SL Advisors Talks Markets

It’s clear that natural gas demand is heading higher over the next few years. It’s less certain that this will push prices higher. New LNG export terminals are going to double our volumes sent overseas over the next five years. The widely criticized pause on LNG permits that President Biden imposed last January only applied […]

Sometimes this blogger stumbles across a phrase that begs to be used as the title for a blog post. Who better to be the subject of this one than the far-left climate extremists whose policies have led to higher energy prices, deindustrialization and job losses. Start with Germany. Ryanair’s CEO Michael O’Leary recently described Germany […]

In recent years as extreme views on climate have become increasingly fringe, no hydrocarbon has enjoyed more of a reassessment than natural gas. Enbridge CEO Greg Ebel talks about the “energy evolution” rather than a transition. The US is adding over 140 new gas power plants this year as demand from data centers builds. Accommodating […]

Like millions of families across America, on Thanksgiving we gave thanks for being with friends and family, along with “…sunny days and that we’re all together.” I added a silent appreciation that left-wing climate extremists were resoundingly defeated on November 5th. The market’s realization that the election had ushered in sensible, pro-American energy policies took […]

The word of the week is re-rating. Both Wells Fargo and Morgan Stanley have suggested that, notwithstanding this year’s 50%+ return in midstream energy infrastructure, further upside is possible. They posit that a re-rating of the sector would not be unreasonable given the strong fundamentals. Enterprise Value/EBITDA (EV/EBITDA) is a widely used valuation metric, although […]

Market strategists often point out that valuations aren’t a good timing tool, but it’s still worth staying on top of whether the market is cheap or not. Stocks were having a good year leading into the election, and the Republican sweep took the market another leg higher. Residents of Naples, FL, our winter home, are […]

Sitting next to me at Newark airport on Monday while I waited to board an airplane was an FT reporter. I know this because he made a phone call to discuss the Trump appointments “on background” with a source who, based on one side of the conversation, had recently been in Mar-a-Lago. Chris Wright, Trump’s […]

When investors ask what return they should expect from an investment in midstream, we typically suggest dividends plus growth plus buybacks. Dividend yields are around 5%. Wells Fargo is forecasting 4% dividend growth next year, and buybacks of around 2% of market cap. 5% + 4% + 2% suggests an 11% total return, assuming no […]

As the market absorbed last week’s election results, energy was the clear winner. On the week, midstream infrastructure returned +8.4% while the S&P500 was +4.7%. The main driver of outperformance is the expectation of a regulatory regime not beholden to climate extremists. The pause on LNG export permits will be lifted. Although many expected this […]

Donald Trump’s political comeback looks a lot like the recovery in the energy sector. In March 2020 during the pandemic pipeline stocks slumped as crude oil prices briefly turned negative. Within a year Trump was out of office, faced numerous civil and criminal charges and was widely believed to be a one-term president. By then […]