Jordan
Long-Term Stock Investor, Compounding & Portfolio Construction
BP has further to go as new CEO Meg O'Neill resets it into a traditional oil and gas major focused on returns and cash flow. Renewable spending is being cut by $5-10 billion while oil and gas investment rises 20% to $10 billion a year. BP plans $20 billion of asset sales by 2027 and aims to cut debt from $22 billion to $14-18 billion, pausing buybacks. Continued instability in the Strait of Hormuz adds support, though the climate pullback faces ESG pushback. x.comÂ
Shell's stronger refining profits and larger buyback support the view that its breakout holds. Q3 adjusted earnings reached $10.8 billion versus $9.9 billion expected, as refining margins hit a record $42 a barrel; the three-month buyback rises from $3 billion to $5 billion. Those margins will not last forever. x.comÂ
Money is rotating from big refiners and integrated oil companies into oil drilling and servicing firms. The move could be in its early innings, and the recent drilling gains alongside refiner losses are working in that direction. x.comÂ
Oil majors such as Shell, BP, ExxonMobil and Chevron deserve their multiples because they have consistently generated 10%+ returns across complete energy cycles. They are integrated, now diversified, and control a key commodity for decades ahead. Investors will do fine if they hold for the long term. x.comÂ
Eni is the premier public way to profit from Algeria's insulated pipeline gas exports to Europe if the Strait of Hormuz closes. As the primary foreign partner of Algeria's Sonatrach, it owns irreplaceable Mediterranean infrastructure feeding Europe's structural gas deficit. With a portfolio breakeven below $40 a barrel, price gains from a supply shock drop almost entirely to the bottom line. Risks include European windfall taxes, shifting carbon rules and offshore execution. x.com x.comÂ
Chevron already has producing Venezuelan ventures, but expanded agreements still need drilling, dependable power, crews and equipment before more barrels can be sold. Its three ventures were producing about 280,000 barrels a day at the July earnings call, and production had grown 15% year to date by September. Keep holding Chevron, but past gains do not justify buying more at any price. x.com x.com x.com x.comÂ
Kosmos Energy probably deserves to trade higher because its gas production is priced as a percentage of Brent and growing, a substantial tailwind that leaves it highly geared to the oil strip. With its development program, effective oil reserve life is probably closer to 10 years than 7. Fair value works out to around $4 a share, with a wide range of outcomes. The risk is $2.5 billion of debt at an E&P with declining production and 18 months of lean capex. x.com x.com x.com x.com x.comÂ
Texas Pacific Land gets a tailwind for its royalty stream as oil spikes on renewed Iran tensions. The stock fell from about $450 to $375 on fear tied to a headline about a major shareholder, not anything fundamental. Its water-treatment business is a growth story most investors are not yet pricing, with a national-security angle on top. A pullback near $400 would be a buying opportunity. x.com x.comÂ
Halliburton is priced for shrinking margins just as fracking capacity tightens. Revenue has been roughly flat since 2023 while operating margin fell from 17.7% to 13.1% and EPS from $3.13 to $2.37, so it trades at 15.3x expected earnings versus about 22x for SLB and Baker Hughes. Years of underinvestment have left less North American frac equipment, and management says its fracking schedule is fully booked. Each one-point margin gain adds about $0.20 of EPS. x.comÂ
Crude oil's latest drop reflects real Gulf export capacity coming back, which erodes Iran's Hormuz leverage. Saudi Arabia resumed loadings at Yanbu, with the East-West Pipeline at 2-2.65m barrels a day and seen by Kpler rising to 3-4m soon. Saudi and UAE shuttle tankers under US escort have restored at least 60% of pre-war flows. The risk: Qatar's mediation is stuck, per Axios, and a squeezed Iran may escalate against ports, refineries, pipelines or Red Sea shipping. x.comÂ
With the 10-year Treasury yield touching 5%, cash generation and price strength matter more, favoring developed-market large caps that pair the highest free-cash-flow yields with strong momentum. General Motors leads with an 18.8% FCF yield, followed by BP at 13.6%, Marathon Petroleum at 11.6% with a top momentum score of 100, DHL at 11.4% and Shell at 11.3%. Verizon, AT&T, Suncor, Valero and Equinor complete the list with yields of 8.9% to 10.1% and momentum scores from 80 to 100. x.comÂ
