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