Mar 28, 2023·edited Mar 28, 2023Liked by Arjun Murti
it seems every bust is also accompanied by outright previous fraud, whether it is economics of over-drilling (or going way back , phantom oil finds). what will it be this time...underestimates of u.s. shale decline as tier1 vanishes? faking the true carbon burden of the oil sands? all and more?
the massive change in global energy trade+transport has added much cost and complexity, and i would think regional busts (and booms) may be more common. its time to put less emphasis on reported resource numbers and more on the integrity of individual company management. some are sensibly hedging for future pro-fossil and anti-fossil regimes.
God bless you for posting Carlin. I have worked in finance for 30 years and I think ESG is perhaps the biggest load of crap the Wall Street marketing machine has ever pulled off...low interest rates have allowed the wealthy west to engage in a staggering amount of magical thinking for the past twenty years. Welcome back 1970s. Long real assets. The poor will bear the brunt of it.
Thanks for another wonderful column. The present column and that of April 23 (the 3Rs - ROCE rebounding, Recovering S&P weight, Rescued assets) left such deep impression (and give me another framework ) that I have looked back the past ROCEs of the oil & gas companies that I current own. One of tiny Canadian company (marketcap US$240 million) fits to your definition of 1Q/2Q. This company was profitable and had 4% ROCE in 2020. Yet, it currently trades less than 3 times of the 2022 EPS.
Does your expectation of the CapEx cycle starting more than 1-2 years away include the possibility of a near term recession? Even a short recession will probably push back the CapEX cycle at least 1 more year into the future. While this may be not so good news for OFS companies, the up phase of the cycle will likely be lengthened.
it seems every bust is also accompanied by outright previous fraud, whether it is economics of over-drilling (or going way back , phantom oil finds). what will it be this time...underestimates of u.s. shale decline as tier1 vanishes? faking the true carbon burden of the oil sands? all and more?
the massive change in global energy trade+transport has added much cost and complexity, and i would think regional busts (and booms) may be more common. its time to put less emphasis on reported resource numbers and more on the integrity of individual company management. some are sensibly hedging for future pro-fossil and anti-fossil regimes.
God bless you for posting Carlin. I have worked in finance for 30 years and I think ESG is perhaps the biggest load of crap the Wall Street marketing machine has ever pulled off...low interest rates have allowed the wealthy west to engage in a staggering amount of magical thinking for the past twenty years. Welcome back 1970s. Long real assets. The poor will bear the brunt of it.
Hi Arjun:
Thanks for another wonderful column. The present column and that of April 23 (the 3Rs - ROCE rebounding, Recovering S&P weight, Rescued assets) left such deep impression (and give me another framework ) that I have looked back the past ROCEs of the oil & gas companies that I current own. One of tiny Canadian company (marketcap US$240 million) fits to your definition of 1Q/2Q. This company was profitable and had 4% ROCE in 2020. Yet, it currently trades less than 3 times of the 2022 EPS.
Does your expectation of the CapEx cycle starting more than 1-2 years away include the possibility of a near term recession? Even a short recession will probably push back the CapEX cycle at least 1 more year into the future. While this may be not so good news for OFS companies, the up phase of the cycle will likely be lengthened.