SLB

Booming Natural Gas Prices Great News for Chevron and ExxonMobil

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Image Shown: Chevron Corporation – August 2021 IR Presentation By Callum Turcan Natural gas prices in the US measured by the Henry Hub benchmark (UNG) based in Erath, Louisiana, have surged higher over the past several months. This is partially due to the slowdown in domestic oil & gas development activity that occurred back in 2020 in the wake of the coronavirus (‘COVID-19’) pandemic and low crude oil prices. Though crude oil prices, measured by the domestic WTI (USO) and international Brent (BNO) benchmarks, have since recovered, that has not resulted in domestic drilling activity returning to levels seen in 2019, though development activity has recovered somewhat. Henry Hub futures are trading north of $5 per million British thermal units … Read more

ExxonMobil Continues to Optimize Its Asset Base

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Image Source: ExxonMobil Corporation – Second Quarter of 2021 IR Earnings Presentation By Callum Turcan According to Reuters, ExxonMobil Corporation (XOM) is in the process of divesting its Fayetteville shale play position in Arkansas, which ExxonMobil’s spokeswoman Julie King confirmed according to the news outlet. This is an upstream asset focused on the extraction of natural gas from the ground via “fracking” techniques (combing horizontal drilling and hydraulic fracturing to unlock raw energy resources from the ground). Divestment Overview The Fayetteville shale play was once touted as a major part of America’s way to become “energy independent” during the early days of the fracking boom. However, the play soon lost favor with energy firms large and small due to the … Read more

Chevron Posts a Great Earnings Update, Share Repurchases to Resume

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Image Shown: An overview of Chevron Corporation’s performance in the second quarter of 2021. We include shares of Chevron as an idea in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios and continue to be huge fans of the name as the global energy complex continues to recover from the worst of the coronavirus (‘COVID-19 pandemic). Image Source: Chevron Corporation – Second Quarter of 2021 IR Earnings Presentation By Callum Turcan We added shares of Chevron Corporation (CVX) as an idea to both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios back on June 27, 2021 (link here). The outlook for the global energy complex continues to improve significantly from the worst of the coronavirus (‘COVID-19’) pandemic, … Read more

ExxonMobil’s Immense Upside in Guyana

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Image Source: ExxonMobil Corporation – 2021 Investor Day Presentation By Callum Turcan On June 27, we added shares of ExxonMobil Corporation (XOM) as an idea to the Best Ideas Newsletter portfolio and the Dividend Growth Newsletter portfolio (link here). The backdrop for the energy complex has improved considerably in recent months. Raw energy resources pricing has surged in the wake of demand for refined petroleum products beginning to recover in earnest, while demand for various petrochemical products is also on the rise. Near-term Brent and WTI futures are trading north of $70 a barrel as of this writing, keeping in mind Brent averaged ~$60-61 per barrel and WTI averaged ~$57-$58 per barrel during the first three months of 2021. On … Read more

ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline

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ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline — — In this 40+ minute video jam-packed with must-watch content, Valuentum’s President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He’ll talk about which companies Valuentum likes and why, and which areas he’s avoiding. This and more in Valuentum’s 2020 Exclusive conference call.   Note: This video was originally published August 2, 2020.    To watch the video >>   The Theory of Universal Valuation —– Valuentum members have access to our 16-page stock reports, … Read more

Energy Earnings Roundup: CVX and XOM

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Image Source: Exxon Mobil Corporation – 2020 IR Presentation In ticker by alphabetical order: CVX, XOM By Callum Turcan Several integrated oil and gas companies recently reported earnings for the final quarter of 2020, and as expected, these were brutal reports. The coronavirus (‘COVID-19’) pandemic weighed negatively on global demand for raw energy resources (crude oil, natural gas, natural gas liquids), refined petroleum products (gasoline, diesel, kerosene), and certain petrochemicals last year which created massive headwinds for the oil and gas industry across the board. Subdued raw energy resources pricing and lackluster refined petroleum product demand were the two big obstacles for the industry as those dynamics severely weakened the economics of upstream (involved in the extraction of raw energy … Read more

ALERT: Raising Cash in the Newsletter Portfolios

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January 27, 2021 ALERT: Raising Cash in the Newsletter Portfolios We are raising the cash position in the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to 10%-20%. — By Brian Nelson, CFA — Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. You can read the 2020 recap here. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we’re raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. — For more conservative investors, the high end of this range may even be larger, especially … Read more

Chevron’s Forward-Looking Dividend Coverage is Becoming Stressed

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Image Shown: Chevron Corporation reduced its capital expenditure expectations a couple of times this year, though that still has not enabled the firm to generate meaningful free cash flows given the various headwinds facing its businesses. Image Source: Chevron Corporation – November 2020 IR Presentation By Callum Turcan On October 30, Chevron Corporation (CVX) reported third quarter earnings for 2020. As expected, it was a brutal report from Chevron. The ongoing coronavirus (‘COVID-19’) pandemic decimated global energy demand and severely weakened raw energy resources pricing at a time when refining margins are quite weak. This double whammy saw Chevron post a $0.2 billion GAAP net loss in the third quarter of 2020 as its revenues tanked. Dividend Coverage Facing Serious … Read more

Exxon Mobil’s Weak Forward-Looking Dividend Coverage is Very Concerning

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Image Source: Exxon Mobil Corporation – Third Quarter of 2020 IR Earnings Presentation By Callum Turcan Exxon Mobil Corporation (XOM) has contended with enormous headwinds so far in 2020 due to the ongoing coronavirus (‘COVID-19’) pandemic, and that has put its dividend at risk. Over the past couple of years, the company has come nowhere close to generating enough free cash flow to cover its dividend obligations. Exxon Mobil’s forward-looking dividend coverage appears quite weak and the company is currently leaning heavily on debt markets to keep making good on those obligations. As of this writing, shares of XOM yield ~9.7% as investors are increasingly pricing in the chance for a meaningful payout cut. Deteriorating Upstream Outlook The long-term slide … Read more

Our Thoughts on Magellan Midstream’s Latest Earnings

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Image Shown: Keeping the many headwinds facing the energy infrastructure space in mind, Magellan Midstream Partners LP remains one of our favorite midstream master limited partnerships. Image Source: Magellan Midstream Partners LP – October 2020 IR Presentation By Callum Turcan On October 30, Magellan Midstream Partners LP (MMP) reported third quarter 2020 earnings that beat both top- and bottom-line consensus estimates. The midstream master limited partnership (‘MLP’) space has faced enormous headwinds due to the ongoing coronavirus (‘COVID-19’) pandemic, though the firm was still able to generate sizable free cash flows during the first nine months of 2020. Magellan Midstream is a modestly-weighted holding in the High Yield Dividend Newsletter portfolio, and as of this writing, units of MMP yield … Read more