| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Miller Howard's North American Energy portfolio posted negative returns for 2Q 2026 but outperformed its energy benchmark both for the quarter and year-to-date. The war in the Middle East drove oil prices higher, raising concerns about demand destruction, but the manager believes structural tailwinds for North American energy have only strengthened. US crude inventories continue declining, with the strategic petroleum reserve at only 45% capacity. Cumulative supply losses from Persian Gulf producers have exceeded 1.3 billion barrels since the war began. LNG demand is rising after Qatar lost two liquidation trains that could take five years to restore, forcing Asia and Europe to rely more heavily on North American facilities. US LNG exports have averaged 19 Bcf/d recently, above the 2025 average of 15.1 Bcf/d. The portfolio holds 25 positions across the energy value chain, including upstream, midstream, and refining companies. During the quarter, the manager exited Coterra Energy following its acquisition, trimmed Select Water Solutions after strong performance, and initiated positions in California Resources Corp, Targa Resources, and Williams. The manager expects higher demand for North American oil and gas to benefit upstream companies through price support, midstream companies through volume growth, and service companies through an improved commodity strip.
North American energy assets are positioned to benefit from structural tailwinds driven by the region's role as a stable, secure energy source amid global supply disruptions.
The manager believes the companies in the portfolio are well positioned to participate in the call on North American energy. Higher demand for North American oil and natural gas should benefit upstream companies and help support prices. Higher prices should result in more volume, which should benefit midstream companies. Service companies have historically benefitted from a higher commodity strip. The manager views this as adding up to a positive outlook for companies in the North American energy value chain.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 25 2026 | 2026 Q2 | APA, CNQ, COP, CRC, MPC, TRGP, TRP, VLO, WTTR | energy, Exploration & Production, LNG, Midstream, Natural Gas, North America, oil, Refiners | - | Miller Howard's North American Energy portfolio underperformed in 2Q 2026 but beat its benchmark amid Middle East-driven oil price volatility. The manager sees strengthening structural tailwinds as North America becomes a more critical stable energy source. Tight crude inventories, rising LNG demand following Qatar supply disruptions, and accelerating US LNG exports support a positive outlook across the energy value chain. |
| Apr 28 2026 | 2026 Q1 | APA, CNQ, JPM, LBRT, OVV, TRP, XOM | AI Disruption, dividends, energy, Geopolitical, Natural Gas, North America, oil | - | Miller/Howard's North American Energy Fund surged 38.91% in Q1 2026 as geopolitical turmoil in Venezuela and Iran validated their thesis of concentrating on politically stable North American energy assets. The fund benefits from reduced geopolitical risk while capturing upside from higher oil prices, with portfolio positioned for continued outperformance through sector tailwinds and improved fundamentals. |
| Jan 24 2026 | 2025 Q4 | CHRD, CNQ, CVE, CVX, EQT, GPOR, HES, LBRT, MPC, OKE, OXY, PBA, PSX, RRC, SM, SU, VLO, XOM | Data centers, dividends, energy, Natural Gas, North America, oil, Refiners | - | Miller/Howard's energy fund returned 6.07% in 2025 while repositioning for long-term opportunities. Despite oil prices at inflation-adjusted century lows, the fund sees improving fundamentals with data center power demand creating new growth avenues. Active portfolio management reduced geopolitical and natural gas exposure while increasing refining positions, maintaining a 3.2% dividend yield. |
| Oct 19 2025 | 2025 Q3 | AR, BKR, DINO, EQT, GPOR, MPC, OKE, RRC, SU, TRP, WTTR | Canada, energy, Natural Gas, oil, Pipelines, Refiners, water | - | Energy equities extended their strong rebound despite lukewarm fundamentals, driven by structural supply fragility from shale's fast-decline profile. With US production expected to decline 2% and rig counts 30% below peaks, the industry's production flexibility remains undervalued. Portfolio activity focused on water treatment opportunities and natural gas exposure while maintaining a 2.9% yield. |
| Jul 22 2025 | 2025 Q2 | AR, BKR, DINO, EQT, GPOR, MPC, OKE, RRC, SU, TRP, WTTR | Canada, energy, Natural Gas, oil, Refiners, Shale, water | - | Energy equities extended their rebound with refiners leading on Ukraine war profits and Canadian producers benefiting from improved realizations. Despite lukewarm fundamentals, structural supply fragility from shale's fast-decline profile supports the thesis. Portfolio positioned for declining US production with water treatment and natural gas exposure while offering 2.9% yield. |
| Mar 31 2025 | 2025 Q1 | AESI, AR, COP, CVE, CVX, EQT, GPOR, HES, KMI, LBRT, SM, SOBO, SU, TRGP, WTTR, XOM | Canada, dividends, energy, Midstream, Natural Gas, oil, Trade Policy | - | Energy sector rotation drove Q1 outperformance despite flat oil prices. Portfolio emphasizes producers with long drilling inventory for stability, making ConocoPhillips the top holding while adding gas-focused Gulfport Energy. Trade tensions pressure Canadian names but manager maintains exposure on strong fundamentals. Current 3.0% yield supported to $40 oil with upside participation at higher prices. |
| Dec 31 2024 | 2024 Q4 | AESI, AR, DINO, EQT, KMI, LBRT, LYB, PBA, PSX, RRC, SM, SOBO, TRP, WTTR, XOM | AI, China, Data centers, energy, Natural Gas, oil, Pipelines, Refiners | - | Miller/Howard's energy fund outperformed despite sector weakness by defensively repositioning toward natural gas pipelines benefiting from AI/data center demand. Chinese oil demand disappointment drove sector weakness, but potential fiscal stimulus could reignite consumption. Portfolio offers 3.3% yield with attractive valuations relative to tech, positioning for opportunities across the North American energy value chain. |
| Sep 30 2024 | 2024 Q3 | AESI, CHRD, CVE, CVX, DINO, HES, KMI, OXY, PBA, TRGP, TRP, WTTR, XOM | energy, Midstream, Natural Gas, oil, Pipelines, Shale |
WTTR AESI |
Miller/Howard's diversified energy strategy proved resilient in Q3 despite 17% oil decline, with natural gas midstream rotation offsetting producer weakness. Added two services companies with unique drivers while maintaining confidence in approach that has delivered 100%+ cumulative returns since 2013 despite oil being down 25%. Strong balance sheets and low valuations support outlook despite 2025 crosscurrents. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
OilWar in the Middle East drove oil prices higher during the quarter. US crude oil inventories continue moving lower, sitting at 424 MMBbls, 2.5% higher than last year. The strategic petroleum reserve is only 45% full. Cumulative supply losses from Persian Gulf producers have exceeded 1.3 billion barrels since the war began. |
Crude Inventories Middle East Supply |
LNGLNG demand is rising after Qatar lost two liquidation trains that could take up to five years to become fully operational. Both Asia and Europe may further rely on North American facilities to restock inventories. US LNG exports have averaged ~19 Bcf/d recently, above the 2025 average of 15.1 Bcf/d. |
Liquefied Natural Gas Exports Qatar Demand | |
MidstreamThe portfolio initiated positions in Targa Resources, viewed as having one of the best growth profiles in midstream, and Williams, which offers peer-leading EBITDA growth. Higher oil and gas prices should result in more volume, which should benefit midstream companies in the portfolio. |
Pipelines Volume Growth | |
Exploration & ProductionThe portfolio holds multiple E&P companies including ConocoPhillips, Occidental, Canadian Natural Resources, Suncor Energy, and APA Corp. The manager initiated California Resources Corp for diversification due to its conventional, low-decline wells with Brent-linked pricing. Higher demand for North American oil and natural gas should benefit upstream companies and help support prices. |
Upstream Production Pricing | |
RefinersValero Energy and Marathon were among the quarter's leaders. Refiners should continue to benefit from lower product inventories. Marathon also benefits from its ownership of MPLX. |
Refining Product Inventories Margins | |
DividendsThis quarter 2 of the portfolio's 25 holdings announced dividend increases. The average increase was 2.6% year-over-year. |
Income Yield Payout | |
| 2026 Q1 |
AIAI disruption fears dominated market sentiment in Q1 2026, particularly around agentic AI capabilities that threaten software business models. The market shifted focus from AI infrastructure build-out to potential disruption of traditional industries, causing software companies to decline over 20% while HALO stocks gained. |
Agentic AI Software Disruption Infrastructure Hyperscalers Automation |
OilOil prices surged above $100 per barrel following the Iran conflict, though they remain below 2008 peaks on an inflation-adjusted basis. The geopolitical instability supports North American energy security and may drive long-term contracts with North American exporters. |
Iran Conflict Geopolitical Risk Energy Security Price Volatility | |
Natural GasLNG export tailwinds strengthened due to Qatar's facilities being offline and Middle East instability. Previous concerns about LNG facility overbuilding through the decade have faded, with North American sources becoming more attractive for global energy security. |
LNG Qatar Export Facilities Energy Security | |
DividendsDividend investing provides a natural barrier against chasing growth and offers a margin of safety in an age of disruption. High dividend yields combined with coverage create lower P/E ratios and reduced duration risk compared to growth stocks. |
Dividend Yield Coverage Ratio Duration Risk Valuation | |
GeothermalData center power demand continues to drive sector tailwinds, with companies positioned to benefit from increasing electricity needs. The conflict may have strengthened these tailwinds further as energy infrastructure becomes more critical. |
Data Centers Power Demand Infrastructure | |
| 2025 Q4 |
Small CapsSmall-cap equities ended 2025 on a positive but volatile note with the Russell 2000 returning 2.2% in Q4. The manager expects a constructive outlook for small-cap equities entering 2026, particularly within value-oriented segments, driven by Federal Reserve monetary easing and improving earnings momentum. Consensus expectations point to meaningful acceleration in small-cap earnings in 2026 with growth projected in the low-to-mid teens. |
Russell 2000 Earnings Volatility Value |
ValueThe manager emphasizes value-oriented positioning within small caps, noting that value stocks remain attractively positioned as growth stocks continue to trade at meaningful premiums. The strategy's portfolio trades at 12.2x forward earnings versus 15.0x for the Russell 2000 Value. Historically, periods of accelerating profits have favored value leadership, particularly within smaller-cap universes. |
Valuation Forward Earnings Premium Leadership | |
RatesThe Federal Reserve's shift toward monetary easing represents an important inflection point for smaller companies, which tend to be more sensitive to changes in interest rates and credit conditions. The Fed cut rates twice in Q4 to the current range of 3.50% to 3.75%. Lower borrowing costs should support refinancing activity, capital investment, and margin recovery for small-cap companies. |
Federal Reserve Monetary Policy Credit Refinancing | |
EarningsEarnings are central to the manager's optimism with consensus expectations pointing to meaningful acceleration in small-cap earnings in 2026, with growth projected in the low-to-mid teens and exceeding that of large-cap companies. This anticipated rebound reflects easier year-over-year comparisons, improving operating leverage, and broadening demand across cyclical and value-oriented sectors. |
Growth Operating Leverage Cyclical Rebound | |
| 2025 Q3 |
WaterThe Permian Basin produces three barrels of water for every barrel of oil, making wastewater remediation a key growth industry. Western Midstream's acquisition of ARIS Water Solutions at a 25% premium underscored the value of water treatment companies. The manager added to their Select Water Solutions position following this transaction. |
Wastewater Remediation Treatment Permian Solutions |
Natural GasUS natural gas prices fell more than 11% from mid-July highs due to tempered summer demand from cheap coal substitution, growing renewable capacity, and cooler weather. However, robust gas output growth more than offset rising LNG exports and secular AI-driven power demand. The manager reinvested into natural gas producer Antero Resources. |
LNG Exports Production Prices Demand | |
RefinersRefiners posted Ukraine war-driven windfall profits and were led by strong performance this quarter. Marathon Petroleum's earnings per share was 23% ahead of consensus on strong refining margin capture, with refiner strength continuing on Russia disruption. |
Margins Ukraine Russia Windfall Disruption | |
PipelinesCanadian producers benefited from improved local price realizations versus global benchmarks, a dynamic the manager has long positioned for in this portfolio. Growing anticipation for expanded Canadian oil pipeline egress under the country's new prime minister supported Suncor Energy performance. |
Canadian Egress Realizations Benchmarks Infrastructure | |
| 2025 Q2 |
WaterThe Permian Basin produces three barrels of water for every barrel of oil, making wastewater remediation a key growth industry. Western Midstream's acquisition of ARIS Water Solutions at a 25% premium underscored the value of water treatment companies. The manager added to their Select Water Solutions position following this transaction. |
Water Treatment Wastewater Permian Basin Oilfield Water Water Solutions |
Natural GasUS natural gas prices fell more than 11% from mid-July highs due to tempered summer demand from cheap coal substitution, growing renewable capacity, and cooler weather. Despite robust gas output growth offsetting rising LNG exports and AI-driven power demand, the manager reinvested into natural gas producer Antero Resources. |
Natural Gas LNG Gas Producers Energy Demand Power Generation | |
RefinersRefiners posted Ukraine war-driven windfall profits and were among the quarter's return leaders. Marathon Petroleum's earnings per share was 23% ahead of consensus on strong refining margin capture, with refiner strength continuing on Russia disruption dynamics. |
Refining Margins Geopolitical Ukraine Russia | |
| 2025 Q1 |
OilOil prices remained flat during the quarter despite energy sector outperformance. The portfolio focuses on producers with long drilling inventory to reduce volatility from short-term oil price fluctuations. Permian Basin production analysis shows rapid well decline rates, making longer-term price stability more likely than short-term volatility. |
Permian Basin Production Drilling Volatility Pricing |
Natural GasStrong natural gas prices boosted gas-oriented exploration and production companies during the quarter. The portfolio added upstream gas producer Gulfport Energy, which appears undervalued relative to natural gas prices. |
Gas Producers Pricing Upstream Undervalued | |
MidstreamThe portfolio trimmed midstream positions during the quarter, selling Targa Resources following strong performance and reducing positions in Kinder Morgan and South Bow along the energy value chain. |
Pipelines Value Chain Performance | |
DividendsThe portfolio currently offers an indicated yield of 3.0% which is well supported down to approximately $40/barrel oil, combined with a significantly larger variable return of capital commitment at higher commodity prices. ConocoPhillips offers strong long-term dividend growth potential. |
Yield Income Growth Capital | |
Trade PolicyTrade war drums weighed on Canadian producers despite strong operational results. Energy executives report conflicting messages about achieving both energy dominance and $50/barrel oil, with steel prices rising 30% amid tariff anticipation creating uncertainty. |
Tariffs Canada Steel Uncertainty | |
| 2024 Q4 |
Natural GasNatural gas emerged as a key beneficiary of AI-driven data center demand growth. Weather-driven price surges boosted natural gas producers like Antero Resources and Range Resources. The fund added natural gas pipelines as emerging beneficiaries of power-hungry AI/data center boom. |
Data Centers AI Weather Pipelines Power |
PipelinesThe fund established a full position in oil pipeline South Bow, a spinoff from TC Energy that owns the stable Keystone Pipeline. Natural gas pipelines were added as beneficiaries of AI/data center power demand. Pipeline assets offer stability and potential upside from infrastructure needs. |
Keystone Infrastructure Spinoffs Midstream Stability | |
ChinaChina remains the wild card for oil demand, where conjectured fiscal stimulus could reignite consumption. Disappointing oil demand growth in China drove energy sector weakness, with factors including rising EV adoption, falling population, and business down-cycle affecting the world's largest oil importer. |
Demand Stimulus Electric Vehicles Demographics Imports | |
| 2024 Q3 |
Natural GasPortfolio rotation into natural gas-focused midstream stocks delivered strong returns this quarter, partially offsetting oil producer and refiner weakness. Kinder Morgan is seeing excitement around long-term exposure to AI-related natural gas developments. |
Midstream AI Power Generation Infrastructure |
Oil ServicesAdded two energy services companies with idiosyncratic drivers: Select Water Solutions investing in water and wastewater pipeline networks, and Atlas Energy Solutions building a 42-mile conveyor system to lower sand costs to the Delaware Basin. |
Water Sand Delaware Basin Infrastructure Oilfield Sand | |
Shale ProducersDevoted significant resources to understanding remaining shale drilling inventory and quality. Confident that inventory-constrained companies will curtail drilling faster than prior cycles, helping restore market balance more quickly. |
Drilling Inventory Breakeven Delaware Basin Permian |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| - | Fund Letters | Miller Howard North American Energy Fund | WTTR | Select Water Solutions | Energy | Oil & Gas Equipment & Services | Bull | NYSE | E&P Support, Energy Services, Pipeline infrastructure, Wastewater Treatment, Water Management | Login |
| - | Fund Letters | Miller Howard North American Energy Fund | AESI | Atlas Energy Solutions | Energy | Oil & Gas Equipment & Services | Bull | NYSE | Conveyor Infrastructure, Delaware Basin, Energy Services, Logistics, Proppant Supply, Sand Mining | Login |
| TICKER | COMMENTARY |
|---|---|
| WTTR | Water infrastructure companies continue to see increasing demand for their services. We trimmed Select Water Solutions Inc after strong performance. |
| TRP | Earnings were in line with expectations, and the company reaffirmed 2026-2028 guidance. Several new projects were announced. |
| VLO | Earnings beat, and refiners should continue to benefit from lower product inventories. |
| MPC | Earnings beat, product inventories are low, and the company benefits from its ownership of MPLX. |
| COP | 1Q earnings were solid, but the exploration and production (E&P) industry pulled back as oil prices moved lower. |
| CNQ | 1Q earnings beat on strong production, but lower crude prices weighed on the stock. |
| APA | Earnings beat, and the company continues to generate good free cash flow (FCF). Lower crude prices weighed on the stock. |
| CRC | We initiated a position in California Resources Corp., which offers diversification from most exploration and production (E&P) peers due to its conventional, low-decline wells with Brent-linked pricing. |
| TRGP | We bought Targa Resources as we view it to have one if the best growth profiles in midstream. |
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