Techquity
Technology Investor, Fundamental Research
Canadian Natural Resources' slowly declining oil and gas reserves will last many years and give it very steady production. It generates a lot of cash even when markets are tough, has raised its dividend for 26 years in a row, and plans to return 100% of free cash flow to shareholders through dividends and buybacks. x.comÂ
Canadian Natural Resources deserves a premium: it has a 30+ year reserve life and grows production every year while spending significantly less on capex than depreciation. x.comÂ
Canadian Natural Resources' long-term track record is hard to argue with, making it more compelling than Rogers. x.comÂ
Oil producers and royalty companies such as Canadian Natural, Suncor, Freehold Royalties, Viper Energy and Obsidian Energy can make money without oil going higher, if prices stay elevated longer than the market expects, say through year end. Many are still valued on trailing free cash flow yields, realized prices and production rates, none of which reflect the current elevated spot price. x.comÂ
Cross Timbers Royalty Trust converts incremental royalty revenue disproportionately into distributable income, and its market cap may not reflect the latent value of its 90% net profits interests. These span the Permian, Anadarko and San Juan Basins, with recent horizontal permitting and development, and burden Texas Sand Hills properties next to another prolific producer. SoftVest Advisors' ~16% stake could unlock value, though the thesis, co-authored with @athelascapital, stands without it. … Show more
SandRidge Energy has the best risk-reward among small-cap E&Ps: it is profitable, pays a dividend, holds net cash and closed below tangible book value. Companies with bad balance sheets are not worth owning here, as the opportunity cost is too high. x.com x.com 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
Infinity Natural Resources' lower trailing EV/EBITDA than Appalachian peers supports its value case. It trades at 4x versus 5-7x for EQT, Range Resources, CNX and Antero, while its P/E is 5 and trailing EBITDAX is $366 million. A somewhat bullish outlook for natural gas prices also underpins the view that Appalachian E&Ps offer value. x.comÂ
Vista Energy grows over 20% yet trades at about 10x earnings, while most big oil companies trade at 20-25x with single-digit growth. It also works as an oil hedge. x.com x.comÂ
Occidental Petroleum is mispriced at about 8.4x trailing earnings and an 8.7% free cash flow yield during an oil shock. Eight times earnings in an oil shock is not a valuation but a clerical error with a ticker symbol. Iran cannot beat the US Navy, so it is waiting out America's vote in 49 days, since Iran does not vote until 2028; owning Occidental beats hiding in Treasuries. x.comÂ
Canada's equity market offers one-ticker exposure to top banks, energy giants and miners that most global investors overlook, adding long-term diversification. It may be boring and probably underperforms, but the chart is a straight momentum buy: accumulation in 2022 preceded a strong yearly breakout. x.comÂ
