00:01:00 @NachoTrust hits the stage. Nacho gives his origin story, and begins with a discussion of natural gas macro.
00:06:30 The NG market was changing in the fall of 2019. NG and LNG markets were oversupplied. This worsened when COVID hit, and LNG cargoes were the same price as NG.
Regasification capacity is back, and liquifaction capacity has stalled on a global basis (not in North America). For regasification you can build a fixed on-shore site or use an FSRU (Floating Storage Regasification Unit).
00:11:15 When coal is $7-$10 mmbtu and there is a coal shortage and high demand, it's bullish for NG. "It's absolutely nuts that we're at $8, but Arc Resources is $17. ... I think that's going to improve."
00:12:30 Antero Resources was a U.S. firm that presented a great opportunity. EQT as well. Antero was a 25-30X.
00:14:30 @ScottW_Grizzle enters and starts a deeper $ARX discussion.
"ARC is quiet and this is how they do it." The company bottomed out at $2.75 (of course, Nacho was able to scoop up a position at around that price.)
00:18:00 Nacho prefers a high base dividend over specials because they make for easier valuations.
@ScottW_Grizzle: The big investors aren't back. They see the FCF, but don't know if they'll get any of it. Discuss where you want to get your debt level, and what you're doing after that. "Making things easier to model always benefits your stock."
00:21:00 Stagflation risk discussion. NACHO: It's going to be a good decade, but it's good to pay down debt. Scott: Don't pay it all down.
00:24:00 Nacho wants $ARX to retire all non-term debt by June. He anticipates a variable dividend. Variable dividends? Base + specials? Dividends in general? @thomasg_grizzle and Nacho discuss. Imagine getting $TOU at $7?!
(me imagining getting $TOU at $7).
00:30:00 Getting better communications from company investor-relations teams. Tell us your plan (how much FCF are you returning), then execute. $DVN gets some love for its variables.
00:32:15 Bad things going on. Energy bros get cocky during this part of the cycle. Supply is more disrupted than demand. $ARX paying back 50-80% in '22-'23. Nacho's heading to corporate HQ if they continue to underperform!
@thomasg_grizzle 7GENs acquisition. Nacho discusses how $ARX gets such good pricing on propane. The cheapest guy in Canada's buying!
00:37:20 Did Nacho's valuations lead to Eric changing his mind?
This market changed in 2020. Nacho missed the oil trade, thinking OPEC had spare capacity. Nat Gas doesn't rely on weather as much, and as LNG capacity comes on line, NG will stay up.
00:41:20 @sohaibab9 asks @thomasg_grizzle to attend $ARX earnings calls to pump up the energy.
00:45:00 @jamesyachyshen 7GENS acquisition covered up some of $ARX's warts. James then switches gears and asks about Alta Gas. $ALA / $ATGFF
@BubleQe let's his Tweets do the talking re $ALA:
00:49:30 Nacho gives his thoughts on the Mexican market.
Mexican demand is not catching any attention. Huge export to them over the next 3 years. This decade looks fantastic.
12 BCF of cross-border pipe from U.S.-Mex, but pipe is an issue within Mexico.
00:54:30 Cannot underestimate the importance of Russia-Ukraine. We can never trust Russian supply again. Nacho's trigger to move into services.
Services "garbage sector" until Russian invasion.
56:00 France could put FRSU's on west coast of country to increase LNG imports. @ScottW_Grizzle What are Europe's alternatives? Start drilling?
I dunno, maybe these guys?
https://vermilionenergy.com
European LNG demand is bringing freight rates down (Euro route cheaper than Asian route). But increased European demand means someone is going to be short of supply.
1:00:00 @ScottW_Grizzle Prices resilient despite Chinese lockdowns.
@AhmedBa44329064 teases out Nacho's lady-killer status in Quebec and discusses JKM-TTF and a large drop in BP's production.
1:04:00 Decline rates in Russia are high, and funding from the West won't be forthcoming. @thomasg_grizzle Should we be skeptical of this? Could Russia actually keep pumping without Western help?
1:04:00 Decline rates in Russia are high, and funding from the West won't be forthcoming. @thomasg_grizzle Should we be skeptical of this? Could Russia actually keep pumping without Western help?
The first company Spaces featuring OFS:
The second!
Nacho likes rig owners, and to a lesser extent the pumpers.
1:11:00 Nacho's also on the Murray Edwards bandwagon. $ESI is growing into its debt. Soon they will be able to let go 50 rigs and be fully delevered.
CWC CEO is a solid business guy. Nacho was very positive listening to the Space. Nacho is with @Tsxman regarding $STEP.
1:15:00 @ScottW_Grizzle compares OFS to U.S. housing -- huge demand, no supply. Nacho: "I'm buying quality, never buying shit again. ... But I'm buying shit again."
@TeddyGambino said to buy $TCW at $0.40, but Nacho didn't nibble. @ScottW_Grizzle when you bought things like that for the last 10 years, and it didn't work maybe you don't buy at $0.40.
1:20:10 PD talking about positive earnings in 2022.
1:22:00 Portfolio construction-Nacho style. He likes to have a lot of cash and a small number of holdings. Sacrilege! Nacho's compiling a list of potential tech buys. ...
Prior holdings included: $PIPE, $KELT, $BIR. He has 2-3 core names and 2-3 speculative names.
$STEP has the most ESG-friendly Tier 4 tech. It's in high demand (uses NG), which gives Step an advantage. Can't find the people. 60% of STEP is institutionally held. An opportunity for the smaller investor.
1:34:00 This is a long cycle. @Tsxman firms are retrofitting old equipment not bringing new equipment on line. Lots of good capital discipline. @AhmedBa44329064 asks about Liberty, $LBRT (NYSE).
Schlumberger sold a division to $LBRT and got shares in return. Liberty is well-run, and could attempt a takeover of $STEP. Calfrac isn't in that great shape and had great results. Expect $STEP to do even better going forward.
1:41:00 Huge valuation gap between $STEP and $TCW. @rockcreekfreak talks about carbon taxes and does $STEP have an edge because of this? $TCW is using NG in Canada and $TOU is using them.
Tri-Can uses dual-fuel (diesel/NG) equipment. Calfrac ($CFW) uses Tier 2 equipment, which leaves them at a competitive disadvantage. Huge ESG demand.
1:48:30 Talking $CWC and $PD. U.S. acquisition of equipment not priced into $CWC -- not being tracked, providing an opportunity for #COM.
Nacho likes $ESI because of its small market cap, and its low value compared to its assets. And let's not forget it's Big Murr!
1:58:00 @AhmedBa44329064 and @jleqc on labor and materials/inflationary pressures on OFS.
2:02:00 @MC_mike411 asks about $SES and $CEU
2:03:30 @Josh_Young_1 cameo/technical difficulties (hey, it's a Twitter Space, technical difficulties welcome!). $SES CEO says on conference call that record pricing structures.
2:11:00 @bar22571935 cameo. SES and CEU and EFX are the companies @MC_mike411 asked for.
2:13:00 @coenjarts has lots of experience with service companies, and the above names in detail, discusses retail investor interest.
Jody even names a firm that runs the camps -- $BDI.
Most interesting names: SES and CEU are kind of recession-proof. ... No one has caught onto the smaller names, and it's early stages. This is Jody's fourth cycle. This is the most interesting set-up in his career because these firms are hated.
This could be the set-up for a multiyear cycle. We are going to need more of this stuff going forward.
2:24:00 Time to draft Andrew Bradford to do a Space with #COM? @coenjarts says Andrew trained many of today's OFS investment-side analysts.
2:30:00 @zeal @sohaibab9 @jleqc @DSteinmoeller and #COM discuss investing philosophies, going for long-shots, charts, and much more.
2:43:00 Some of the names being pumped on TV are very odd, and troubling when companies such as $MEG provide far less risk with great potential reward. When in doubt, buy the big names $NNRG, CNQ, $CVE, $ARX.
2:48:00 @HectOracle
on $TVE and $ATH earnings. @DSteinmoeller
hedging by shorting tech and the Queen of $12 Whale Oil; the Fed, and a possible sell-off
3:03:00 @BarrsDorian is a fan of @agnostoxxx. Dorian says have cash on hand, and prepare for short-term pain (long-term $). He also notes that $PEA is releasing earnings May 12 -- Dorian suspects this is a bullish thing.
A #COM first (I think) @HectOracle calculates FCF and AFFO on the fly for two of our favorites. DON'T TRY THIS AT HOME!
Two reasons the #COM rules. Our guys post their homework for us to conduct sanity checks.
3:12:00 @WhiteTundraSG discusses @ARX new numbers with $6 AECO. An extra $500M-$700M in FCF going into 2023 without growth. ... $ARX also has top Montney wells.
Shubham likes $TVE for quality of the wells and the land. He anticipates a tripling of the dividend later in the year, and price appreciation accelerating in Q2-Q4.
$PNE and $TOU? Storage is low. Unless trends change, we could see $10-$12 AECO. If you run a Pine Cliff valuation at that price, it's "pretty hilarious."
3:18:00 @jonathanslusser asks about $SDE. Shubham wishes he'd swapped out $ARX for Spartan Delta. SDE is 50-60% cheaper per flowing barrel than $PIPE.
$SDE has been aggressively marketing in the U.S. "If they can take some money (from shale investors) that will set them up well."
Will Spartan make another acquisition? They could 3X their production, but Shubham thinks they want to get bigger, and there are PE firms such as Hammerhead that would be a good fit.
3:25:00 We will keep talkin' shitcos until morale improves! Juxtaposing beginning/end of @RazorOil's epic 30-APR Space with $SU vets describing the mess, and @crudegusher talking Elliott's ability to restore Suncor.
magnificently summarizes eight hours! Sankey with a whiskey and a cigar ... He really likes the Elliott Group, they're in it for 3-5 years. He said they should spin off their retail. ... They announced it the day after.
Suncor wants to work with Elliott. They're not trying to fight it. Hector has some $SU and likes the options and the torque they provide. #COM Spaces have the subject-matter experts and we get to attend live.
shout-out to @SHOPGod2 and his fantastic work in the Space -- keeping us laughing and running the room like a boss.
GET SANKEY A #COM TIE!
3:30:30 Sankey cuts to the chase -- the upside is about getting the U.S. investor into the #COM trade. SHALL WE SAY IT AGAIN? WE NEED AMERICANS IN THE TRADE!
What's Elliott? It's "the front skin cells of the first big toe of America entering the system." Harbinger companies going from S-U-curious to C-N-curious. If Elliott is the first U.S. group looking in Canada, then we're in the first inning.
3:34:30 Shout-out to @MC_mike411, the Yves Saint Laurent of #COM.
Mike's baby:
https://canadianoilmafia.ca/
Mike's origin story includes lots of pain, lots of faith, and late-in-life redemption.
3:55:00 @MC_mike411 has backed off margin to go from 120% oil to 95% oil. Sankey's tie?!
Why did Mike stay with @ericnuttall and his thesis? He knows the industry well. He was inspirational. For him to be able to stick with it. ... It was just a matter of time. He knew it. I knew it. ... There's a "Dare to dream" hoodie in the store.
Costless collars on AECO gas for $5/$14. ... Anybody see it? What does that add up to?
4:02:00 @WhiteTundraSG There's the same chance that NG could be $5 as it could be $14? Are we going to see a Euro-style NG blowout in the U.S.? Demand through the roof.
What are the gassy names to consider? $SDE, $PNE? @jleqc: $VET! SDE and VET have tiny floats. $PRQ is growing fast. $JOY?
What about Birchcliff? "At this level, the math changes."
Fully unhedged. Shubham did a presentation last year -- the capex spend was not promising.
---
People don't understand $TVE's FCF for Q1 because they spent a huge amount of projected capex to surge production heading into Q2
4:10:30 Question about Tellurian ($TELL). @thejeff85 wonders about Cheniere's ($LNG) earnings with LNG soaring.
@Zeal1203 is a fan of $TELL and shares his investment thesis.
4:21:00 @Zeal1203 looks at it as a 4X-5X possibility. @sohaibab9 what differentiates this company?
Read "The Frackers" by Gregory Zuckerman about Cheniere. Same management team as $TELL. @thejeff85 Inflation risk.
4:29:00 @crudegusher agrees to tie one on for the #COM!
4:30:00 @joemama48072123 @sohaibab9 #COM members talk about growing #COM and an initiative to transparently provide parting gifts to guest speakers.
#COM Stampede Party -- sounds like it will be lit -- for those lucky enough to get an invite!
High-Energy Tuesday Ep. 10