Description:
Jason Burack of Wall St for Main St interviewed returning guest former senior executive at Hess Oil for many years and the …

Transcript:
Hi everyone, this is Jason Ber with Wall Street for Main Street. Welcome back for another Wall Street for Main Street podcast interview. We’re recording this interview on Friday the 13th, 2026. West Texas intermediate crude oil prices, they’ve been in a trading range still. President Trump and a lot of the people from the Trump administration are they constantly pretty much every single day they’re on business TV. They’re on Fox News. are on all the major uh news left and right. Cable outlets saying we need uh lower oil and gasoline prices there is no inflation. Drill baby drill. West Texas Interme crude oil prices are stuck in a range at $62.89. Brent crude is at $6768. So just under 68. Natural gas did rally briefly I think during that storm uh about 10 days ago. It’s back down to around $324. Um, today’s special guest is a returning guest. He’s a former senior executive at Hess Oil for for decades, specializing mergers and acquisitions. He’s the founder and president of the Energy Perspectus Group in Houston, Texas. Amazing insights into the oil and natural gas industry. He knows pretty much everything there is to know about the oil and natural gas industry because he’s worked there his entire career. Dan Stefins, thank you for joining me again. >> Yeah, thanks for having me. We live in interesting times, my friend. >> Oh, yes. I mean, and that’s like the stuff with Venezuela over the last couple months. And uh you know, I saw on on social media that Trump that Trump was potentially moving the naval fleet into the aircraft carrier Abraham Lincoln was in Indian Ocean that had been moved and a fleet of C7s, the bombers were being moved within striking distance of Iran. I mean, uh obviously like not in favor of all these regime changes, but I don’t have a vote in the matter. A lot of this stuff’s happening. But I I want to ask you about oil and supply and demand right now because uh I talked a little bit about the narrative going on that uh oil and uh natural gas prices, excuse me, oil and gasoline prices need to go lower. There is no inflation. Is the oil industry besides maybe the shares of Exon Mobile, is it in a good sweet spot or state right now where the industry can earn a lot of free cash flow in the US and Canada? Well, that, you know, the oil price went from, you know, mid December, we were at 55 or so. Now we’re up to 62. It was, it actually went over 65 the other day because of, you know, concerned about what’s going to happen with Iran. Uh, I personally don’t, I think the negotiations with Iran are not going to generate anything. I think it’s just a delay tactic by Iran. Uh, plus, you know, no agreement on paper. Will they agree to, you know, they may agree to something, but will they actually do it? Like give up all their nuclear enrichment facilities? That’s probably the barebone minimum that he will accept. Uh Trump will accept. Uh the Abraham Lincoln fleet is on location. A second aircraft carrier group is coming to it to location and within a few days, it’s actually going to have uh a ton of firepower and whatever they want to do. But this is not something like we’re going to go invade with troops or anything. I think they’ll, you know, take out some of the key military sites, bomb a whole bunch of their missile capacity. I mean, they do have a lot of missiles. They have a lot of drones, but the uh probably the military is not very loyal at this point since uh the currency of Iran is almost like worthless paper now. So, uh it’s if you’re ever going to have regime change, now’s the time to do it. And you know, they have all these protests. Uh, I know some people that have uh that have family. I know a woman that has family in Iran and she said it’s much worse than what we’re being told. She thinks it’s maybe 30 or 40,000 people have been killed. A lot of, you know, several 20 30,000 have been jailed, you know, and uh, you know, it’s a terrible situation over there. I don’t know how this ends up for the people with Iran, but there’s no, you know, I if if Trump doesn’t get what he wants and and he wants a lot, he wants them to give up the missile program. He wants to give up, you know, uh, funding terrorist groups. And I don’t know if they’re going to agree with that. But also, I heard that the high level officials, the Iranian government are moving money out of the country as fast as they can because they’re going to hit the trail when this all starts. So, >> yeah, they’ve saw what happened in Venezuela, right? So, >> yeah. [laughter] They need an escape plan immediately. >> Yeah. And if you’re bluffing, you know, and Trump had this meeting with Netanyahu the other day and he comes out of the meeting and the military asked him, you know, what’s the deal? You know, and he says, well, you know, we’re really work we’re hoping for a a negotiated some. Well, do do anybody in the media really think Donald Trump is going to tell them about his war plans? If he’s got war plans with Netanyahu, he’s not going to share them with the media. >> Well, people are seeing that Iran stalling, and in the past, I think that is true. Iran did stall, but I think it’s the other way around this time. I think Trump is stalling and I think that’s to move in like you said the aircraft carriers and the bombing fleet cuz uh if we go back um the couple months prior to Venezuela and the um military or the police action where Madura was arrested, you know, in-n-out surgical precision strikes. >> Yeah. >> Uh in and out I think very similar things. So um I I thought that would happen a couple months prior. I was telling people, my educated guess a couple months prior to that happening with Maduro is that would happen and people like, “Oh, you’re crazy. He won’t do that. The US won’t do regime change.” I was like, I mean, he’s hinting he’s going to do it. He was just waiting for, you know, the uh basically the naval fleet to surround Venezuela and then they were what practicing for for weeks for a while to make sure that they had the right plan that was coordinated. So, I I hope I’m wrong where we don’t have a ton of military or anything like that, but uh the writing just looks like it’s on the wall for me, but I think like that’s the next >> The people in Venezuela will support it. The people in Iran will support it. Their lives their their economy is ruined. Their money’s worthless and uh they want they don’t want this Islamic uh religious leadership anymore. They’re tired of it. And if you’re going to have if you’re going to have meaningful peace, a chance for peace in the meaning in the Middle East, there has to be a regime change in Iran. That’s just my opinion. So, we’ll see how it turns out. But, you know, the problem with these things, you may get rid of the one regime and then what do you get after that? I don’t know how I’ll follow it up. >> Probably someone the US military, US government, US oil companies approve of. I mean, that normally at least that used to be the blueprint, the cookie cutter blueprint in the past. I don’t know if that’s going to be the uh blueprint going forward, but that used to be the blueprint. Um uh polling, you brought up polling that the Venezuelan people, Iranian people would be in favor of it. I mean, I think like they did a poll after the uh Venezuela arrest of Maduro and the US military went in and out so quickly and a lot of the Venezuelan citizens, I think it was 70%, it was over 60%. So, there was a lot of Latin Americans in a lot of different countries. I think Mexico had the lowest approval rating of it, but a lot of Latin Americans in uh throughout South America, Venezuelans and others actually approved of what the US did. So I I don’t know if that’s right or wrong, but >> terrible. >> Well, I think it’s mostly about the economy, right? That people are just fed up that like look, if the currency is destroyed, there’s no investment in the economy, there’s no jobs, there’s no economy, they can’t feed their families. So >> both these countries, you know, Iran and Venezuela, they have they have tremendous, you know, oil wealth. I mean, it just has to be managed better. Instead of, you know, spending all your money on military equipment and trying to enrich uranium, what if you helped your people have a better life? That’s just the way I see it. But anyway, >> I mean, look at Iraq though. Um, Iraq, the US occupied it for a long time. And there is their oil industry uh anything back to what it was decades ago because they have a they have a enormous uh oil reserves as well. >> Yeah, I don’t hear much out of Iraq, but I mean I I think it’s probably Yeah, they’re they’re a major oil producer still. They’re one of the top three or four in OPEC oil producers. So, >> so I want to ask you about OPEC. We’re at an oil price and uh before we started recording, I went and looked up capital expenditure cuts. So, 2025 there was a lot of capital expenditure cuts because the oil price at one point the West Texas Intermediate did get into the upper 50s and it’s been in a trading range. You know, every time there’s a rally, it seems like Trump just sends out more people talking about we need to drill more. Uh oil and gasoline prices can’t go too high. There’s no more inflation. Seems like an industry talking point. Um well, a uh White House talking point. Washington DC. Yeah. White White House talking point. >> Uh are we at a oil price where OPEC can actually make a profit at the current price or do you think they’re going to start to look at production cuts because we’re starting to see sizable capex cuts? uh some of the Canadian companies like uh White Cap which you cover in I think in the sweet 16 they’re mid-tier Canadian oil producer they did a huge acquisition what eight or nine months ago and then pretty shortly after they went and did the acquisition and it went through they then announced I think 20 25% capital expenditure cuts are we going to see more of that or do you think that OPEC at some point is just going to say we can’t um make profits and free cash flow at the current oil price we’re going to start to cut production >> well uh the only first of all the increase in production that there’s been only three countries accounted for about 90% of the increase in production last year. It was Saudi Arabia, UAE, and Guyana. They accounted for 90% of the world’s uh supply growth. There really isn’t that many OPEC plus countries that can even produce up to their quotas. Uh as of right now, they have uh decided to hold their quotas flat through March. Now [snorts] they are going to meet I think they’re going to meet on March 1st or 2nd to decide what they’re going to do after March but there is only a few countries that have upside potential and then still like I said a lot of the countries can’t produce up to their quotas anyway so it doesn’t matter if they raise their quotas uh you know cuz at these oil prices they haven’t been investing in in developing you know new supplies either and yes I think I’ve heard I think Continental which is now private company that Hail Tam’s company he has stopped all drilling up in North Dakota. Uh I I I think Ycap will be one of the companies that you know cuts back on their capex drilling. Uh but they can survive. I mean these companies are still cash flow positive when when oil is in the 60s obviously. >> Well look at the share price for Exon Mobile, right? So that’s like the superstar, right? That share price is going parabolic. My friend uh was buying the shares when it was out of favor. The share price is going parabolic. But a lot of the other what the small uh small caps and mid-tier oil producers in the US and Canada those their companies and stock charts are not doing as well as Exxon Mobile, right? So there’s more value there with a higher free cash flow yield. >> Yeah. And oil demand really does go up with economic growth. You know I Trump saying he thinks the economy is going to grow by seven 8 10 even mentioned 15% would be possible. You know I don’t know if that’s possible but if that would happen that that is creates a lot of oil demand. I mean, building all these new factories, building these AI data centers, that creates requires a lot of diesel. Now, see, in the winter months, and I know a lot of your people up in the Northeast know with all these snowtorrms, they’re telling people to stay off the road. So, gasoline demand does go down in the in the winter months mainly because they just don’t want, you know, people don’t want to get out and drive around on on snow and ice. But then once you get to the springtime, in the summer, uh, gasoline demand picks up. And to make uh summer blend gasolines requires more crude oil. In the winter months, winter blend gasolines, you can use mix in more butane and stuff into the gasoline. But in the summer months, that makes it evaporates, makes more air pollution. So you have to use more crude oil uh for it. So gasoline is never going to be a problem because the shale the shale plays have ultra light oil and that’s perfect for make making gasoline. We need heavy black oil to make diesel. And that’s one of the reasons why Trump, you know, took over control of the Venezuelan uh oil industry. Uh we’ll talk about that later, but I mean it’s got a lot of a lot of problems to increase production, but uh but we also get a lot of heavy oil from Canada. Uh but uh we we export a lot of this ultra light oil to the European refineries. uh we still export about five or six million barrels a day of our oil and in exchange we import six or eight million barrels a day of heavy cruds which we need uh for our uh diesel and uh right now uh the last report by EIA was US crude oil inventories are 4% below normal for this time of year diesel is about four or five% below normal for this time of year and gasoline inventories are up mainly because demand and uh consumption of gasoline was down uh because of all the winter storms that hit the northeast. But other than that, there’s no glut of oil in the world. We’re adequate adequately supplied right now. Uh another thing that is kind of getting m missed by these IEA reports where IEA keeps telling everybody that there’s this over supply coming is both China and the US are re refilling their strategic petroleum reserves. Well, that boil that goes into the strategic petroleum reserves is not available to for commercial, you know, refining. So that’s really not part of supply right now. And uh so that’s one thing. They also report when they report oil, they’re also including NGL’s. Well, that’s natural gas liquids. And you know, you can’t make gasoline out of propane and butane and ethane. You know, it’s you know, yes, it’s a hydrocarbon, but you can’t make gasoline and you can’t make diesel out of it. >> Yeah. It’s more for plastics or plastics and stuff, right? >> Controlling products. Yeah. >> And uh and you know, every finally IEA that at one time said oil demand was going to peak by 2030 is now giving up on that lie. That was a total myth. And uh demand >> well that’s cuz they were probably taking bribes from uh from the green energy ESG crowd. Look at all the scandals that are coming on Europe. I mean, like, I think there was a scandal in Finland, and Finland has extremely cold weather in the winters, and they had wind turbines that couldn’t um the wind turbines couldn’t even survive the cold winters. They froze up, the motors froze. So, I mean, like, these the the stuff that’s coming out, the corruption with the ESG, we’re going to need fossil fuels. I think I just saw President Trump announce that not only does he want to invest what in nuclear energy, a humongous amount at Davos, he was talking up nuclear energy, he wants to fund coal. So, clean coal, he wants to upgrade the clean coal fleet. I’m looking at the capex cuts. I just used AI on the search here. Konico Phillips, $1 billion capex cuts right now. And the industry overall, it looks like natural gas spending for capex is going to increase globally by about 7% this year with new LG projects in Qatar, Canada, and the US um coming online or under construction. But the oil capex could fall by as much as 4% right now. And that’s assuming the oil price uh Dan does not go back to the high $50 barrel range. That’s if it just >> if you just look at the active rig count, the active drilling rig count, it’s down about 80 or 90 rigs from where we were last year. We’re just not drilling and completing enough new wells to offset normal declines. Uh you know, you got about a million oil wells out there. Some of them are making one barrel a day, but uh they’re all on decline. All oil wells, you know, maybe increase. >> Are these pering basin? mean mostly like the um so they’re not reinvesting. Are these like the fracked wells um in the Peran basin? >> Yeah, the in the Peran basin the tier one the the wells that can make money at $60 oil. I would say that’s tier one. Okay. They’re in some of those wells are very profitable, you know, pay out in a year or so, you know, at $50 oil, $60 oil, they pay out in like a year because they come on so strong. But when you get out of those tier one areas, you’re going to need like 70 $80 oil. I’m you know I’m asked on a I’m continually asked at some of these conferences I go to. They ask are we running out of oil? We ever going to run out of oil? And I said well when I got into the industry in the late 19789 range, yeah, we had $10 oil. Then we ran out of that. Then we had $20 oil. Then we ran out of that. Then we went 30 40 50 60. Then we ran out of that. And you know, until the only thing that has kept oil prices down at all is the miracle, I call it a miracle of horizontal drilling and the and the multi-stage fracking. Uh it amazes to me that dr the common length now of a horizontal well is like two mile a two-mile lateral and some have drilled three mile laterals. And >> is that a lot more than in the past? >> Oh yeah. You know, it was a half mile to a mile laterals and then then, you know, just in the last couple years, we went to two miles, mile and a half, two miles. And now you got companies announcing three. Well, for one thing, you have to own the acreage. You can’t, you know, if you don’t own all those leases. And so, you know, three mile leases, you need like three sections and that’s to put that together. And that’s why uh horiz the shale plays are for the big boys. I mean, these these wells cost 78 $9 million, but they’re tremendously economic wells at 50 or 60. But here’s the thing. In the Perian Basin, we probably drilled 85% of the tier one locations. We’re down to about 15%. And uh you know, that acres is owned by people like EOG and Continental and Exxon uh because they took over Pioneer out there. Uh there’s some you know like Perian Resources, Matador Resource out in the per uh Perian base in Devon now uh you know Devon recently merged or is yeah I think they closed that deal and they merged with Cotera and they that now that makes them one of the top producing companies in the Delaware basin which is the western side of the Peran Basin. The Delaware Basin is a subbasin of the Peran Basin and some of the best oil wells in the world are being drilled in the Delaware basin. I mean, these these wells come on at like four or 5,000 barrels a day. >> Is a combined company for Devon is it going to still be around 50/50 mix of oil and natural gas or is it going to skew towards another way? >> Yeah, let me get it up here right now. I think >> because they were I think they were trying to focus a couple years ago. They did another acquisition a couple years ago and they their organizational philosophy was they’re going to try to be about 50/50. So 50% of revenue is oil, 50% of revenue is natural gas. That may have changed that may have changed though what given the the LG exports uh the demand for that and the data centers. >> Yeah, they’re pretty good. Uh they’re going to be one of the top producers and I think about half of their production is going to be coming from the Delaware Basin. Let me see if I can get to this. It’s not it’s not seeing my disc there. Uh anyone >> and that was what a $40 billion deal the merger um or acquisition. So about 40 50 almost $50 billion. >> Kera Cotera is merging into Devon. I think the deal closed in in mid January. Uh it’s going to be the second or third largest independent. Uh I think only maybe Oxy and uh Kicole Phillips or something is are larger producers than them uh in the in the Perian. Uh it’s a big deal and it it’s going to it’s going to create a really nice company. Now Cotera was had a lot of gas production in the Appalachia area and uh they still have that. So they’ve told the market that they’re they see a billion dollars in synergies by combining these companies and cost savings which means a lot of people are going to lose their jobs. But um >> is that the Marcela ship by Appalachia? You mean the Marcela shale where EQT has most of the acreage? >> Okay. >> Yeah. Yeah. Yeah. So they’re big there. Coter was one of the top producers in the Appalachia with which is Marcel’s and Udica shale. >> Okay. And are do they own like a lot of pipelines like EQT? how they just uh reacquired their pipeline company to so they can have the pipeline from the natural gas production back uh down here to Virginia, Northern Virginia for the data centers. Do you see a lot of the companies trying to copy what EQT did with that? >> Yeah, EQ EQT does have is almost like a fully integrated company with all the gathering pipelines. So is Antaro. Antarrow has pipeline connections all the way down to the Gulf Coast and they get a premium for their gas prices down there. uh they just made a deal, bought out a private company. I think it’s called HG Energy and uh for like two 2.8 billion or something. Let me see if I can get up here. Yeah, that’s I still have this one. Okay. uh they sold their assets for 800 million in the Udica shale over in Ohio uh eastern Ohio for 800 million and then they almost immediately announced that they were buying this HG Energy which their assets fit right in in a lot of it in West Virginia and the south uh western part of uh Pennsylvania. And HR resources is a very profitable company by the way and they uh get premium prices for their gas. They’re one of the top NGL producers and this deal is going to make them get a a nice uh their production mix will be about 30% NGL’s 68% natural gas. They only produce about 1 and a half% of their production is crude oil. So it’s pretty much a pure play on natural gas and NGL’s but very profitable. The only thing I don’t like about them is they don’t pay a dividend. They’re one of our sweet 16 companies. So, it’s the only sweet sweet 16 company that does not pay dividends. And I think >> was Entaro a lowcost natural gas producer. I’m trying to remember. There was one of the natural gas producers you told me about in the last year or two that was around a dollar production. They were one of the low cost. I can’t remember if it was Ent or another one. >> Yeah. Now, their gathering and and compression and processing uh cost are like 225, but all in their total cash cost is about 250 to get the gas out. But then but then that’s on an MCFE based now. But they produce a lot of NGL’s and the NGL NGL prices are are about half what oil prices are. So they’re getting a much higher price for their NGL’s. They’re what they’re like the number two NGL producer. It’s in the fourth quarter. They they did announce fourth quarter results just the other day and it was 199,000 barrels per day of NGL’s. Uh so that’s where they get a lot of their revenues even. So, they get more revenues from NGL sales than they do from gas sales. But they’re also, what’s really interesting is they’re going to have direct sales contracts with AI data centers. They’re building a lot of AI data centers in Ohio and uh they’re going to be able to connect right to those AI data centers and uh lock in some high prices. They also hedged quite a bit of their gas for January at about $4. So, they locked in that price. Yeah, there was announcements I think from Meta that they’re going to build a massive 1 gawatt data center in Ohio and that’s after already putting under construction I know the one in Louisiana near the Hannesville shell. Did you see about the Hyperion data center? So you’re in uh Texas there. It’s not right near you in Houston, but you have what the Stargate facility. So that’s not that far from the Peran Basin that that’s probably going to be using a massive amount of natural gas. Meta built the Hyperion data center which is massive in Louisiana there. They negotiated what natural gas contracts. Are you seeing a lot of these uh natural gas producers? Are they going directly to the tech companies or the tech companies going to the producers and it’s like a joint venture deal where they’re making sure they get reliable natural gas supply immediately? >> Yeah, that’s exactly what they’re doing. I I’ve heard that there’s 15 or 20 uh AI data centers going to be built in West Texas right in the oil field there right where they can get the gas and that’s going to be great for for West Texas cuz they’ve been pipeline constrained the Peran basin gas has been selling at deep discount because the pipelines are full you know they they have a lot of oil pipelines they also have gas pipelines but with the gas to oil ratio increasing the you know these wells come on strong even though they’re drilled for oil they come on strong they but they produce a combination of oil and gas. And as the oil production goes down, the natural gas production goes up and they don’t have enough pipelines to take it. So they’ve been, you know, selling their gas for 50% of what NX prices were. So if they can start building these uh day centers out there and they’re also building just power plants for the region. They’re building natural gas fire power plants for the region to produce the gas, which you know, never made any sense to me to have, you know, hundreds of windmills out there that they have to hook all those up to the grid. Why not just build more natural gas fired fire fire fired power plants and you just have one place you have to hook up to the grid, you know, and then just hook up build one like next to every decentsized city and you solve the electricity problem. But uh we’re going to >> there’s a huge fight now with the data centers, right? Cuz like here in my area, a lot of the political commercials on TV were very anti-data center and we have the most data centers. They’re the old data centers. They’re more like social media ones, not for next generation AI. Although uh a lot of the tech companies have bought land packages in the Northern Virginia and Maryland area for 9 figures. So they do want to build the next generation data centers, but those next generation data centers, Dan, uh the average person like doesn’t want them anywhere near them. You’re seeing politicians say that the tech companies have to get their own power supply. So they’re telling the tech companies now, you have to build your own pipelines. You have to build your own power plant. We don’t want uh you interfering with high electricity prices and driving the electricity prices and taking away the energy and electricity for regular people. You have to have your own reliable power supply and it has to they want the data centers away from cities now. >> Yeah. I uh one of the companies in our sweet 16 actually is an oil field service company that about seven or eight months ago got into the building of uh power plants for AI data centers. That’s what they do. They build modular, not for the really big ones, but you know, smaller module stuff. So, they’re they’ll have their own electricity. Uh it’s called Solaris Energy Infrastructure. So, their uh stock price was uh on January 1st of 2021 was $8.30. It closed on Friday at $5663. So, it’s been quite a like an 800% increase, but just in the it was our best performing stock last year and uh you know when half of the sweet 16 we were actually down for the year, it was the top performer and up about 60% and this year they’re already up 23% year to date since just January 1st and it pays a little dividend and very profitable. And every time I listen to talk to them, they’re announcing another contract with an AI data center. they they have, you know, their their their forecasted, you know, workload is out to like three years now. So, it’s going to be uh and it is pretty small company, but it’s getting big real fast. But that that’s a that’s definitely going to be big for this for the gas industry as well. >> Okay. So, they already have some cash flow or is the market just reacting to like the announcements of the contracts in? >> Yeah, it’s free cash flow. There are other businesses they handle frack sand for well completions but it’s already a very uh profitable company. >> Yeah. So follow the investment follow the money follow the investment follow the capital expenditure. If the capital expenditure starts to drop rapidly then the data center infrastructure companies will probably those chair prices and their their uh business operations their cash flow their profit margins will start to dry up. But right now it seems like they’re in a huge growth and huge sweet spot where a lot of the tech companies I mean I think Meta just announced a huge increase in the amount of uh data center spending. So some of the tech companies are talking about cutting back. I I know that’s like a popular theme that AI is in a bubble. They’re overspending on data centers. I I think you know there’s a chip war. So like everyone was like oh you can only use Nvidia chips. There’s huge competition now even with that. I I if I were to bet on a major theme though for this, I I think the main winners are going to be what? Energy and electricity, the infrastructure companies, so nuclear power, natural gas, those seems to be the long-term winners that are the safest bets out of all this uh long-term trend, >> you know, and I think AI data center data centers are just one of the big you have all these manufacturing companies that that Trump’s talking into moving back into the US and building factories here. Man, building factories takes a lot of diesel to build them and they’re all going to need power. They’re all going to need electricity, right? I mean, if you’re man if you’re moving a car manufacturing place here, you need a lot of electricity to run that run that line. Uh I I think the outlook for >> especially if you switch to robots, I mean, cuz like BMW, the BMW factory in South Carolina is already testing humanoid robots that are running there for the last 6 months. So, I mean, if they switch to robots, that’s going to use even more um raw materials and electricity. Yeah, I’m I’m very I’m bullish on GA now. We’ve had a little bit, you know, break in the weather here. So, we’ve had a warm up in the weather and that’s, you know, reduced to in the first quarter of every year in the win during the winter natural gas prices are determined 100% by the weather forecast. They react m well. So, if let’s say in two or three weeks we’re having another polar vortex come in and uh then the price will jump up a couple bucks to you know 450 or something. Uh but uh crude oil, I think we’re going to see $70 by the end of the year. I think we’re going to see it start really tightening up once we get to, you know, May, June, you have the summer driving season just ahead. That alone, just the conversion from winterb blend gasolines to summer blend gasolines increases crude oil demand like a million barrels a day. And uh you like we talked earlier, there’s only a few of the OPEC countries that have additional supply, it’s going to tighten the market up pretty quick. And and with all the White Cab’s not going to be only one. You’re going to have, you know, Diamondback’s going to cut back their their drilling program. And you’re just going to they’re basically telling Trump that look, we’re not going to do drill baby drill unless you let the oil price go higher. Now, Trump definitely wants to keep gasoline prices as low as he can leading up to the midterms, right? >> Yep. >> Well, I think Saudi Arabia is going along with that plan maybe for now. You know, that’s maybe possibly can suppress them by then, but I think once we get past the intern, the midterms, I see oil jumping to $70 real quick. And let me tell you, these stock prices are nothing close to where they will be if people have confidence that oil, even if it just firms up over 65. >> Well, other than Exxon Mobile, which those shares are on fire, I think like the rest of the oil and natural gas industry, especially a lot of small caps and the mid-tier producers that have uh some free cash flow, the free cash flow yields, Dan, are some of the best and it’s the cheapest, most undervalued sector, especially in commodities, but maybe of any industry. If you remove Exxon Mobile and Chevron, which seem to be the two star performers, but the rest of the industry, there’s really high free cash flow yields. What between 9 and 15%, especially for Canadian producers. Yeah. So, there’s very high free cash flow yields for a lot of these producers. >> Every every one of our sweet 16 companies, which is growing production, which are very profitable. All of them are profitable. They’re all free cash flow positive at $60. They’re all free cash flow positive at $55. But they’re all they’re my 20 26 forecasts look really good as a group. They’re they’re trading now for like four and a half times operating cash flow. These companies should all be trading for over six times operating cash flow. When I was at Hess, I worked in business development and we were always looking for companies to take over. If we could buy a company for six times operating cash flow, they were on our they were on our takeover list, potential cap takeover list. And so we were always tracking four, five, six, you know, companies that we would consider as takeover targets all the time. And, you know, I saw um who was it, Shell, uh I think Kicole Phillips, there was several of the majors have already announced their year-end reserve reports and they did not replace their reserves. They they only have like eight or 10 years of, you know, reserves of running room in their in their proven reserves. And so what they’re going to do, they’re going to go out and buy some of these companies. You’re going to see more takeovers. I don’t think this, you know, this Cotera uh merger, you had Civotas merging into uh SM, that’s another one I think’s outstanding. Uh there’s been several, you know, smaller, I say smaller, these are multi-billion dollar uh mergers. And uh I think you’re going to see more M&A if uh the oil prices firm up at all. >> Yeah, I totally agree. I mean, we saw that um I think they thought the bottom in oil was 9 10 months ago. So, we saw some M&A, but if it’s if the valuations continue to be as attractive as you said, we’ll see even more. And then we’ll see a similar strategy to what Whitecap did where they did a large acquisition and they they integrated the assets and then they cut the capital expenditure um on the existing total uh overall company especially for the oil production saying that we don’t need to uh grow for gross sake. We need to focus on efficiency, cut our cost, cut our profit margin, cut our overhead, and I think you’re going to see more of that where the companies will buy assets. There were rumors uh what Diamondback was um what Exom Mobile or Chevron were looking at Diamondback uh six or seven months ago. >> Yeah, that would be that would be a major deal. You’re you’re talking like 60 or 70 billion dollar deal to get Diamond back. Uh Diamondback’s a big company and they control some of the best acreage in the Perie Basin. They have some of the best well-level economics in the entire world. It’s it’s just a great company and uh you know this it’s at 100. Let’s see what the stock price is here. It’s a hundred and something dollar stock. Let’s say more. Okay. It closed on Friday at $169 a share. My current valuation uh is $200 per share. uh the the first call price target is like 180 but I think you know and that’s because a lot of the Wall Street analysts energy sector analysts are still using very low prices in their price forecast. So that that’s another thing is once you know it gets accepted that 65 is the right price or $70 is the right price, you’re going to see a revaluation of a lot of these companies and and they’re going to be raising their price targets after they get year-end results because only a few of them have announced uh December results. uh just you know looking at YCAP looks really really good. Y I’m moving >> YAP YCAP is actually on the value investors list. So for generalist investors I was looking at value investors list. These are not oil experts like you. These are like hedge fund people and investment bank value investor list. YCAP is coming up as a attractive value play in uh for uh free cash flow yield for other industries too. So it’s coming up on general value investors list now. So I think that shows It’s a big company. That Von deal was big. It took them from like 180,000 barrels a day to their third quarter production was 374,000 barrels a day. If they just hold it, like my forecast for next year, I’m forecasting that they hold production flat at just 375,000 barrels a day and they can just do that with like maintenance capital. They’re going to be producing a ton of cash flow. They’re going to going to be generating uh probably well over a billion dollars in free cash flow. They’re going to be generating like $3 billion in operating cash flow and a million a billion dollar be free cash flow. Uh >> so 30% 30% uh free cash flow. Wow. Yeah. >> It’s it’s an incredibly profitable company. Incredibly profitable. It and it pays a nice dividend. It’s got like a five or six% dividend yield. >> I want to ask you with the oil prices where they are. um in the past if the oil prices were trending down or in a range the oil refinery so your valos and some of the others could make a lot of money or do you think that they’re struggling then to get with the heavy sour crude that they need and that’s uh you mentioned that you think that that’s why the uh Trump administration did the police action and went in and did a regime change and arrested Maduro there with the military strike in and out. Uh do you think that the oil refinery companies in the US like Valero and some of the others that have Gulf Coast operations are they profitable right now or do you think that this time is different given where the oil >> they’re profitable and I but I I don’t with the rise in crude prices I think their margins are probably come down. I don’t really follow the refineries that much. I just follow a few of the midstream companies. I’m primarily just focused on the upstream companies and um anyway I yeah I I I mean Valero they’re a great company there no no doubt about it. I mean you’re just buying them kind of for dividends and and you know steady growth. We’re going to need refined products for a long time. So they’re they got a big fix on it. >> Well Valero normally does well in a lower oil price environment because they have what cheaper inputs. But given that you think that we could have like oil’s been rangebound now for what 18 months. So, it’s been in a bare market to rangebound. Now, I would argue that’s probably the cheapest on a valuation basis for a free cash flow yield out of any of the S&P 500 sectors if you move Exon Mobile and Chevron because like Exon Mobile, like the chart on Exom Mobile’s just like it’s the rest of the industry is not benefiting like Exon Mobile. [laughter] No, >> but they, you know, Valero, they buy a lot of their oil on long-term contracts and they hedge a lot of it. So, they they lock in prices. these these you know these war related or what do you call geopolitical you know spikes in the oil price don’t really affect them as much because they they bought the next six or eight months or a year’s worth of oil already at a fixed price. So >> are are the Canadian producers you cover are they benefiting from these uh Canadian oil and natural gas pipelines coming online and increasing capacity and the Canadian LNG export facilities yet? Yeah, they’ve they’ve completed some oil pipelines, expanded some export capacity to the west coast. That’s uh reduced the differentials. The fe the thing with Venezuela has actually hurt the heavy oil producers up in Canada. Uh because if we start if we would start getting a whole bunch of heavy oil from Venezuela, it it’s not going to happen overnight, but if we would, that would hurt uh the price up in Canada a little bit. They’re dependent on our market quite a bit. But uh yeah, some of our best gains came on these small uh Canadian companies last year. Uh we had Spartan Delta was over up 100% for us, but Canada was because of big oil discoveries uh big oil wells. They were uh announcing in the Duivere shale play up there, but they’re primarily a gas producer, but they’ve been announcing some really big oil wells and I still see upside on that one. Uh Jouri was in partnership with them. Oh, Bayex is an interesting story. They just completed a sale of all their South Texas assets and the sales proceeds are almost equivalent to the company’s total debt. They’re going to pay off like a a bunch of their senior notes with this this and they’re going to keep like a billion dollars worth of cash on the balance sheet and they’ve got some tremendous running room up in Western uh Canada. And uh that’s a very interesting stock and the stock price is only like $4 Canadian. Uh BTE is a symbol. Bayex uh I liked it. I liked it for the South Texas stuff, but they got an offer they couldn’t refuse. It kind of came out of the clear blue sky and and they were able to sell it and pay off all their debt. So that’s great. >> So you think the Canadian companies uh got unfairly punished with the Venezuela that the market overreacted? Because when when I’m listening to the oil executives, whether it was that hearing that Trump had with what the CEO of Chevron and Exon Mobile wrote that shell some of the other guys or Harold Ham from Continental Resources, they’re basically cautioning people that look, you should not be that optimistic about Venezuela. It’s a disaster. I mean, I’ve I I worked with Robert Rapier. He worked at Kico Phillips when the Venezuelan government confiscated their assets. So, I’ve heard stories from him. You were telling me stories before we started recording. I’ve been reading articles about Venezuela. It sounds like uh Harold Ham did an interview. He said at least he’s like best case scenario at least a hundred billion needs to be invested in like pipelines, refineries just to just um basic level of investment. And then he was like that assumes that it’s safe in Venezuela. So a h 100red billion just for the pipelines and the refineries and some of the other oil infrastructure there. And that doesn’t even count like is my capital safe? are my employees going to get kidnapped or held hostage or something like that? It just doesn’t sound like any of the Venezuelan oil production where what at one point, Dan, they were producing 4 million barrels a day. That was uh 20 years ago. >> Three and a half four million barrels a day and now they’re down to under a million. Under a million. >> Yeah. So basically like it’s looking at many many years and hundreds of billions if not I’ve seen estimates someone someone put out a report saying a trillion dollars or more of investment needed for Venezuela to get >> [laughter] >> That sounds odd. But I can tell you when we this is 30 years ago or so when I was at S that we were going to buy this company Lasmo which was a a British company but they had all these assets in Venezuela and yes they have massive reserves but they’re not economic to produce. They’re they’re they their recoverable reserves that they report. They say they have the biggest oil reserves in the world. Yeah but it’s not economical. You probably it’s their real reserves that are economical at 60 $65 oil is maybe like 20% of what they report. Okay. It’s heavy heavy heavy sour crude. Very difficult produce. It’s like ooze. It’s like it’s like u if it comes out of the pipe it’s like thick jell-o or something and you have to put all these dilutants in it even just to move it through pipelines. We we sent a team down there that to examine the what we’re going to buy and they said the oil field was a a a total economic dea uh e um environmental disaster. The the gathering lines were on top of the ground. Every other joint was leaking. They had to build they had to build these elevated wood like sidewalks so you could walk around the oil field because the oil the ground was saturated with oil. And he said it was just it’s just terrible. >> So it’s like a tarpit. It sounds like a tarpit then. How what trap like the dinosaur like the woolly mammoth or the saber-tooth tiger? Sounds like a tar pit in Labraa there. >> And it’s pretty far inland and I mean it’s over the mountain range. You got to go in there and to get it out of there by pipeline. It’s hard to move even by pipeline. So, uh you know, Chevron’s in there. I think they’re they’re happy that they’re having some regime change or whatever, but I don’t see Exxon or those guys going back in there very soon unless unless there’s a real switch in the government. >> Well, and any good assets from what it sounds like that were in the oil industry, they were sold off and gutted. So, basically, there was just um the uh Yugo Chavez government, the Maduro government, the corrupt military and bureaucrats there that were, you know, buying mansions in Miami with the stolen funds or I saw a documentary from Real Vision TV. I don’t know if you saw it. They did a documentary seven or eight years ago on Venezuela talking about how like the Venezuelan people got cheap discounted oil and gasoline at the pump for way below a dollar. But then the corrupt government officials would fill up like um a gas station tank. You know how like um those large big rig trucks uh when the gas station is out of gasoline, they come in and they fill it back up. that the corrupt government officials and military officials would fill up that tank for a couple bucks and then drive it across the border in Brazil or Colombia and sell it for millions of dollars at full Yeah. at full market price and then they’d go and buy a mansion in Miami or somewhere. >> So >> yeah, it’s insane. It’s terrible. >> And that was going on for for literally for decades. So the Venezuelan people were just they didn’t get any of the benefits of all that oil and all the wealth natural resources. So, it’s basically I I almost starting from scratch or in some cases even worse than that. >> Yeah. I tell you what, if I was an Exxon shareholder, Kicle Phillips or something, they decided they were going to go in there and spend $100 billion or something, I would be dumping my shares like immediately. I think that would be the dumbest financial decision ever. You got to have security, you know, and Exxon’s saying, “Hey, they won like law, you know, in international court that Venezuela owes them 50 or 60 billion dollars and they said we’ll go in there when they pay us that back.” Well, they’re not going to pay that back. They can’t pay it back. They don’t have the money. I don’t know. It’s I I wouldn’t touch it. >> Well, they there needs to be what? There needs to be private property rights, rule of law. There needs to be safety. So, we saw this in Mexico with the silver mine, Vista Silver. There was a drug cartel, a kidnapping and a hostage situation. Five mining executives at the mine in Mexico. This new silver miner just died. They were held hostage and then they were killed by I think a a drug cartel. And Venezuela right now is a very very dangerous place. So there needs to be safety. The mining companies, not the mining companies. So your larger oil companies, Dan, are not going to send in what any senior executives there. They’re not going to want to be there. It’s not safe to bring your family down there right now. It sounds like there needs to be a huge amount of safety in place first. >> Yeah, there does. Yeah. Anyway, oh well, if I would tell if I could tell your listeners if you’re interested in what we do, uh we look we’re looking for undervalued small caps, midcap companies primarily. I don’t really look at the big big ones. I’m looking for ones that the Wall Street gang isn’t quite aware of yet and is is valuing. uh and we publish reports, individual reports on the companies on the newsletter. We have three model portfolios. Uh the sweet 16 is our kind of midl large cap companies, upstream companies, and I have small cap growth portfolio and a high yielding portfolio. And uh I’m doing some work there. Uh we just added Flex LNG, which has a dividend yield of 11.5% that looks very secure. So uh there’s a lot of good dividend plays in the energy sector uh because a lot of the stocks are just grossly oversold for one thing. Anyway, >> oh so for natural gas pipelines, I want to ask you connecting to the data centers, you have a a yield portfolio there for energy perspect perspectus group besides the um sweet 16. Are you focused on natural gas pipeline companies? Are they announcing new growth opportunities with deals with some of the tech companies and the data center companies to where like they’re going to build out a new pipeline quickly in the Perian Basin or in Louisiana or the Marcela Shell play what they’re up there in Pennsylvania? >> Yeah, I don’t Yeah, the midstream companies I I I’ve covered Antarridge uh One Oak and Plains All American and my top pick for dividends is Plains All-American because it has a dividend yield of about eight 8% or so. Oh yeah, 8 and 12% dividend yield and it’s it’s told the market repeatedly it’s going to increase the dividends for the next like 3 years. Uh cuz they’re they’re generating a ton of cash flow. Um, but I haven’t heard any of them talk about direct deals with the AI data centers because I think the the if they build the data centers near the oil field, the upstream companies themselves can build a line directly from their wells uh to the AI data center. Uh, like you know, you could get gas from anywhere in the Pering Basin in West Texas. uh that Stargate one in Abalene. I think they’re going to have, you know, gas coming right out of the ground. Uh we follow a little Canadian company called Pine Cliff. They’ve already got one contract in place to uh supply their gas literally right out of the ground. They’re going to have to, you know, uh take some fluids out of it, you know, do some some separation and take it right to the AI data center. It’s a small AI data center. small deal, but they’re they’re going to we’re working on two or three more deals with AI data centers. So, there’s going to be they’re going to be building them in Alberta as well. >> The market is really starting to buy up a lot of the larger ones though. So, like your Kinder Morgans, your energy enterprise products partner, energy transfer partner. Some of the larger ones are already getting bit up because what uh a month ago, about a month ago, Kinder Morgan announced earnings and they had a huge earnings speed, huge earnings surprise. And a lot of it was because of natural gas pipelines building out uh the natural gas pipelines to the data centers. So the market is already figuring out that this is a long-term trend that the infrastructure play. So the larger cap ones like in Kinder Morgan, their growth and their earnings are already starting to get priced in. >> Well, you know, I heard a lot of the, you know, the wind is solar people say that natural gas is a transition fuel. It’s going to be the transition fuel until we get enough windmills and solar panels. Let me tell you >> transition for decades until we have new nuclear power plants, better next generation. >> Yeah. [laughter] Yeah. Wind is solar. I wouldn’t touch with it. You know, I wouldn’t spend a dime on it. Uh natural gas is the future. It is the future. It’s it’s there. No doubt about it. We have we have tremendous natural gas reserves in the United States. It’s a clean burning fuel. It it’s great for generating electricity. It’s also great for running vehicles on on compressed natural gas, even LG for uh 18-wheelers. And when when diesel gets too expensive, one thing you’re going to see is a big move for the the trucking companies to switch their engines over to run on compressed natural gas. Uh I went to a conference 10 years ago or so at Rice University where we actually talked about that being a pass a possibility. The thing is you just got to build more, you know, filling stations where they can fill up with compressed natural gas along the interstates and then that could happen. But it they’re very clean. They’re they run better. They natural gas can have high high uh octane levels and the engines can run very well on it. Uh so that’s the future. >> I think natural gas has more um more growth than any other than nuclear power. Yeah. Well, so you have liqufied natural gas exports coming online in the US and Canada. Obviously, there’s other countries too like Qatar, Norway, Australia that have uh liqufied natural gas exports uh facilities that are being built now and increasing. But you also have the data centers. And so the US, the tech companies, we have the largest tech companies in the world. They all have very large budgets, tens of billions of dollars. Now maybe there is some cut back on the data center capex but there’s a lot of data centers under construction right now Dan and it seems the we can’t build nuclear power plants very quickly. So the tech companies they’ve negotiated some nuclear deals but if they want to bring the data center online now they need natural gas. >> Yeah. Yeah. Yeah. I tell tell your listeners I tell you that go look at Solaris Energy Infrastructure. It’s a very interesting company and I just finished today a report on Flex LNG. I’m very impressed with that one, too. It’s got mo a modern fleet of LG tankers. I think they have 13 that are under long-term contracts. They have very secure revenue flow and it pays an 11 and a half% dividend. I mean, we’re going to find that anywhere. >> They just own LG tankers. So, they don’t own like a LG export facility like >> Chener. They’re just a transport. They’re just shipper. They’re shipping them. >> Okay. Okay. So, that’s under what? That they’re not exposed to spot prices. They’re doing contract long-term contract deals for shipping then. Yeah, I think they have 10 of their 13 ships are under long-term contracts, like 30-year contracts, not just, you know, short-term. They have they have like three three of them that are spot prices, but >> Okay. Well, as we wrap up, you actually had a great story on Cargiller for Venezuela because I see a lot of people like, “Oh, I’m going to start investing in Venezuela. I I don’t think it’s safe right now. I need to see a lot of of hurdles cleared. there’s still a lot of uh enormous amount of uh violence and geopolitical risk. I don’t think it’s safe for foreign investors yet. You’re telling me about Cargill and I I kind of heard a similar story from someone else that like the Venezuelan government, a bureaucrat with the military, a bunch of armed military people came in and just seized a Cargill factory. For our listeners out there, what they’re a agriculture company and what they make rice and pasta. They were one of the main agriculture companies in Venezuela for years. >> Yeah. and they just took all their equipment and sold it. They actually sold the >> the seed the seeds they had for the next year’s planting and they sold those seeds. >> So, >> well, they were ripping off they were ripping off the Venezuelan people, Dan. I mean, like the the bureaucrat there, the the Wesley Mouch, you know, from I don’t know if you’ve read Atlas Shrugged, the Wesley Mouch type bureaucrat there who uh is not capable of anything useful, came in with a bunch of military people behind him with, you know, humongous amount of guns and tanks and stuff and just said, “You’re stealing from the Venezuelan people. You’re overcharging them for instant rice.” This is that’s the Cargill story I heard. I they they they confiscated the instant rice factory [laughter] >> for years and said they were being overcharged and then the Cargill company was handed back the factory a couple years later and there was nothing left in the factory. All the assets >> exactly the story that’s exactly the story this guy and he he knows the CEO of Cargill personally and that was exactly the story he told me when they got the factory back there was nothing left just an empty shell. Well, yeah, there was like homeless people in there and yeah, so all anything of value, any equipment or metal, full asset stripping and sold. And so like a someone in the military or the government or bureaucrat or a friend with Chavez or Maduro could go buy a mansion or a private jet somewhere. >> It’s a full klepto. They called it the person I spoke to said it was a kleptocracy for decades. >> Yeah. Terrible. Well, I I don’t I do not blame I know Trump is angry with the COX on mobile, but I do not blame him for the comments he made. I would not invest there either. [laughter] >> He’s got a long way to go. All right. Well, Iran’s the near-term story. We’ll see what happens here in a couple weeks, I think, there. So, >> well, either way, if whether there’s Iran or no Iran, I think like the oil price has been in a trading range. There’s a lot of good value there, especially in Canadian oil producers and some of the smaller and medium-sized US producers. Obviously, you know, Exxon Mobile, like the share price is just on fire. I probably wouldn’t buy that right now. I’d wait for a dip. But there’s good valuations for smaller and mediumsiz companies in the US and Canada that are free cash flow positive. And I think um out of some of the other companies and sectors, I think oil probably has the best value. >> Yeah. There just just think about there’s there’s no more $60 oil. There’s not much $60 oil left. So the oil price has to go up. So what you want to do is buy the companies that hold a whole bunch of acres. That’s why Diamondback is so valuable. They have huge leaseold uh held by production leaseold with tons of upside uh for development if the oil price goes to just 70. I mean they got a lot of upside but it’s not going to ramp up quick because the oil field services companies have declined. They’ve let go a lot of people because they, you know, with the rig count going down, the oil field service jobs go down and it it just doesn’t you just turn it on. You can’t turn it on with a switch. You got to go hire people. Got to mobilize a lot of equipment and it’s expensive stuff. So, uh, >> sounds like you just laid out the case for why a larger oil company might be targeting diamond back there. Sounds like their assets are attractive. >> I’ve heard that rumor. I’ve heard that rumor from our people in Midland. We have members out in Midland. I’ve heard that several times. So, we’ll see. But it will be a big big deal if that happens. >> But you don’t see any evidence of drill baby drill though. So, that’s just like the Trump administration and some of his advisers. That’s what to try to uh to manage expectations for inflation for the congressional midterms coming up. >> Yeah, there’s no drill baby drill at this at these prices. Uh there is now there’s going to be more drilling for gas wells, but there’s not going to be more drilling for oil wells. Yeah, I’d rather for for natural gas, I think I’d rather get exposure to the pipeline companies, but like Kinder Morgan, the shares are up enormously. I’d wait for a pullback. I wouldn’t go out and buy Kinder Kinder Morgan immediately, especially with the earnings beat. That’s going to bring a lot of uh attention. So, it’s going to be on people’s radar now that they had a huge earnings beat there with their natural gas pipeline growth and demand from data centers and LG exports. So >> yeah, American also announced they announced fourth quarter results on February 2nd and they were pretty good. Uh another profitable quarter and uh they’ve said several times that they’re going to raise their dividend next year. So we’ll this year. Uh, horsey.

Pitch Summary:
SSP Group, a British concessionaire, operates food and beverage outlets in travel hubs. Despite a challenging business model with thin margins and high capital intensity, SSP’s recent cost-cutting measures and potential activist investor interest have sparked some optimism. The company’s Indian subsidiary, Travel Food Services Limited, IPO’d in mid-2025, significantly contributing to SSP’s market capitalization. However, the success of SSP’s turnaround efforts remains uncertain, and the Indian subsidiary’s value is not expected to be monetized soon.

BSD Analysis:
SSP’s business model faces inherent challenges, including high operational costs and pressure from lessors. The company’s recent strategic moves, such as closing loss-making units and reducing costs, indicate a potential turnaround. The IPO of Travel Food Services, a joint venture with K Hospitality Corp, highlights the value of SSP’s Indian operations, now accounting for 40% of SSP’s market capitalization. While this subsidiary presents a valuable asset, SSP’s overall performance and future growth depend heavily on the success of its restructuring efforts. Investors should monitor SSP’s operational improvements and any developments regarding the potential buyout.