In this week’s podcast, Simon Lack talks about the impractical promises from Democrat presidential candidates on climate change, and adds an update on the Blackstone-Tallgrass deal (6 minute mark).
https://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpg00Simon Lackhttps://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpgSimon Lack2019-09-12 11:38:182019-10-08 15:33:22Episode 10: Political Promises on Climate Change
In Episode 5 of SL Advisors Talks Energy, Simon Lack talks about market volatility, valuations in midstream energy, and Canada’s new way to export its crude oil.
Show Notes:
Volatile week with more tariffs on China roiling markets (:51)
Still assuming Trump will take China deal in time for election (:52)
Falling bond yields reflect widespread risk aversion (1:28)
Equity risk premium is favoring equities (2:15)
Investors asking why energy stocks are down again (2:48)
Sector remains out of favor, falls farthest when stocks are weak (2:53)
But valuations are compelling (3:03)
Energy Transfer yields >9%, 2X covered by DCF (3:10)
Williams 6% yield, also 2X covered (3:24)
ENLC fired its CEO and lowered guidance but still expects to raise distribution, yielding 15% (3:36)
Midstream energy infrastructure earnings generally good, but sentiment poor (3:51)
Misallocated cash, although signs of improvement (4:00)
Weak natural gas prices, although not hurting pipeline earnings (4:30)
Fears over climate change, although oil and gas consumption continue to grow (5:00)
Turn to Canada – big challenge to get crude out of Alberta (6:55)
Keystone XL much delayed although TC Energy (FKA TransCanada) expects to finally build it (7:32)
ENB told us they wouldn’t build a Canadian crude pipeline except in Alberta (7:47)
Plans to build railway from Edmonton and Ft McMurray to Alaska (8:10)
Amazing considering 2013 crude disaster in Quebec, 47 deaths (8:34)
But pipeline opponents have done this (8:41)
Railway will travel up through Yukon Territory, allowing Canadian crude exports from Alaska (9:19)
Also unlocking mineral reserves in Yukon by providing transport (9:22)
Project still in planning stage, but reflects ongoing global demand for crude in spite of fears over climate change (9:38)
https://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpg00Simon Lackhttps://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpgSimon Lack2019-08-09 13:49:032019-08-09 15:30:38Episode 5: Don’t Let Energy Volatility Scare You
In Episode 4 of SL Advisors Talks Energy, Simon reports on 2Q19 pipeline earnings and provides his insights on the weeks’s major stories in energy politics.
Show Notes:
In this week’s podcast, I’m going to talk about pipeline company earnings and why valuations are attractive, followed by some comments on climate change politics
Pipeline Earnings Are Good 1:08
Energy out of favor 1:10
Too much investing in new projects, not enough cash back to investors 1:22
Democratic primary debates show political risk given extreme positions 1:27
But cash flows are growing 1:40
Some big companies reported 2:10
EPD increased EBITDA 18%. $66BN company 2:14
WMB been weak because of natgas but had good earnings and popped 2:22
OKE, CEQP, TC Pipelines all good quarters 2:38
Still expect FCF to reach $7-8BN for AEITR this year, up from $1BN 2:47
Balance sheets are stronger, 4.1X Debt:EBITDA 3:40
Dividend yields >2X bond yields 4:00
…credit analysts, banks fine with risk 4:05
Industry has growing FCF, better credit profile, lots of PE interest 4:40
Energy politics
2 Items caught my eye
Annual Google Camp 5:10
Attendees of rich and famous, secretive affair 5:20
Barry Diller, Dave Geffen, Katy Perry, Tom Cruise, Leonardo DiCaprio 5:25
Many arriving by private jet – one estimate of 111 separate flights 5:30
Let’s hope there’s no sermonizing on climate change from this crowd 5:40
Democratic Debate 6:05
Most candidates endorse GND 6:12
We wrote Bovine Green Dream 6:16
Completely impractical 6:25
Climate change solutions include 6:50
Government support for nuclear 7:05
Increased natgas and phasing out of coal 8:30
R&D on cleaner use of fossil fuels, share results 9:23
Greater honesty, that dealing with climate change will be expensive 10:11
Americans won’t spend >$10 per months fighting climate change 10:18
https://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpg00Simon Lackhttps://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpgSimon Lack2019-08-02 13:49:572019-08-02 15:07:53Episode 4: Pipeline Earnings Are Good
Although much of the press coverage focuses on solar and wind, the big story in energy is the growth in natural gas. In this podcast, Simon Lack reviews how natural gas growth is far more important than renewables.
Show Notes:
New natgas hookups in Westchester County are prohibited (1:00)
Will constrained natgas hookups hurt demand (1:07)
Energy is undergoing a transformation (1:12)
Renewables receive all the press (1:15)
Solar and wind prices are falling (1:17)
Nextera Energy analyst day (1:20)
Berkeley, CA won’t allow new buildings to use natgas (1:44)
In 2018 natgas was 43% of growth in world energy use, vs 18% renewables (1:57)
U.S. natgas share rose almost 2% to 31%; renewables rose from 3.9% to 4.2% (2:08)
China burns half the world’s coal (2:41)
Political issue. Killing citizens, causing respiratory problems (2:44)
China wants to reach 15% natgas share by 2030, vs 7.5% today (3:01)
With China’s growth of 4.3% they needs to more than triple natgas consumption (3:15)
They need almost ¾ of today’s U.S. consumption (3:30)
They need a U.S. Shale Revolution (3:37)
But Chinese forecasts of shale output keep being revised down (3:51)
Russian exports from eastern Siberia will help (4:00)
Two seasonal peaks, China has too little storage (4:06)
But volumes not able to vary (4:31)
Chinese LNG imports will increase, likely to grow 2-4X, maybe more based on 5 year plan (4:57)
Liberal media focus on renewables (5:44)
Natgas is the real transformation in energy (5:58)
https://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpg00Simon Lackhttps://sl-advisors.com/wp-content/uploads/2013/04/logo1.jpgSimon Lack2019-07-26 15:50:292019-08-02 14:49:24Episode 3: Natural Gas | The Big Energy Story
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By clicking the OK button below, you will be connected to a website maintained by a third party. We are providing a link to the third party’s website solely as a convenience to you, because we believe that website may provide useful content. We do not control the content on the third-party website; we do not guarantee any claims made on it; nor do we endorse the website, its sponsor, or any of the content, policies, activities, products or services offered on the website or by any advertiser on the site. We disclaim any responsibility for the website’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. The link is not intended to create an offer to sell, recommend, or a solicitation of an offer to buy or hold, any securities.
By clicking the OK button below, you will be connected to a website maintained by a third party. We are providing a link to the third party’s website solely as a convenience to you, because we believe that website may provide useful content. We do not control the content on the third-party website; we do not guarantee any claims made on it; nor do we endorse the website, its sponsor, or any of the content, policies, activities, products or services offered on the website or by any advertiser on the site. We disclaim any responsibility for the website’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. The link is not intended to create an offer to sell, recommend, or a solicitation of an offer to buy or hold, any securities.
By clicking the OK button below, you will be connected to a website maintained by a third party. We are providing a link to the third party’s website solely as a convenience to you, because we believe that website may provide useful content. We do not control the content on the third-party website; we do not guarantee any claims made on it; nor do we endorse the website, its sponsor, or any of the content, policies, activities, products or services offered on the website or by any advertiser on the site. We disclaim any responsibility for the website’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. The link is not intended to create an offer to sell, recommend, or a solicitation of an offer to buy or hold, any securities.