Dan Steffens: Oil & Natural Gas Producers Are Best Value Plays In S&P 500? Oil Demand Still Growing?
Summary
Market Outlook: Oil prices are currently rangebound around $60 per barrel, with geopolitical factors and U.S. government interventions influencing price movements.
Supply and Demand Dynamics: U.S. petroleum inventories are below normal levels, indicating no current supply glut, while global oil demand is expected to grow by 1.5 million barrels per day next year, driven primarily by Asia.
Natural Gas Insights: The U.S. natural gas market is bullish, with significant demand from LNG exports and domestic consumption, particularly from data centers, expected to drive prices higher.
Investment Opportunities: Oil and natural gas producers, particularly those with efficient operations and low-cost structures, are seen as undervalued, trading at low cash flow multiples, presenting attractive investment opportunities.
Company Strategies: Companies like ExxonMobil and Chevron are focusing on strategic acquisitions and capital expenditure cuts to maintain profitability, while others are investing in natural gas-fired power plants to capitalize on cheap gas.
Sector Consolidation: Mergers and acquisitions are expected to continue, with potential deals like Crescent Energy and Vital Energy, and SM Energy and Civitas, which could lead to significant production and market presence.
Infrastructure Growth: The development of data centers, particularly in North America, is driving demand for natural gas, with companies like Solaris Energy Infrastructure benefiting from building power plants for these centers.
Contrarian Value Play: The oil and natural gas sector, including pipeline companies and low-cost producers, is highlighted as a contrarian value play due to current low valuations and strong future demand prospects.
Transcript
Hi everyone, this is Jason Bur of Wall Street for Main Street. Welcome back for another Wall Street for Main Street podcast interview. Today's special guest is a returning guest. We're recording this interview on Columbus Day on Monday, October 13th, 2025. The oil price has been rangebound, been in a trading range. It's at the low end of a trading range right now. It's around $60 a barrel, just under $60 a barrel. West Texas Intermediate. Seems like every time there's a rally in the oil prices, President Trump or someone from his administration comes out and says, "We're focused on fighting inflation. We're focused on cheap oil and cheap gasoline prices." The natural gas price here in the US has rallied substantially, maybe based on the projections for data centers which are under construction. These massive next generation data centers which are energy hogs, natural gas prices rallied to over three. Today's special guest, like I said, is a returning guest. He's a former Hess oil senior executive for many years. He worked in the mergers and acquisitions department. He currently runs the energy perspectus group in Houston, Texas where he covers a lot of these oil and natural gas energy companies, the pipeline companies and oil and natural gas growth companies. Dan Stefins of the Energy Perspectus Group. Thank you for joining me again. >> All right, thanks for having me. So Dan, before we get into maybe some of the details of the oil market right now, I want to get your thoughts on supply and demand because we're we're on the low end of a trading range right now for oil. Are we seeing any signs that there's actually demand destruction or do you why do you think oil prices are so weak then? >> Well, I think it's just a geopolitical noise trying to talk down the oil price as much as they can. like you said, every time it makes a rally, they, you know, start putting out reports that it's going to go lower or or there's going to be this supply, uh, you know, this big glut. Well, as of last week's EIA report, all of the petroleum inventories United States, crude oil 4% below normal for this time of year. Gasoline 1% below normal for this time of year, and distillates, which includes diesel and home heating oil 6% below normal for this time of year. So, the market is adequately supplied today, but there's definitely no glut. I mean we're we're nowhere close to the situation that you had at the beginning of the pandemic when there was a significant demand destruction uh you know because they shut down all travel. uh but nothing like that is happening now and until you know and I certainly do not see OPEC plus Saudi Arabia UAE are the only two uh OPEC countries that have any excess supply that they can bring to the market and I just it's not in their best interest to to create an overs supplied market and US oil production if oil stays in the in the low 60s it's going to decline anyway it's going to peak in December and once it rolls over in the first quarter of 2026 once it's confirmed that US oil production is on decline and I believe that we're going to see that in the first quarter within six months and I think that's going to be a big paradigm shift because I think people believe that you know this this shale oil is just going to keep going up up up no matter what it's just going to keep and I'm surprised that it's actually held up as well as it has >> well they've gotten efficient with the drilling right so even though the rig count is down enormously what the rig count's down a lot over the last 18 to 24 months they've gotten more efficient at drilling the wells. But um if I could add to your points here on supply and demand, I mean some of the news stories that I've seen come out in the last week or two, I mean Indian oil demand it's growing like gang busters. Y >> does does it seem like um that that the Saudis and OPEC are are they doing like Trump a favor? Because normally in the past, Dan, I know you've been through many cycles, bull markets, bare markets over the years, throughout your career both at Hess Oil, other oil companies, and covering these companies extensively with your newsletters. Uh, normally does do the Saudis and OPEC, do they normally cut production in this type of market at these prices? >> Yeah, but I think they see the demand. They see an undersplied market. Like just today, this morning, uh the OPEC quarterly report came out and they see demand going up like a million and a half barrels next year. They they think there's room. >> That's so that's globally. You said a million and a half globally. >> About a million and a half globally uh next year. And and they still have got US production increasing next year in their model. And I just don't see that happening. I I mean I think it'll flatline. I mean the the the at the current active rig count and and I will tell you this if oil if WTI oil goes below 60 and goes like to like $55 a barrel, you will see all of these upstream uh US companies just put the slam the brakes on their drilling programs. Uh they'll go into, you know, hunker down, you know, try to maintain free cash flow and whatever. and uh they hold most of their really good acreage is held by production anyway. So they don't have to drill new wells and it's stupid to bring these high rate uh wells online into a low oil price. It's it's the smart business move is for them to leave that leave those drilling locations in inventory, wait till the price rebounds and then you know once you get back to I I truly believe the right price today for oil would be in the 70s 70 to $80 range. Well, I think the Saudis are going to need that at some point because isn't Saudi Ramco, aren't they? They they've talked about the dividend cut. I'm not sure if they've cut the dividend or not, but they were discussing it. They were borrowing. They were taking on billions of dollars of debt to maintain their dividend. And there's uh charts out there that people are going through the math that they need the Saudi government in order to pay the dividends for Saudi Aramco shareholders, which they said they wouldn't cut. And then also to fund all their social programs so there's no civil unrest like an Arab Spring 2.0 I know inside Saudi Arabia they need like $90 a barrel uh Brent crude, right? To break even. >> Yeah. And you know they're they're wanting to make good deals with Trump and this is all part of the negotiation probably. Uh but you know in the real world you know when oil demand growth is relentless year after year it goes up with population growth. Uh really the simple formula is whatever percentage the population growth is. Uh multiply that by 1.5 and that's going to be the increase in oil demand because of you know in addition to more people uh people want higher standard of living and you only get that if you have reliable energy and that's going to come with oil and gas. And so um you know the outlook looks really good and and you know we could discuss this later but there's really two markets. There's the oil market, the global oil market, and then there's the regional natural gas market, which is extremely bullish in my opinion. >> So, this oil demand growth, the 1.5 million barrels per day, is a lot of it coming from like emerging markets, Saudi Arabia, India, where do you think it's come from? >> Well, they they see really Asia and and they include India in Asia. That's where almost all the demand's going outside of uh that market. outside of of uh what we think in our mind Asia, China, Japan, you know, Indonesia that and you put India in that uh that's where all the demands growth is coming from. Outside of that, it's pretty much demand is flat. >> Okay. And so the demand would you say is it from like people that normally would have used bicycles or walking or public transportation and what they're buying their first uh scooter or they're buying a motorcycle or they're buying a a small car. >> Yeah. I made a presentation uh with this US energy group uh back at the end of September and I had a chart in there and I said it shows uh US uh people per capita we use 917 barrels per person per capita of oil based products in India it's 57 so just to get anywhere close I mean if everybody in India starts you know riding a a moped or something that or something that runs on gas, gasoline, you're going to have a big increase in demand. And that's what it is. And then in China, it's only 140 gallons per person. So to get anywhere close to our standard of living, uh you're going to see a big increase in in demand uh from those countries in Asia. >> Well, China started at way lower base. I mean, it's up enormously over the last couple decades, though. So, like I think they've been switching some of their taxis over to electric vehicles, but like their diesel and their the gasoline usage are and especially electricity now because of how modern a lot of their cities are and now they're building data centers too. Like we're just looking at a new normal of enormous growth for for electricity demand. I want to ask you though about the Peran Basin oil production because for listeners out there, what that's 85% of all the oil production growth since what 2009 or something. It's like a disproportionately insanely large numbers out of the Peran Basin for for lowcost producers. Are are they going to start to feel pain now at below at $60 a barrel West Texas Intermediate or below or do you think there's still free cash flow there or are they going to start? Yeah, the the way to look at it is, you know, these shale wells are very expensive upfront, but then after they're online, even at $60 oil, the lifting cost or your your your operating expenses after they're placed online are only 12 to $15 per barrel. So, they have huge profit margin. You ca huge cash flow margin. So, you know, they can be very profitable and very free cash flow positive uh during an extended period of low oil prices. And and seriously, I I updated six of my sweet 16 company forecast models today. I reduced the oil price to $60 across the board in there. And uh they're all generating a lot of free cash flow. Every company in our sweet 16 is free cash flow positive. If you assume uh natural gas is going to be $3 and oil is going to be $60, they're still free cash flow positive. In fact, I I did one Perian Resources, which is a company I really like, and I took it down to $50 barrel oil, and they're still free cash flow positive because they have some tremendous uh acreage out in the Delaware Basin, which is the the western part of the Perian Basin. >> But there is large capex cuts, right? Many billions of dollars of capital expenditure is being cut. So like companies like Exxon Mobile which is one of the largest producers in the perine after buying Pioneer and EOG which did an acquisition recently. So they're announcing what a huge capex cuts not for a little bit it's billions of dollars in capex cuts. Right. >> Right. Right. Right. Yeah. that I think it's going to be a rough period for the service companies until we get past this uh and can establish some at you know e even if we would could stabilize the oil price in the low60s and everybody would have confidence in that then you could build your budget and your fork and your strategy for going forward. But the problem is it's just flopping all over the place so much that you know it just scares investors away. But, you know, there's really really good companies trading for three and four times operating cash flow. And when I was at Hess, if if we could buy a company for five or six times cash flow, they were very high on our target list. And today, it's like I think the average in our sweet 16 portfolio, which is really high quality companies. The average is like three and a half times cash flow multiples are what these these companies are traded for. And none of them none of are in any financial difficulty. if oil stays even if it goes to 5560 they're they're still doing quite well >> that was actually my next question you started partially answering it so I was going to ask about the companies are being aggressive right now so I think there's what been a lot of mergers and acquisitions of medium-sized ones in Canada and then EOG in the last 6 to9 months EOG did a sizable acquisition they were heavily criticized for the oil purchases but they basically said we're getting um profit free cash flow with the natural gas right now on the assets that they did and then they said if the oil price rebounds and we're going to make a lot of money over the next couple years. >> Right. Right. Right. That's the thing to to remember. All of these companies produce a lot of natural gas. So, not just, you know, 10%. I think our sweet 16 companies, the the average, if you do it looking at a barrel of oil equivalent is 40 or 50% of their productions comes from the sale of natural gas and NGL's. So, two totally separate markets. So, okay, the oil price is down below where they would like it to be, but the gas price is going up and it's going to accelerate into the end of the year. I think before Christmas of this year, we will see $4 natural gas prices at Henry Hub. And uh if Fitz stays there and if we have just a normal winter, a normal winner is going to wipe out that surplus in storage pretty quick because you got LG export capacity from today. I think it's was last week or something they exported about 17 uh BCF per day of um of LG and within a few months our export capacity out of the US is going to be approaching 21 BCF. So, so year overyear in this coming winter, we have an additional 3 or 4 billion cubic feet of natural gas per day that's going to be going out being exported and >> and domestically, Dan, >> to add to your points there, these massive new next generation data centers that are way larger and much more of an energy hog than the current data centers we have now in in major cities and metro areas that are for like Netflix and YouTube and stuff like that. Like we have the ones in Tennessee for Colossus, for XAI, Elon Musk company. Those use only natural gas because there's not nuclear power plants nearby. And then you have the two of the ones in the southern states. You have the one in Texas which is like hours from you. One in Abene, the first phase one of the Stargate project that phase one with the 200,000 GPUs I think approximately approximately 300 megawatts that's online. But they're talking about scaling this thing up in the next 5 to seven years to 1 million GPUs and 1 gawatt of electricity demand. >> I know it's incredible. Uh we one of the companies we have in our sweet 16, I think I mentioned before on your show, Solaris Energy Infrastructure, it was up 15.5% today. It's up it's up 80% since I added it to the portfolio about six months ago. And what they do is they build uh they build power plants, gas fired power plants for data centers. Now these are smaller ones. I mean but but for a company of their size, it's really really a significant profit margin for them and they look really good and they're first class engineering company and and highly respected. >> Do they have contracts at the Stargate facility in >> Abling? I don't think so. But but they're also building power plants in uh the Perian Basin just to use that cheap gas out there because they don't have enough pipeline takeaway capacity. So people are building e even operating companies, oil and gas companies are building some gas fired power plants, small ones to generate electricity for their own pumps. So they can turn that natural gas that they're giving away for like a $150 out in the Peran Basin. They can turn it into electricity. Uh so a much more valuable commodity out there. I >> I get asked a lot um by uh professional investors, hedge fund managers about some of these pipeline companies because they see that the pipelines are going to be required for the natural gas to move the natural gas from either the Hannesville shale or the Peran Basin to the LG export facilities to these next generation data centers. Do you see a lot of growth potential and cash flows there? >> Yeah, and I think some of them are like incredibly priced. Um, one I don't really follow the misstream companies that much. I we have uh four of them in our high yield income portfolio. The one I really like is uh Plains Old American. It's primarily an oil pipeline company, but they spent a lot of money over the last three or four years adding more pipeline capacity out to the Peran Basin. Now, that capital's all been spent and they are going to be generating a ton of free cash flow. Uh the stock is trading below book value which is insane. It plays a very nice dividend. I think it's got a seven or eight% dividend yield and uh they've told me they intend to, you know, raise the dividend. Uh they expect to be able to raise a dividend again next year. So that's a good one to get into. I like One Oak. Uh they do move a lot of gas and NGL's. Uh they're based in Tulsa. Uh that symbol is OK. um uh let's see what's it uh Antar Midstream which is tied to Antar Resources uh that looks real good and it's got a good dividend yield on it and though and you know people invest in in midstream companies for yield primarily. So if the Fed does keep reducing interest rates, I think you'll see some some uh uh investors start looking for other places where they can get good dividend yield. >> Are some of the larger pipeline companies that in the past would have been focused on oil, say like Kinder Morgan and Enbridge, what that's the Canadian one, but they've been investing a lot into the Peran Basin, are they starting to align themselves with their investments to focus on natural gas and the data centers? Yeah, I mean they're not the ones that are taking it directly to their I mean some of these data centers are actually being built in the oil field. They're building, you know, building them right where they can just take it right from the wells and send it right to them. They just got to, you know, dehydrate a little bit and get the liquids out of it and then they can burn it in a in a gas fired power plant. It's actually a pretty simple process, but it's it's very expensive equipment, but you basically you're just burning something to generate, you know, a turbine and and uh generate electricity. So you mentioned uh the oil and natural gas companies doing acquisitions. We haven't seen that many acquisitions yet. There were some a couple uh in the last 18 to 24 months. Obviously you had what Kono Phillips do one Chevron bought Hess Oil but that was more for for Deep Water that finally got approved through the court system. Uh Exon Mobile bought Pioneer. Are we starting to see some other acquisitions now where the companies are running the the the uh cash flow multiples like you were talking about three times cash flow. Are are they going and doing that because I think there was a lot of acquisitions up for the mid-tier ones up in Canada. Do you think these acquisitions are good or you think these companies are waiting before they do more? >> Well, there there's there's one that I'm pretty sure is going to uh close here in December and that's Crescent Energy. the uh Vital Energy is going to merge into Crescent Energy and uh both companies are trading at a deep discount to my valuations and when that merger closes it's going to have about 400,000 BOE per day of production. It's got a really good production mix about 50% of their production is natural gas. I think they're going to they're going to also I think when that deal closes, the timing of that deal when it closes uh because I do expect in December we'll see $4 gas uh early in December. And I think that's going to draw a lot of attention because a a lot of energy sector analysts really don't look at these mergers until the deal closes. Uh you know, they don't want to waste a bunch of time on it if they don't think it's going to close. But this one I think is going to close. And then also there's a rumor going around right now that uh SM Energy and uh Civotas are going to merge. And both of these mergers that I'm talking about, the Crescent Point one and the SM Energy merger, uh they are going to become top 10 independent companies with both of them with well over 400,000 BOE per day of production. And another thing to remember is size does matter in this business. Uh when you have a much larger reserve base, you have much more access to capital. But the other thing it does is these companies will be big enough that they'll be considered for uh an addition to the S&P 500 index. And there's so many of these index funds. People are put pouring money into these index funds like crazy. And so if they become an S&P 500 company, uh those funds have to buy those stocks which will you know run up their share price or should run up their share price. So the combination of and and both of these uh mergers do have are companies that do have a lot of gas production. Uh SM Energy and Civotas that would they would have uh core areas in the Perian Basin, the Uenta basin and the DJ basin. So, and the DJ Basin has a lot of gas and they have good markets up there for their gas also. So, they get decent prices for that gas. So, I like I like both of those deals if they go through. So, we'll see. But, but I'd keep an eye on those two. >> So, you're talking about growth when these companies actually merge. But, um when a large company like Exon Mobile or Chevron or Kico Phillips, when they do an acquisition, don't they um kind of slow down the amount of uh they they fire employees, right? because they you don't need two mergers and acquisitions departments or two accounting departments. So they start to uh let go some employees. They start to cut capital expenditure. So are are we seeing that with like Exon Mobile where postp Pioneer acquisition which was massive. Are they like cutting a lot of the capital expend uh expenditure budget and they're slowing down the growth projections? >> Yeah, with the when two public companies, you know, join forces, you're you're going to you're going to have a headcount reduction for sure. And uh then they're also going to look and they may be selling off some non-core assets to you know quickly pay down the debt. Uh I mean that's what we did. We'd buy the companies and we were really looking at you know maybe we wanted about 80% of the assets and we would immediately sell the stuff we really didn't like uh just to you know get rid of it. You don't you don't care about it. So if it's not in your core areas you can get rid of it. Uh but anyway you know it's it's a I there's always going to be mergers and acquisitions. I've been doing this for a long time and it's it's like every year I put out a sweet 16 and by the end of the year two or three of them had been acquired by somebody. I used to have Pioneer in there. I couldn't I could not believe when that one went through. I I would never have guessed that one that one happening. So actually I I'm hearing rumors that Exxon is taking a hard look at Diamondback Resources and I can tell you that would be a 60 or 70 billion deal. If they announce that deal, that's going to be a big big announcement on Wall Street. >> That's kind of surprising. But I mean like uh Ro. Shell, Exom Mobile, Chevron, there were rumors they were looking at BP. I guess they decided for now to not uh bid on BP. >> Yeah, that's those are big complex deals or because they're not just, you know, like Diamondback is a pure uh upstream company. It doesn't have a a bunch of mid-stream assets. sits on Avatar. It's a very clean company. It's a pure play on the Peran basin. Two others perian companies that I both of my updated my forecast models on today, Matador Resources and Perian Resources uh are both about 200,000 BOE per day. First of all, I would love to see those two companies merge. I I really like them. They have some outstanding acreage in the Delaware Basin and they if I was at Hess I would I tell you I these guys would be on my hit list uh to go after. >> So I I want to talk about growth for oil and natural gas. You already talked about the growth for oil. We talked before we started recording you think that the growth picture long-term for natural gas is far stronger than oil. Could you maybe talk about some of the the projections for natural gas demand growth? Well, the the problem with natural gas is, you know, you can't truck it out. You have to be able to hook the wells to a to a pipeline. Uh so the so yeah, we could increase our production really quick, but but we don't have enough pipeline capacity to move it. So um actually one of my slides I brought up now that I spoke from a couple weeks ago, uh LG from the end of 2024 to the end of 2026, LG export growth is going to increase 5.6 6 BCF per day. Then you get an additional 1.6 BCF per day as more pipeline capacity going into Mexico from West Texas. We're exporting gas into Mexico. And then just power burn, industrial demand is going to go up for uh, you know, electricity generation and just other, you know, feed stock and stuff will increase by 3 BCF a day. So you add all that together and you get a 10.2 BCF per day increase in two years. Well, because of pipeline limitations, we can only increase production by about five BCF per day. So, there's really if we just have a normal winter, we we have enough gas in storage this year to make it through a normal winter. But if we would have, you know, some big polar vortex thing or something happen early in December or January and and it's a leninia winter, so that's when you have these big polar vortex events. If we have that, it will wipe out that surplus in storage like within a day. Uh last year, which was considered a mild winter, the winter of 2425 was considered a relatively mild winter. We had four weeks where the draws from storage were more than 100 BCF above the 5-year average. And so we're running I think the the storage capacity right now is about 150 BCF above the 5-year average. But looking at looking backwards at the 5-year average doesn't really take into consideration how much uh gas demand has increased. So it's it's really a flawed comparison to say, well look at the 5-year average. We're way above. Well, we're in a world that's where natural gas demand in the US is is is ramping up much faster than the 5-year average. It we're having increased demand for natural gas go five or 6% year after year. And that's and all that demand is locked in from now to 2030. L the LG export facilities are going to be built. The day AI data centers are all getting built. All this other stuff just and just commercial industrial demand is going up. And every house that we build across the whole south and east, they heat their homes with natural gas. So just, you know, heating demand goes up year after year after year. It's it's just such a strong market because it's the cheapest energy on Earth. Well, also with the data centers, I mean, I've seen projections all over the place. Yes. Um, it's tough to know because the construction might not be on time and on budget. Like the uh phase one for the Stargate data center in Abalene, Texas, that is online, but they're planning additional phases to scale it up even more than that. They also announced additional plans to build these data centers in the Midwest, I think. And then Google and some of the other tech companies, Google, Meta, Amazon, there's tons of other uh tech companies, at least five other tech companies with Oracle and Nvidia involved and OpenAI and some of the other companies. They all want to build data centers of at least like I would say 200,000 GPUs, which are around uh 300 megawatts of power, but they're talking about scaling it up, Dan, to like potentially 1 million GPUs, I said by the early 2030s. So, I don't know if we're going to get there, but the people seem to think that are building these uh data centers right now that are coming online, the um the Stargate one and then also the Colossus one from XAI, they seem to think it's feasible that we can scale 5 to 7 years from now from 200,000 GPUs up to 1 million. I mean, like the amount of natural gas I've seen projections 14% growth per year if that stuff plays out like they're projecting. >> I know. Well, I saw something a couple months ago that there's eight or 10 AI data centers that are going to be being built in Appalachia. That's the Marcellus Udica play in Eastern Ohio and Pennsylvania. So, so the AI data centers are going to build because they know they can't build them like in, you know, Virginia and expect the pipeline to be built quick enough. So, they're going to build those data centers right in the middle of the gas fields that you're going to see a couple big ones built in in um in Mississippi that have been announced, really big ones, and uh and eight or 10 being built in Appalachia. And we had a uh very small uh Canadian upstream company called Pine Cliff Energy, and they've already signed a contract with an AI data center to be built in their largest gas field. And they're and they've already got that contract in place. and they're hoping to get two or three more of those in place uh in the coming years. So, a lot of they're looking north because you know natural gas up in Canada is even cheaper than it is in the US. So for listeners out there, I'm sure they've seen all the headlines and some of the articles talking about like nuclear power and data centers, but the reality of the situation, Dan, is that unless the nuclear power plant is right there and they have an expansion permit to maybe build another cone and bring that online in the years to come, you have to build the data centers. If you're going to get the data centers online quickly, they have to have natural gas supply, not nuclear. No, >> they have it's it's the it's the only short-term solution that I see, you know. because the grid the grid they're saying in Texas we're not going to be able to hook them up to the grid because we don't have enough uh grid capacity and you know you hook up these big big data centers let's say you hooked up one you know run around San Antonio or something and they need power 24/7 so you're not going to be able to do that because >> do you think that means so so if they're not hooked up to the grid do you think that means that the governments then are telling the tech companies that you have to pay for the separate electricity substation. You have to pay for all the pipelines that the taxpayer the government is not going to pay for any of that. >> Well, I mean the you know they the market will take care of that. But the data centers must have reliable power. And the only way to have a reliable reliable, you know, seven days a week, 24 hours a day, 365 days a year is to build your own power plant where you control it and it's right there and you're not going to have blackouts or brownouts if you run your own power plant. And that's what SEI does. They they right-size power plants for these data centers. >> Oh, are do you cover that company? It's in what the sweet 16. >> Yeah, I I I cover it. It's very profitable. uh every every time they do a quarterly announcement, they update us on how many more orders they have and they they really can't keep up with the orders they've already got. So, they're their upside is incredible. It it was up 15% today. It's my I I looked at it like two months ago when it was trading in the like 30 and my valuation was $42. It just blew right past that. It's at 52 now. Well, a lot of the institutional investors, they uh are not necessarily buying Nvidia. They're actually looking at the infrastructure because I don't know if you've seen some of the charts, some of the charts showing uh basically these data centers are extremely complex uh for the cooling systems. You need a lot of energy usage for the cooling systems. There are energy hogs or water hogs. And these uh racks of the GPU servers, I mean, they're over 2,000 lbs for these Nvidia Blackwell chips per rack. and you have you burn through them. You have to keep them cooled off. So, you're burning tons of electricity for a bunch of different things. >> Well, I think MIT put out a report that said they don't see how these AI companies are going to ever make enough money to justify their share price. Now, of course, I said that about Amazon 20 years ago or so, but uh you know, so you look at a little company like SEI and they clear they're clearly profitable. I mean, they're extremely profitable now. They're generating, you know, free cash flow now. uh and they could get all the funding they want. You know, the bankers are happy to loan them money so they can they can get more of this stuff going and it's incredible. >> And so, you know, people are looking for ways like you said to invest in the the people that are going to really be making money off the AI buildout. And that's why I think there's a lot of company investors looking at and you know what when you have companies like this that that jump out. Let me let me look what their their uh trading volume was. I think it was massive. Yeah, their their normal trading volume, which is big for this company. It's only got like 65 million shares outstanding. Their average volume is like 2.6. Today, it was close to 5 million shares traded hand. That's a huge volume for a company of this size. >> So, it sounds like a pension fund or an institutional investor started to open up a position in stock. That's what it sounds like. >> Yeah, that's right. Yeah. And it pays a dividend. I mean the dividend yields low but it does pay a dividend. >> Yeah. So I I agree with you. I think a lot of the software companies that are designing the artificial intelligence so far all the different versions I think they will not be the main beneficiaries. I think it's going to be like the energy companies the utility companies the uh infrastructure companies that are involved in constructing the data center where where all the many billions of dollars of capital expenditure is uh being spent right now. I think those are going to be the main beneficiaries. >> Yeah, I bet you there's some construction companies are going to be making a ton of money off these things. You know that because that the they've got so much money invested, you know, hundreds of billions of dollars invested. So, and they have to meet these deadlines. They have to get these data centers up and running. So, they'll pay whatever it takes. It's not like, you know, it's like money's no object, but they got to they got to get these things online to justify their existence. Well, did you see what Meta is doing? Meta has been building these things with tents and then Meta just put out like an Enron type guarantee that any like construction overrun cost that Meta will subsidize all of it. Literally like almost a blank check from Meta. And then Mark Zuckerberg did a podcast interview. I mean, I I don't know. Um I'm sure his board of directors is angry at this. He basically said that like I don't care what my board of director thinks with profitability. I'm committed to spending like $600 billion of capex for data centers and AI software to improve it with his like glasses, the Rayban glasses and the other glasses, the VR stuff by the end of 2028. $600 billion. That's just one company. >> It Yeah, the numbers are crazy. I mean, I, you know, the oil and gas business is a very capital intensive business, but I tell you, this AI data stuff, data center stuff, and these AI companies, I mean, I I can't get my arms around the amount of money they're investing in this and how they're going to pay it back. I don't get it. But maybe I mean, they're smart people, but >> Well, I mean, I think they'd love to to build nuclear power plants, but it's just not efficient to build a nuclear power plant quickly here in the United States. It's not like China where you can build um you know 9 or 10 nuclear power plants a year. The US is just way too slow. It takes uh way too much capital and rules regulations, red tape, construction overruns. I think the the nuclear power plants in Georgia, they cost like they ended up costing over $10 billion more and there was many years of construction delays. >> Yeah. And and the thing about natural gas is you can rightsize the power plants. you know, uh, we generated our own power for a big CO2 flood we had out in West Texas when I was at Hess and we it basically was three jet engines that were hooked up to generate electricity for the whole field and we have five or six hundred wells in there. They're all on pump jack and everything. So, we needed a lot of reliable electricity. So, but you can right size for what it what it was. Actually, if your listeners, if they go to Solaris Energy Infrastructures website, it's SEI as a symbol. They have a really good presentation that explains kind of how they do it and how they rightsize the power plant for the needs of their of their customers. It's it's really a cool it's really a cool company. Anyway, >> so as we wrap up here, I want to ask you about lowcost producers, free cash flow, growth companies. Which companies do you think are doing a good job navigating these relatively low oil prices, keeping costs low, uh maybe making smart acquisitions that you cover in your sweet 16? >> Well, one company now these guys are outspending their cash flow because they they've got a tremendous asset in the Duivere Shale. Uh the U Spartan Delta Energy, it's SD.TO. Now, their current production is about 75% natural gas, which is a good thing, right? But they've got a lot of upside on the oil side, and that stock is up about 50%, but it's still trading at about half of my valuation. And they have a partner, they have a 20% partner in their the core area of the Dubet. It's called Journey Energy, and that stock's up about 30 or 40%, but it still has a lot of upside. Uh I I I also, you know, I like natural gas. I like uh well one and this company is building it's a very lowc cost producer very profitable company Riley exploration perian symbol R px and they are building two of their own natural gas fired power plants to generate the electricity for their own operations. They're way out in West Texas and in uh Eddie County uh New Mexico which is in the souththeast corner of New Mexico. They've got a new core area and the gas market is terrible out there. Literally, you can only sell your gas if you're lucky for a dollar, dollar$ dollar50 because there's just so much more gas than there is pipeline. So, they're going to turn that gas into electricity and they're going to build these things big enough for to generate all the electricity they need and they're going to sell electricity into the Texas grid. Uh, so they'll be making money off the electricity sales as well. So, I really like that one. That one's pretty cool. And uh let's see another one uh one of our top picks is still uh Calibbre uh you know the company has a pristine balance sheet. They're doing everything with free cash flow now. Uh it symbol is KGI. It's a it's really a one asset company. It's a very very small company uh with about 5,000 uh barrel BOE per day of production. Mo mostly oil though. Uh for natural gas the little company I mentioned it's Pine Cliff uh based in Calgary. uh symbol is PNE.T0. Uh the stock's only uh you know.7 cents Canadian. Uh my valuation is about 95 cents. And but if but if natural gas price goes up, it could go way up. But when last time natural gas up in Canada was about $3 in MMBTU, this stock got up like $2. So if if gas prices bounce up in Western Canada, it could be a double from where it's trading right now. And I think they're also talking about now that they've started building out some of these massive data centers in the US and talking about additional ones in the Midwest, they're talking about building them in Canada, too, because there is that cheap natural gas. Like you said, I've just heard in the last like month or so, they're talking about now since natural gas is so cheap. Why don't we put in Canada's colder that would save them some money on the cooling costs, why don't we put some data centers up in Canada then? >> That's that's exa that's exactly right. I said when they started looking at it, they said, "Hey, wait a minute. All we have to do up in Canada is open the windows. It's pretty cold up there right now. >> Yeah. I mean like Norway. So like Norway or uh Iceland, some of these other colder countries that that have like geothermal or other stuff like it makes sense to put some data centers up there too. >> Yeah, it does. Anyway, >> well um la last question here. Now, I've seen some negative research coming out uh predicting that potentially there will be a natural gas supply gut for liqufied natural gas exports um by like early 2030s. Do you agree with that or do you think that's inaccurate? >> No, I'll worry about it then. I I truly think, you know, people have been talking about natural gas to be the transition fuel to where we can transition to where all of our electricity comes from from uh you know, wind and solar. That's not happening. That is not going to happen. Natural gas is the future. It is the future. You know, eventually oil will oil prices will go high and oil oil fields do decline. And if if just demand in general for electricity just keeps going up up up, the only solution that I see is natural gas for the next 5 to 10 years at least. So, I don't think I don't think that's a problem until way down the line. And I'll I'll believe it when I see it. Well, the supply glut has to do, I think, with how I think China and Russia just announced that China doesn't want to buy as much expensive LG imports and that I think Russia is going to be building them what a a Trans Siberian type of uh massive natural gas pipeline to try to pipe gas from uh Russia into China. So, that will uh allow them to reduce their LG exports. But I I look at Europe and Europe has a lot of oil and natural gas drilling bans. They basically have to buy natural gas from either the US or Norway or Qatar. So they have to buy it from somewhere because they don't allow domestic oil and natural gas drilling. And then Europe is also like the United Kingdom and Europe, Dan, they're really far behind on the uh artificial intelligence and data center buildout. They're going to want to catch up and they're going to want to start building these data centers and that's going to cause even more natural gas demand in the future. >> Yeah, I think so. It's it was it's a clean burning. I mean, it's so clean burning. A natural gas fired power plant almost has no emissions. I mean, compared to a coal fired power plant, it probably has 5% of the emissions of a coal fire power plant. We have one, you know, I drive by one all the time, uh, coming home from the health club, and it's just a bunch of steam coming out of the thing. That's it. >> Well, but the green energy people, the ESG people, Dan, a lot of them, if they're not scammers, they're hypocrites. So, a lot of them don't even understand like they say about uh how how clean or green uh solar panels and wind turbines are, but I mean like the reality and we're going to find this out now with with rare earth because they're being talked about constantly in the news >> is how like highly toxic all the chemicals are for earth mining. Like it destroys the air, water, and soil. So, to say to label and say these things are green, I mean to get the rare earth to make, you know, solar panels and wind turbines like it's insanely unecon uh uh environmentally unfriendly, excuse me. >> Yeah. There there there's nothing green about wind turbines, I can tell you. >> Or solar panels. Yeah. Or a solar panel. >> Or even solar panel. I mean, the the the mining cost and the pollution and the mining operations to get the materials you need them to build them, to haul them, to install them, you got to add all that up. And all that all that work is done by machines that are run on diesel. So >> well al also they don't talk about this a lot because a lot of these uh rare earth experts I'm using air quotes they're they're Johnny come lately I've been covering rare earth for many many years there's huge radioactive byproduct with the rare earth elements there for uh uranium and thorium as a byproduct and then also like you're using an insane amount of highly toxic chemicals to separate out the rare earth to separate the radioactive materials out of that and then you have to store the radioactive materials. So, and then on top of that, you have to turn the rare earth that you mined at the mine site after you destroyed the air, water, and soil around there for miles, you have to turn that into viable products. And that's like like uh very energy intensive and lots of chemicals, too. >> Yeah. Well, if any of your listeners, you know, want to contact me, I'll send them my last newsletter or something. They can kind of see what we do. just send me an email at energypersperspectus@gmail.com and um we'll just send you a newsletter and tell you what we want to do and if you're have interested in any of the companies I mentioned just let me know we do updated profiles on all these companies and u and detailed forecast models on all of them >> and if I could add to your points there about valuations for the oil and natural gas sector I mean we are in terms of sentiment I mean in the last like few months the oil longs for on the oil futures contracts I I think we're at an all-time low for oil bulls. It was like the most bare sentiment I think on record. And so like what the uh XLE, which is what the uh S&P 500 portion of the energy sector, I mean that's disproportionately low compared to a lot of the other industries. >> Yeah. Yeah. You know, like EIA comes out with a forecast and their short-term energy outlook forecast from last week and they lowered their oil price forecast for Brent down to like 53 or something, which would put WTI at 50. And >> who makes money? Who makes money at those prices? >> Look at look at the strip, the NYX strip today. So the the oil traders obviously don't believe that because the strip is all the way for the whole next year is like 57 or 58. So they're I don't know where EIA is getting that coming up with that number because the real world supply and demand is pretty tight and it's definitely does not justify oil going down another8 or $10. >> Well another eight or$10 I mean you're at the marginal production cost for a lot of producers. makes no sense to produce oil and lose money. >> Yeah. If if that would happen, you would see these upstream companies just slam on the brakes on their drilling programs like crazy. And and then what would follow that would be the same thing we saw with the pandemic. You would see a big decline in US production in a very short period of time. And it would be extremely difficult to rebound from that because a bunch of people would lose their jobs. The service companies would be in, you know, be in big trouble too. And you know, they're not just you don't just have big expensive great drilling rings sitting around at some Walmart parking lot someplace. This is an industry that is really hard to ramp up if you let it go down. >> Yeah. Especially deep water with a lot of additional oil production. I mean, because if the oil prices go low, they just start scrapping all the old deep water rigs. They just shut them down or or decommission them. >> Yeah. There's still a lot of potential in the deep water, no doubt about it. But those are long-term projects. They don't happen overnight. Oh yeah, I agree. >> So, so, so we're basically at a sentiment standpoint. I think riskreward valuations, I think for a contrarian standpoint, oil, oil and natural gas companies are probably the cheapest of any commodity sector right now. >> No, they they literally look good. I can tell you I got some great companies that are very, very profitable companies trading at extremely low multiples right now. >> Yeah, I think from a valuation standpoint, I think they're by far the cheapest. Now, I I think we could see gold at $5,000 an ounce in 2 years or less. So, I think the gold stocks cuz I have a friend who's a oil hedge fun manager and he keeps, you know, saying that the gold run is over. And he said that like four or five months ago, and I was like, "No, the gold run's not over. The gold run's not over. The gold run's kind of like it's based on all these other currencies and government debt like being destroyed. They're intentionally devaluing these things." So, I could see gold at, you know, $5,000 an ounce in two, two and a half years or maybe even less. We We'll have to see. Hey, one of the little mining companies that I follow up in Canada, it's not really that little. Uh, it's called Nuvo Graphite. They have a big graphite discovery they're developing and they get they got Panasonic and GE or and General Motors are invested in the company now. The stock was up 50% today in one day. >> Well, I think that's because didn't I think China just announced that they're banning some graphite exports. So I think that's why so I think people are scrambling looking around for reliable supply for western countries like in the US and Canada. I think that's why >> yeah and that they their discovery is huge. It's all been confirmed. This is a very big discovery. It's going to take a couple years to get the mine online but they've definitely got huge resources. The symbol on that one is uh NMG. I think they I think they recently listed on the New York Stock Exchange too. I haven't looked at it closely in a long time. Anyway, >> well, and graphi graphite, I mean, it a lot of it depends on graphine. So, graphine demand for manufacturing. So, we we'll have to see. We haven't had the graphine batteries yet in the smartphones cuz I know in the labs those were testing pretty well like six, seven, eight years ago and they haven't manufactured those and added those into Samsung or Apple iPhones. Samsung smartphones or Apple iPhones. It's kind of shocking. >> Yeah, I I'll send you one when I find it. I can't think of it offhand right now, but one of our members posted about a graphine company and I think the stock is up like 300% since you mentioned it. I'll send you that later. >> Okay. Well, thank you so much for your time and keep up the good work at Energy Perspectus Group. For our contrarians out there who have wanted to take some profits in some of your gold stocks and look to diversify into cheaper markets with better riskreward, the oil and natural gas sector, the pipeline companies, the lowcost oil producers, some of the lowcost natural gas producers in the US and Canada looking like good riskreward contrarian value plays right now. >> All right, ma'am. Thanks.
Dan Steffens: Oil & Natural Gas Producers Are Best Value Plays In S&P 500? Oil Demand Still Growing?
Summary
Transcript
Hi everyone, this is Jason Bur of Wall Street for Main Street. Welcome back for another Wall Street for Main Street podcast interview. Today's special guest is a returning guest. We're recording this interview on Columbus Day on Monday, October 13th, 2025. The oil price has been rangebound, been in a trading range. It's at the low end of a trading range right now. It's around $60 a barrel, just under $60 a barrel. West Texas Intermediate. Seems like every time there's a rally in the oil prices, President Trump or someone from his administration comes out and says, "We're focused on fighting inflation. We're focused on cheap oil and cheap gasoline prices." The natural gas price here in the US has rallied substantially, maybe based on the projections for data centers which are under construction. These massive next generation data centers which are energy hogs, natural gas prices rallied to over three. Today's special guest, like I said, is a returning guest. He's a former Hess oil senior executive for many years. He worked in the mergers and acquisitions department. He currently runs the energy perspectus group in Houston, Texas where he covers a lot of these oil and natural gas energy companies, the pipeline companies and oil and natural gas growth companies. Dan Stefins of the Energy Perspectus Group. Thank you for joining me again. >> All right, thanks for having me. So Dan, before we get into maybe some of the details of the oil market right now, I want to get your thoughts on supply and demand because we're we're on the low end of a trading range right now for oil. Are we seeing any signs that there's actually demand destruction or do you why do you think oil prices are so weak then? >> Well, I think it's just a geopolitical noise trying to talk down the oil price as much as they can. like you said, every time it makes a rally, they, you know, start putting out reports that it's going to go lower or or there's going to be this supply, uh, you know, this big glut. Well, as of last week's EIA report, all of the petroleum inventories United States, crude oil 4% below normal for this time of year. Gasoline 1% below normal for this time of year, and distillates, which includes diesel and home heating oil 6% below normal for this time of year. So, the market is adequately supplied today, but there's definitely no glut. I mean we're we're nowhere close to the situation that you had at the beginning of the pandemic when there was a significant demand destruction uh you know because they shut down all travel. uh but nothing like that is happening now and until you know and I certainly do not see OPEC plus Saudi Arabia UAE are the only two uh OPEC countries that have any excess supply that they can bring to the market and I just it's not in their best interest to to create an overs supplied market and US oil production if oil stays in the in the low 60s it's going to decline anyway it's going to peak in December and once it rolls over in the first quarter of 2026 once it's confirmed that US oil production is on decline and I believe that we're going to see that in the first quarter within six months and I think that's going to be a big paradigm shift because I think people believe that you know this this shale oil is just going to keep going up up up no matter what it's just going to keep and I'm surprised that it's actually held up as well as it has >> well they've gotten efficient with the drilling right so even though the rig count is down enormously what the rig count's down a lot over the last 18 to 24 months they've gotten more efficient at drilling the wells. But um if I could add to your points here on supply and demand, I mean some of the news stories that I've seen come out in the last week or two, I mean Indian oil demand it's growing like gang busters. Y >> does does it seem like um that that the Saudis and OPEC are are they doing like Trump a favor? Because normally in the past, Dan, I know you've been through many cycles, bull markets, bare markets over the years, throughout your career both at Hess Oil, other oil companies, and covering these companies extensively with your newsletters. Uh, normally does do the Saudis and OPEC, do they normally cut production in this type of market at these prices? >> Yeah, but I think they see the demand. They see an undersplied market. Like just today, this morning, uh the OPEC quarterly report came out and they see demand going up like a million and a half barrels next year. They they think there's room. >> That's so that's globally. You said a million and a half globally. >> About a million and a half globally uh next year. And and they still have got US production increasing next year in their model. And I just don't see that happening. I I mean I think it'll flatline. I mean the the the at the current active rig count and and I will tell you this if oil if WTI oil goes below 60 and goes like to like $55 a barrel, you will see all of these upstream uh US companies just put the slam the brakes on their drilling programs. Uh they'll go into, you know, hunker down, you know, try to maintain free cash flow and whatever. and uh they hold most of their really good acreage is held by production anyway. So they don't have to drill new wells and it's stupid to bring these high rate uh wells online into a low oil price. It's it's the smart business move is for them to leave that leave those drilling locations in inventory, wait till the price rebounds and then you know once you get back to I I truly believe the right price today for oil would be in the 70s 70 to $80 range. Well, I think the Saudis are going to need that at some point because isn't Saudi Ramco, aren't they? They they've talked about the dividend cut. I'm not sure if they've cut the dividend or not, but they were discussing it. They were borrowing. They were taking on billions of dollars of debt to maintain their dividend. And there's uh charts out there that people are going through the math that they need the Saudi government in order to pay the dividends for Saudi Aramco shareholders, which they said they wouldn't cut. And then also to fund all their social programs so there's no civil unrest like an Arab Spring 2.0 I know inside Saudi Arabia they need like $90 a barrel uh Brent crude, right? To break even. >> Yeah. And you know they're they're wanting to make good deals with Trump and this is all part of the negotiation probably. Uh but you know in the real world you know when oil demand growth is relentless year after year it goes up with population growth. Uh really the simple formula is whatever percentage the population growth is. Uh multiply that by 1.5 and that's going to be the increase in oil demand because of you know in addition to more people uh people want higher standard of living and you only get that if you have reliable energy and that's going to come with oil and gas. And so um you know the outlook looks really good and and you know we could discuss this later but there's really two markets. There's the oil market, the global oil market, and then there's the regional natural gas market, which is extremely bullish in my opinion. >> So, this oil demand growth, the 1.5 million barrels per day, is a lot of it coming from like emerging markets, Saudi Arabia, India, where do you think it's come from? >> Well, they they see really Asia and and they include India in Asia. That's where almost all the demand's going outside of uh that market. outside of of uh what we think in our mind Asia, China, Japan, you know, Indonesia that and you put India in that uh that's where all the demands growth is coming from. Outside of that, it's pretty much demand is flat. >> Okay. And so the demand would you say is it from like people that normally would have used bicycles or walking or public transportation and what they're buying their first uh scooter or they're buying a motorcycle or they're buying a a small car. >> Yeah. I made a presentation uh with this US energy group uh back at the end of September and I had a chart in there and I said it shows uh US uh people per capita we use 917 barrels per person per capita of oil based products in India it's 57 so just to get anywhere close I mean if everybody in India starts you know riding a a moped or something that or something that runs on gas, gasoline, you're going to have a big increase in demand. And that's what it is. And then in China, it's only 140 gallons per person. So to get anywhere close to our standard of living, uh you're going to see a big increase in in demand uh from those countries in Asia. >> Well, China started at way lower base. I mean, it's up enormously over the last couple decades, though. So, like I think they've been switching some of their taxis over to electric vehicles, but like their diesel and their the gasoline usage are and especially electricity now because of how modern a lot of their cities are and now they're building data centers too. Like we're just looking at a new normal of enormous growth for for electricity demand. I want to ask you though about the Peran Basin oil production because for listeners out there, what that's 85% of all the oil production growth since what 2009 or something. It's like a disproportionately insanely large numbers out of the Peran Basin for for lowcost producers. Are are they going to start to feel pain now at below at $60 a barrel West Texas Intermediate or below or do you think there's still free cash flow there or are they going to start? Yeah, the the way to look at it is, you know, these shale wells are very expensive upfront, but then after they're online, even at $60 oil, the lifting cost or your your your operating expenses after they're placed online are only 12 to $15 per barrel. So, they have huge profit margin. You ca huge cash flow margin. So, you know, they can be very profitable and very free cash flow positive uh during an extended period of low oil prices. And and seriously, I I updated six of my sweet 16 company forecast models today. I reduced the oil price to $60 across the board in there. And uh they're all generating a lot of free cash flow. Every company in our sweet 16 is free cash flow positive. If you assume uh natural gas is going to be $3 and oil is going to be $60, they're still free cash flow positive. In fact, I I did one Perian Resources, which is a company I really like, and I took it down to $50 barrel oil, and they're still free cash flow positive because they have some tremendous uh acreage out in the Delaware Basin, which is the the western part of the Perian Basin. >> But there is large capex cuts, right? Many billions of dollars of capital expenditure is being cut. So like companies like Exxon Mobile which is one of the largest producers in the perine after buying Pioneer and EOG which did an acquisition recently. So they're announcing what a huge capex cuts not for a little bit it's billions of dollars in capex cuts. Right. >> Right. Right. Right. Yeah. that I think it's going to be a rough period for the service companies until we get past this uh and can establish some at you know e even if we would could stabilize the oil price in the low60s and everybody would have confidence in that then you could build your budget and your fork and your strategy for going forward. But the problem is it's just flopping all over the place so much that you know it just scares investors away. But, you know, there's really really good companies trading for three and four times operating cash flow. And when I was at Hess, if if we could buy a company for five or six times cash flow, they were very high on our target list. And today, it's like I think the average in our sweet 16 portfolio, which is really high quality companies. The average is like three and a half times cash flow multiples are what these these companies are traded for. And none of them none of are in any financial difficulty. if oil stays even if it goes to 5560 they're they're still doing quite well >> that was actually my next question you started partially answering it so I was going to ask about the companies are being aggressive right now so I think there's what been a lot of mergers and acquisitions of medium-sized ones in Canada and then EOG in the last 6 to9 months EOG did a sizable acquisition they were heavily criticized for the oil purchases but they basically said we're getting um profit free cash flow with the natural gas right now on the assets that they did and then they said if the oil price rebounds and we're going to make a lot of money over the next couple years. >> Right. Right. Right. That's the thing to to remember. All of these companies produce a lot of natural gas. So, not just, you know, 10%. I think our sweet 16 companies, the the average, if you do it looking at a barrel of oil equivalent is 40 or 50% of their productions comes from the sale of natural gas and NGL's. So, two totally separate markets. So, okay, the oil price is down below where they would like it to be, but the gas price is going up and it's going to accelerate into the end of the year. I think before Christmas of this year, we will see $4 natural gas prices at Henry Hub. And uh if Fitz stays there and if we have just a normal winter, a normal winner is going to wipe out that surplus in storage pretty quick because you got LG export capacity from today. I think it's was last week or something they exported about 17 uh BCF per day of um of LG and within a few months our export capacity out of the US is going to be approaching 21 BCF. So, so year overyear in this coming winter, we have an additional 3 or 4 billion cubic feet of natural gas per day that's going to be going out being exported and >> and domestically, Dan, >> to add to your points there, these massive new next generation data centers that are way larger and much more of an energy hog than the current data centers we have now in in major cities and metro areas that are for like Netflix and YouTube and stuff like that. Like we have the ones in Tennessee for Colossus, for XAI, Elon Musk company. Those use only natural gas because there's not nuclear power plants nearby. And then you have the two of the ones in the southern states. You have the one in Texas which is like hours from you. One in Abene, the first phase one of the Stargate project that phase one with the 200,000 GPUs I think approximately approximately 300 megawatts that's online. But they're talking about scaling this thing up in the next 5 to seven years to 1 million GPUs and 1 gawatt of electricity demand. >> I know it's incredible. Uh we one of the companies we have in our sweet 16, I think I mentioned before on your show, Solaris Energy Infrastructure, it was up 15.5% today. It's up it's up 80% since I added it to the portfolio about six months ago. And what they do is they build uh they build power plants, gas fired power plants for data centers. Now these are smaller ones. I mean but but for a company of their size, it's really really a significant profit margin for them and they look really good and they're first class engineering company and and highly respected. >> Do they have contracts at the Stargate facility in >> Abling? I don't think so. But but they're also building power plants in uh the Perian Basin just to use that cheap gas out there because they don't have enough pipeline takeaway capacity. So people are building e even operating companies, oil and gas companies are building some gas fired power plants, small ones to generate electricity for their own pumps. So they can turn that natural gas that they're giving away for like a $150 out in the Peran Basin. They can turn it into electricity. Uh so a much more valuable commodity out there. I >> I get asked a lot um by uh professional investors, hedge fund managers about some of these pipeline companies because they see that the pipelines are going to be required for the natural gas to move the natural gas from either the Hannesville shale or the Peran Basin to the LG export facilities to these next generation data centers. Do you see a lot of growth potential and cash flows there? >> Yeah, and I think some of them are like incredibly priced. Um, one I don't really follow the misstream companies that much. I we have uh four of them in our high yield income portfolio. The one I really like is uh Plains Old American. It's primarily an oil pipeline company, but they spent a lot of money over the last three or four years adding more pipeline capacity out to the Peran Basin. Now, that capital's all been spent and they are going to be generating a ton of free cash flow. Uh the stock is trading below book value which is insane. It plays a very nice dividend. I think it's got a seven or eight% dividend yield and uh they've told me they intend to, you know, raise the dividend. Uh they expect to be able to raise a dividend again next year. So that's a good one to get into. I like One Oak. Uh they do move a lot of gas and NGL's. Uh they're based in Tulsa. Uh that symbol is OK. um uh let's see what's it uh Antar Midstream which is tied to Antar Resources uh that looks real good and it's got a good dividend yield on it and though and you know people invest in in midstream companies for yield primarily. So if the Fed does keep reducing interest rates, I think you'll see some some uh uh investors start looking for other places where they can get good dividend yield. >> Are some of the larger pipeline companies that in the past would have been focused on oil, say like Kinder Morgan and Enbridge, what that's the Canadian one, but they've been investing a lot into the Peran Basin, are they starting to align themselves with their investments to focus on natural gas and the data centers? Yeah, I mean they're not the ones that are taking it directly to their I mean some of these data centers are actually being built in the oil field. They're building, you know, building them right where they can just take it right from the wells and send it right to them. They just got to, you know, dehydrate a little bit and get the liquids out of it and then they can burn it in a in a gas fired power plant. It's actually a pretty simple process, but it's it's very expensive equipment, but you basically you're just burning something to generate, you know, a turbine and and uh generate electricity. So you mentioned uh the oil and natural gas companies doing acquisitions. We haven't seen that many acquisitions yet. There were some a couple uh in the last 18 to 24 months. Obviously you had what Kono Phillips do one Chevron bought Hess Oil but that was more for for Deep Water that finally got approved through the court system. Uh Exon Mobile bought Pioneer. Are we starting to see some other acquisitions now where the companies are running the the the uh cash flow multiples like you were talking about three times cash flow. Are are they going and doing that because I think there was a lot of acquisitions up for the mid-tier ones up in Canada. Do you think these acquisitions are good or you think these companies are waiting before they do more? >> Well, there there's there's one that I'm pretty sure is going to uh close here in December and that's Crescent Energy. the uh Vital Energy is going to merge into Crescent Energy and uh both companies are trading at a deep discount to my valuations and when that merger closes it's going to have about 400,000 BOE per day of production. It's got a really good production mix about 50% of their production is natural gas. I think they're going to they're going to also I think when that deal closes, the timing of that deal when it closes uh because I do expect in December we'll see $4 gas uh early in December. And I think that's going to draw a lot of attention because a a lot of energy sector analysts really don't look at these mergers until the deal closes. Uh you know, they don't want to waste a bunch of time on it if they don't think it's going to close. But this one I think is going to close. And then also there's a rumor going around right now that uh SM Energy and uh Civotas are going to merge. And both of these mergers that I'm talking about, the Crescent Point one and the SM Energy merger, uh they are going to become top 10 independent companies with both of them with well over 400,000 BOE per day of production. And another thing to remember is size does matter in this business. Uh when you have a much larger reserve base, you have much more access to capital. But the other thing it does is these companies will be big enough that they'll be considered for uh an addition to the S&P 500 index. And there's so many of these index funds. People are put pouring money into these index funds like crazy. And so if they become an S&P 500 company, uh those funds have to buy those stocks which will you know run up their share price or should run up their share price. So the combination of and and both of these uh mergers do have are companies that do have a lot of gas production. Uh SM Energy and Civotas that would they would have uh core areas in the Perian Basin, the Uenta basin and the DJ basin. So, and the DJ Basin has a lot of gas and they have good markets up there for their gas also. So, they get decent prices for that gas. So, I like I like both of those deals if they go through. So, we'll see. But, but I'd keep an eye on those two. >> So, you're talking about growth when these companies actually merge. But, um when a large company like Exon Mobile or Chevron or Kico Phillips, when they do an acquisition, don't they um kind of slow down the amount of uh they they fire employees, right? because they you don't need two mergers and acquisitions departments or two accounting departments. So they start to uh let go some employees. They start to cut capital expenditure. So are are we seeing that with like Exon Mobile where postp Pioneer acquisition which was massive. Are they like cutting a lot of the capital expend uh expenditure budget and they're slowing down the growth projections? >> Yeah, with the when two public companies, you know, join forces, you're you're going to you're going to have a headcount reduction for sure. And uh then they're also going to look and they may be selling off some non-core assets to you know quickly pay down the debt. Uh I mean that's what we did. We'd buy the companies and we were really looking at you know maybe we wanted about 80% of the assets and we would immediately sell the stuff we really didn't like uh just to you know get rid of it. You don't you don't care about it. So if it's not in your core areas you can get rid of it. Uh but anyway you know it's it's a I there's always going to be mergers and acquisitions. I've been doing this for a long time and it's it's like every year I put out a sweet 16 and by the end of the year two or three of them had been acquired by somebody. I used to have Pioneer in there. I couldn't I could not believe when that one went through. I I would never have guessed that one that one happening. So actually I I'm hearing rumors that Exxon is taking a hard look at Diamondback Resources and I can tell you that would be a 60 or 70 billion deal. If they announce that deal, that's going to be a big big announcement on Wall Street. >> That's kind of surprising. But I mean like uh Ro. Shell, Exom Mobile, Chevron, there were rumors they were looking at BP. I guess they decided for now to not uh bid on BP. >> Yeah, that's those are big complex deals or because they're not just, you know, like Diamondback is a pure uh upstream company. It doesn't have a a bunch of mid-stream assets. sits on Avatar. It's a very clean company. It's a pure play on the Peran basin. Two others perian companies that I both of my updated my forecast models on today, Matador Resources and Perian Resources uh are both about 200,000 BOE per day. First of all, I would love to see those two companies merge. I I really like them. They have some outstanding acreage in the Delaware Basin and they if I was at Hess I would I tell you I these guys would be on my hit list uh to go after. >> So I I want to talk about growth for oil and natural gas. You already talked about the growth for oil. We talked before we started recording you think that the growth picture long-term for natural gas is far stronger than oil. Could you maybe talk about some of the the projections for natural gas demand growth? Well, the the problem with natural gas is, you know, you can't truck it out. You have to be able to hook the wells to a to a pipeline. Uh so the so yeah, we could increase our production really quick, but but we don't have enough pipeline capacity to move it. So um actually one of my slides I brought up now that I spoke from a couple weeks ago, uh LG from the end of 2024 to the end of 2026, LG export growth is going to increase 5.6 6 BCF per day. Then you get an additional 1.6 BCF per day as more pipeline capacity going into Mexico from West Texas. We're exporting gas into Mexico. And then just power burn, industrial demand is going to go up for uh, you know, electricity generation and just other, you know, feed stock and stuff will increase by 3 BCF a day. So you add all that together and you get a 10.2 BCF per day increase in two years. Well, because of pipeline limitations, we can only increase production by about five BCF per day. So, there's really if we just have a normal winter, we we have enough gas in storage this year to make it through a normal winter. But if we would have, you know, some big polar vortex thing or something happen early in December or January and and it's a leninia winter, so that's when you have these big polar vortex events. If we have that, it will wipe out that surplus in storage like within a day. Uh last year, which was considered a mild winter, the winter of 2425 was considered a relatively mild winter. We had four weeks where the draws from storage were more than 100 BCF above the 5-year average. And so we're running I think the the storage capacity right now is about 150 BCF above the 5-year average. But looking at looking backwards at the 5-year average doesn't really take into consideration how much uh gas demand has increased. So it's it's really a flawed comparison to say, well look at the 5-year average. We're way above. Well, we're in a world that's where natural gas demand in the US is is is ramping up much faster than the 5-year average. It we're having increased demand for natural gas go five or 6% year after year. And that's and all that demand is locked in from now to 2030. L the LG export facilities are going to be built. The day AI data centers are all getting built. All this other stuff just and just commercial industrial demand is going up. And every house that we build across the whole south and east, they heat their homes with natural gas. So just, you know, heating demand goes up year after year after year. It's it's just such a strong market because it's the cheapest energy on Earth. Well, also with the data centers, I mean, I've seen projections all over the place. Yes. Um, it's tough to know because the construction might not be on time and on budget. Like the uh phase one for the Stargate data center in Abalene, Texas, that is online, but they're planning additional phases to scale it up even more than that. They also announced additional plans to build these data centers in the Midwest, I think. And then Google and some of the other tech companies, Google, Meta, Amazon, there's tons of other uh tech companies, at least five other tech companies with Oracle and Nvidia involved and OpenAI and some of the other companies. They all want to build data centers of at least like I would say 200,000 GPUs, which are around uh 300 megawatts of power, but they're talking about scaling it up, Dan, to like potentially 1 million GPUs, I said by the early 2030s. So, I don't know if we're going to get there, but the people seem to think that are building these uh data centers right now that are coming online, the um the Stargate one and then also the Colossus one from XAI, they seem to think it's feasible that we can scale 5 to 7 years from now from 200,000 GPUs up to 1 million. I mean, like the amount of natural gas I've seen projections 14% growth per year if that stuff plays out like they're projecting. >> I know. Well, I saw something a couple months ago that there's eight or 10 AI data centers that are going to be being built in Appalachia. That's the Marcellus Udica play in Eastern Ohio and Pennsylvania. So, so the AI data centers are going to build because they know they can't build them like in, you know, Virginia and expect the pipeline to be built quick enough. So, they're going to build those data centers right in the middle of the gas fields that you're going to see a couple big ones built in in um in Mississippi that have been announced, really big ones, and uh and eight or 10 being built in Appalachia. And we had a uh very small uh Canadian upstream company called Pine Cliff Energy, and they've already signed a contract with an AI data center to be built in their largest gas field. And they're and they've already got that contract in place. and they're hoping to get two or three more of those in place uh in the coming years. So, a lot of they're looking north because you know natural gas up in Canada is even cheaper than it is in the US. So for listeners out there, I'm sure they've seen all the headlines and some of the articles talking about like nuclear power and data centers, but the reality of the situation, Dan, is that unless the nuclear power plant is right there and they have an expansion permit to maybe build another cone and bring that online in the years to come, you have to build the data centers. If you're going to get the data centers online quickly, they have to have natural gas supply, not nuclear. No, >> they have it's it's the it's the only short-term solution that I see, you know. because the grid the grid they're saying in Texas we're not going to be able to hook them up to the grid because we don't have enough uh grid capacity and you know you hook up these big big data centers let's say you hooked up one you know run around San Antonio or something and they need power 24/7 so you're not going to be able to do that because >> do you think that means so so if they're not hooked up to the grid do you think that means that the governments then are telling the tech companies that you have to pay for the separate electricity substation. You have to pay for all the pipelines that the taxpayer the government is not going to pay for any of that. >> Well, I mean the you know they the market will take care of that. But the data centers must have reliable power. And the only way to have a reliable reliable, you know, seven days a week, 24 hours a day, 365 days a year is to build your own power plant where you control it and it's right there and you're not going to have blackouts or brownouts if you run your own power plant. And that's what SEI does. They they right-size power plants for these data centers. >> Oh, are do you cover that company? It's in what the sweet 16. >> Yeah, I I I cover it. It's very profitable. uh every every time they do a quarterly announcement, they update us on how many more orders they have and they they really can't keep up with the orders they've already got. So, they're their upside is incredible. It it was up 15% today. It's my I I looked at it like two months ago when it was trading in the like 30 and my valuation was $42. It just blew right past that. It's at 52 now. Well, a lot of the institutional investors, they uh are not necessarily buying Nvidia. They're actually looking at the infrastructure because I don't know if you've seen some of the charts, some of the charts showing uh basically these data centers are extremely complex uh for the cooling systems. You need a lot of energy usage for the cooling systems. There are energy hogs or water hogs. And these uh racks of the GPU servers, I mean, they're over 2,000 lbs for these Nvidia Blackwell chips per rack. and you have you burn through them. You have to keep them cooled off. So, you're burning tons of electricity for a bunch of different things. >> Well, I think MIT put out a report that said they don't see how these AI companies are going to ever make enough money to justify their share price. Now, of course, I said that about Amazon 20 years ago or so, but uh you know, so you look at a little company like SEI and they clear they're clearly profitable. I mean, they're extremely profitable now. They're generating, you know, free cash flow now. uh and they could get all the funding they want. You know, the bankers are happy to loan them money so they can they can get more of this stuff going and it's incredible. >> And so, you know, people are looking for ways like you said to invest in the the people that are going to really be making money off the AI buildout. And that's why I think there's a lot of company investors looking at and you know what when you have companies like this that that jump out. Let me let me look what their their uh trading volume was. I think it was massive. Yeah, their their normal trading volume, which is big for this company. It's only got like 65 million shares outstanding. Their average volume is like 2.6. Today, it was close to 5 million shares traded hand. That's a huge volume for a company of this size. >> So, it sounds like a pension fund or an institutional investor started to open up a position in stock. That's what it sounds like. >> Yeah, that's right. Yeah. And it pays a dividend. I mean the dividend yields low but it does pay a dividend. >> Yeah. So I I agree with you. I think a lot of the software companies that are designing the artificial intelligence so far all the different versions I think they will not be the main beneficiaries. I think it's going to be like the energy companies the utility companies the uh infrastructure companies that are involved in constructing the data center where where all the many billions of dollars of capital expenditure is uh being spent right now. I think those are going to be the main beneficiaries. >> Yeah, I bet you there's some construction companies are going to be making a ton of money off these things. You know that because that the they've got so much money invested, you know, hundreds of billions of dollars invested. So, and they have to meet these deadlines. They have to get these data centers up and running. So, they'll pay whatever it takes. It's not like, you know, it's like money's no object, but they got to they got to get these things online to justify their existence. Well, did you see what Meta is doing? Meta has been building these things with tents and then Meta just put out like an Enron type guarantee that any like construction overrun cost that Meta will subsidize all of it. Literally like almost a blank check from Meta. And then Mark Zuckerberg did a podcast interview. I mean, I I don't know. Um I'm sure his board of directors is angry at this. He basically said that like I don't care what my board of director thinks with profitability. I'm committed to spending like $600 billion of capex for data centers and AI software to improve it with his like glasses, the Rayban glasses and the other glasses, the VR stuff by the end of 2028. $600 billion. That's just one company. >> It Yeah, the numbers are crazy. I mean, I, you know, the oil and gas business is a very capital intensive business, but I tell you, this AI data stuff, data center stuff, and these AI companies, I mean, I I can't get my arms around the amount of money they're investing in this and how they're going to pay it back. I don't get it. But maybe I mean, they're smart people, but >> Well, I mean, I think they'd love to to build nuclear power plants, but it's just not efficient to build a nuclear power plant quickly here in the United States. It's not like China where you can build um you know 9 or 10 nuclear power plants a year. The US is just way too slow. It takes uh way too much capital and rules regulations, red tape, construction overruns. I think the the nuclear power plants in Georgia, they cost like they ended up costing over $10 billion more and there was many years of construction delays. >> Yeah. And and the thing about natural gas is you can rightsize the power plants. you know, uh, we generated our own power for a big CO2 flood we had out in West Texas when I was at Hess and we it basically was three jet engines that were hooked up to generate electricity for the whole field and we have five or six hundred wells in there. They're all on pump jack and everything. So, we needed a lot of reliable electricity. So, but you can right size for what it what it was. Actually, if your listeners, if they go to Solaris Energy Infrastructures website, it's SEI as a symbol. They have a really good presentation that explains kind of how they do it and how they rightsize the power plant for the needs of their of their customers. It's it's really a cool it's really a cool company. Anyway, >> so as we wrap up here, I want to ask you about lowcost producers, free cash flow, growth companies. Which companies do you think are doing a good job navigating these relatively low oil prices, keeping costs low, uh maybe making smart acquisitions that you cover in your sweet 16? >> Well, one company now these guys are outspending their cash flow because they they've got a tremendous asset in the Duivere Shale. Uh the U Spartan Delta Energy, it's SD.TO. Now, their current production is about 75% natural gas, which is a good thing, right? But they've got a lot of upside on the oil side, and that stock is up about 50%, but it's still trading at about half of my valuation. And they have a partner, they have a 20% partner in their the core area of the Dubet. It's called Journey Energy, and that stock's up about 30 or 40%, but it still has a lot of upside. Uh I I I also, you know, I like natural gas. I like uh well one and this company is building it's a very lowc cost producer very profitable company Riley exploration perian symbol R px and they are building two of their own natural gas fired power plants to generate the electricity for their own operations. They're way out in West Texas and in uh Eddie County uh New Mexico which is in the souththeast corner of New Mexico. They've got a new core area and the gas market is terrible out there. Literally, you can only sell your gas if you're lucky for a dollar, dollar$ dollar50 because there's just so much more gas than there is pipeline. So, they're going to turn that gas into electricity and they're going to build these things big enough for to generate all the electricity they need and they're going to sell electricity into the Texas grid. Uh, so they'll be making money off the electricity sales as well. So, I really like that one. That one's pretty cool. And uh let's see another one uh one of our top picks is still uh Calibbre uh you know the company has a pristine balance sheet. They're doing everything with free cash flow now. Uh it symbol is KGI. It's a it's really a one asset company. It's a very very small company uh with about 5,000 uh barrel BOE per day of production. Mo mostly oil though. Uh for natural gas the little company I mentioned it's Pine Cliff uh based in Calgary. uh symbol is PNE.T0. Uh the stock's only uh you know.7 cents Canadian. Uh my valuation is about 95 cents. And but if but if natural gas price goes up, it could go way up. But when last time natural gas up in Canada was about $3 in MMBTU, this stock got up like $2. So if if gas prices bounce up in Western Canada, it could be a double from where it's trading right now. And I think they're also talking about now that they've started building out some of these massive data centers in the US and talking about additional ones in the Midwest, they're talking about building them in Canada, too, because there is that cheap natural gas. Like you said, I've just heard in the last like month or so, they're talking about now since natural gas is so cheap. Why don't we put in Canada's colder that would save them some money on the cooling costs, why don't we put some data centers up in Canada then? >> That's that's exa that's exactly right. I said when they started looking at it, they said, "Hey, wait a minute. All we have to do up in Canada is open the windows. It's pretty cold up there right now. >> Yeah. I mean like Norway. So like Norway or uh Iceland, some of these other colder countries that that have like geothermal or other stuff like it makes sense to put some data centers up there too. >> Yeah, it does. Anyway, >> well um la last question here. Now, I've seen some negative research coming out uh predicting that potentially there will be a natural gas supply gut for liqufied natural gas exports um by like early 2030s. Do you agree with that or do you think that's inaccurate? >> No, I'll worry about it then. I I truly think, you know, people have been talking about natural gas to be the transition fuel to where we can transition to where all of our electricity comes from from uh you know, wind and solar. That's not happening. That is not going to happen. Natural gas is the future. It is the future. You know, eventually oil will oil prices will go high and oil oil fields do decline. And if if just demand in general for electricity just keeps going up up up, the only solution that I see is natural gas for the next 5 to 10 years at least. So, I don't think I don't think that's a problem until way down the line. And I'll I'll believe it when I see it. Well, the supply glut has to do, I think, with how I think China and Russia just announced that China doesn't want to buy as much expensive LG imports and that I think Russia is going to be building them what a a Trans Siberian type of uh massive natural gas pipeline to try to pipe gas from uh Russia into China. So, that will uh allow them to reduce their LG exports. But I I look at Europe and Europe has a lot of oil and natural gas drilling bans. They basically have to buy natural gas from either the US or Norway or Qatar. So they have to buy it from somewhere because they don't allow domestic oil and natural gas drilling. And then Europe is also like the United Kingdom and Europe, Dan, they're really far behind on the uh artificial intelligence and data center buildout. They're going to want to catch up and they're going to want to start building these data centers and that's going to cause even more natural gas demand in the future. >> Yeah, I think so. It's it was it's a clean burning. I mean, it's so clean burning. A natural gas fired power plant almost has no emissions. I mean, compared to a coal fired power plant, it probably has 5% of the emissions of a coal fire power plant. We have one, you know, I drive by one all the time, uh, coming home from the health club, and it's just a bunch of steam coming out of the thing. That's it. >> Well, but the green energy people, the ESG people, Dan, a lot of them, if they're not scammers, they're hypocrites. So, a lot of them don't even understand like they say about uh how how clean or green uh solar panels and wind turbines are, but I mean like the reality and we're going to find this out now with with rare earth because they're being talked about constantly in the news >> is how like highly toxic all the chemicals are for earth mining. Like it destroys the air, water, and soil. So, to say to label and say these things are green, I mean to get the rare earth to make, you know, solar panels and wind turbines like it's insanely unecon uh uh environmentally unfriendly, excuse me. >> Yeah. There there there's nothing green about wind turbines, I can tell you. >> Or solar panels. Yeah. Or a solar panel. >> Or even solar panel. I mean, the the the mining cost and the pollution and the mining operations to get the materials you need them to build them, to haul them, to install them, you got to add all that up. And all that all that work is done by machines that are run on diesel. So >> well al also they don't talk about this a lot because a lot of these uh rare earth experts I'm using air quotes they're they're Johnny come lately I've been covering rare earth for many many years there's huge radioactive byproduct with the rare earth elements there for uh uranium and thorium as a byproduct and then also like you're using an insane amount of highly toxic chemicals to separate out the rare earth to separate the radioactive materials out of that and then you have to store the radioactive materials. So, and then on top of that, you have to turn the rare earth that you mined at the mine site after you destroyed the air, water, and soil around there for miles, you have to turn that into viable products. And that's like like uh very energy intensive and lots of chemicals, too. >> Yeah. Well, if any of your listeners, you know, want to contact me, I'll send them my last newsletter or something. They can kind of see what we do. just send me an email at energypersperspectus@gmail.com and um we'll just send you a newsletter and tell you what we want to do and if you're have interested in any of the companies I mentioned just let me know we do updated profiles on all these companies and u and detailed forecast models on all of them >> and if I could add to your points there about valuations for the oil and natural gas sector I mean we are in terms of sentiment I mean in the last like few months the oil longs for on the oil futures contracts I I think we're at an all-time low for oil bulls. It was like the most bare sentiment I think on record. And so like what the uh XLE, which is what the uh S&P 500 portion of the energy sector, I mean that's disproportionately low compared to a lot of the other industries. >> Yeah. Yeah. You know, like EIA comes out with a forecast and their short-term energy outlook forecast from last week and they lowered their oil price forecast for Brent down to like 53 or something, which would put WTI at 50. And >> who makes money? Who makes money at those prices? >> Look at look at the strip, the NYX strip today. So the the oil traders obviously don't believe that because the strip is all the way for the whole next year is like 57 or 58. So they're I don't know where EIA is getting that coming up with that number because the real world supply and demand is pretty tight and it's definitely does not justify oil going down another8 or $10. >> Well another eight or$10 I mean you're at the marginal production cost for a lot of producers. makes no sense to produce oil and lose money. >> Yeah. If if that would happen, you would see these upstream companies just slam on the brakes on their drilling programs like crazy. And and then what would follow that would be the same thing we saw with the pandemic. You would see a big decline in US production in a very short period of time. And it would be extremely difficult to rebound from that because a bunch of people would lose their jobs. The service companies would be in, you know, be in big trouble too. And you know, they're not just you don't just have big expensive great drilling rings sitting around at some Walmart parking lot someplace. This is an industry that is really hard to ramp up if you let it go down. >> Yeah. Especially deep water with a lot of additional oil production. I mean, because if the oil prices go low, they just start scrapping all the old deep water rigs. They just shut them down or or decommission them. >> Yeah. There's still a lot of potential in the deep water, no doubt about it. But those are long-term projects. They don't happen overnight. Oh yeah, I agree. >> So, so, so we're basically at a sentiment standpoint. I think riskreward valuations, I think for a contrarian standpoint, oil, oil and natural gas companies are probably the cheapest of any commodity sector right now. >> No, they they literally look good. I can tell you I got some great companies that are very, very profitable companies trading at extremely low multiples right now. >> Yeah, I think from a valuation standpoint, I think they're by far the cheapest. Now, I I think we could see gold at $5,000 an ounce in 2 years or less. So, I think the gold stocks cuz I have a friend who's a oil hedge fun manager and he keeps, you know, saying that the gold run is over. And he said that like four or five months ago, and I was like, "No, the gold run's not over. The gold run's not over. The gold run's kind of like it's based on all these other currencies and government debt like being destroyed. They're intentionally devaluing these things." So, I could see gold at, you know, $5,000 an ounce in two, two and a half years or maybe even less. We We'll have to see. Hey, one of the little mining companies that I follow up in Canada, it's not really that little. Uh, it's called Nuvo Graphite. They have a big graphite discovery they're developing and they get they got Panasonic and GE or and General Motors are invested in the company now. The stock was up 50% today in one day. >> Well, I think that's because didn't I think China just announced that they're banning some graphite exports. So I think that's why so I think people are scrambling looking around for reliable supply for western countries like in the US and Canada. I think that's why >> yeah and that they their discovery is huge. It's all been confirmed. This is a very big discovery. It's going to take a couple years to get the mine online but they've definitely got huge resources. The symbol on that one is uh NMG. I think they I think they recently listed on the New York Stock Exchange too. I haven't looked at it closely in a long time. Anyway, >> well, and graphi graphite, I mean, it a lot of it depends on graphine. So, graphine demand for manufacturing. So, we we'll have to see. We haven't had the graphine batteries yet in the smartphones cuz I know in the labs those were testing pretty well like six, seven, eight years ago and they haven't manufactured those and added those into Samsung or Apple iPhones. Samsung smartphones or Apple iPhones. It's kind of shocking. >> Yeah, I I'll send you one when I find it. I can't think of it offhand right now, but one of our members posted about a graphine company and I think the stock is up like 300% since you mentioned it. I'll send you that later. >> Okay. Well, thank you so much for your time and keep up the good work at Energy Perspectus Group. For our contrarians out there who have wanted to take some profits in some of your gold stocks and look to diversify into cheaper markets with better riskreward, the oil and natural gas sector, the pipeline companies, the lowcost oil producers, some of the lowcost natural gas producers in the US and Canada looking like good riskreward contrarian value plays right now. >> All right, ma'am. Thanks.