Thanks for reading Jacob. Depends on risk tolerance and appetite for income. I am income-oriented and am conservative — I like the 2030 secureds the most on a risk-adjusted return basis. Very low risk >8% in my opinion.
Equity seems to trade off oil price sentiment and risk appetite in the absence of shareholder returns. Also equity seems to be pricing in bankruptcy risk which I think they avoid — that would be good for equity, but unlike the bonds, you aren’t getting cash returns and have to stomach the volatility with a multiyear view.
I agree, Tommy, it has been a tough 2025 to-datet. However, valuations are looking very compelling right now and the Q1 CC's were very encouraging for longer term investors.
Two recent pieces that may help keep the resolve, and I found helpful are:
Excellent analysis. I believe sometime in the next few years oil is going to rocket to new all time highs. I'm good with the equity. I've put the shares in the back of a dark closet where I believe they will grow. One day I'll open the closet door and viola! ;)
Love the chart with the Brent futures curve and Shale vs Deepwater symbols. Great visualization to show how the long end of the curve didn't change meaningfully
Thank you. I have used that chart a few times elsewhere. Term structure matters and is a variable IOC’s consider when making multibillion dollar project sanction decisions. Still not great prices today but adequate and mid $60’s Brent is often a price I see used in E&P investor decks demonstrating their projects’ returns above their cost of capital
Thank you, Joe. Appreciate the offer though your time reading is what is valued. I hope to sell separate research in the future. Also I apologize for deleting your comment — was a mistake!
Thanks Tommy. At market pricing currently are you a bigger fan of the debt or the stock itself at these levels?
Thanks for reading Jacob. Depends on risk tolerance and appetite for income. I am income-oriented and am conservative — I like the 2030 secureds the most on a risk-adjusted return basis. Very low risk >8% in my opinion.
Equity seems to trade off oil price sentiment and risk appetite in the absence of shareholder returns. Also equity seems to be pricing in bankruptcy risk which I think they avoid — that would be good for equity, but unlike the bonds, you aren’t getting cash returns and have to stomach the volatility with a multiyear view.
Great piece as always, thanks Tommy.
Thank you for continuing to read, John. 2025 isn’t much fun so far but I think the future looks promising
I agree, Tommy, it has been a tough 2025 to-datet. However, valuations are looking very compelling right now and the Q1 CC's were very encouraging for longer term investors.
Two recent pieces that may help keep the resolve, and I found helpful are:
(a) Monetary Matters - Bob Robotti - https://podcasts.apple.com/us/podcast/patient-value-investing-and-americas-industrial/id1769093906?i=1000710416013
(b) Hosking Partners - The Capital Cycle Way - https://www.hoskingpartners.com/articles/the-capital-cycle-way
In reading / listening to the above, I couldn't help but think of the Offshore sector as being an excellent sector to allocate capital to.
Cheers
John
Excellent analysis. I believe sometime in the next few years oil is going to rocket to new all time highs. I'm good with the equity. I've put the shares in the back of a dark closet where I believe they will grow. One day I'll open the closet door and viola! ;)
Thank you, Walker. It is no surprise you have a level-headed view on the long term outlook. You will hear from me if view on the credit changes.
Thanks Tommy!
Very interesting analysis Tommy, think the Offshore credit space (drillers as well as E&P) has a lot of interesting picks.
Love the chart with the Brent futures curve and Shale vs Deepwater symbols. Great visualization to show how the long end of the curve didn't change meaningfully
Thank you. I have used that chart a few times elsewhere. Term structure matters and is a variable IOC’s consider when making multibillion dollar project sanction decisions. Still not great prices today but adequate and mid $60’s Brent is often a price I see used in E&P investor decks demonstrating their projects’ returns above their cost of capital
Thanks Tommy - great article + charts.
Thank you, Andrew. You da man!
Thank you, Joe. Appreciate the offer though your time reading is what is valued. I hope to sell separate research in the future. Also I apologize for deleting your comment — was a mistake!