I think the sharp drop in crude and the decline in some US centric shale plays creates a buying opportunity. We bought Anadarko, Apache, Continental Resources, EOG, a little Chesapeake and quite a bit of Occidental today. It’s a falling knife for sure but we are probably a lot closer to the bottom than the top.
We don’t pretend to be able to portend the future price of crude. I don’t think the CEO of Exxon can do that. What is clear though is that the US has become the most reliable, safest place in the world to explore and we have the best infrastructure in place to do it.
For example, where are you going to explore for oil?
Russia? it’s an organized “feudal system for the benefit of Putin”. It’s hard to imagine investing much money with them and the recent sanctions doesn’t help the investment thesis.
Iraq? It’s day rates for oil field workers are skyrocketing. Would you rather keep your head on your shoulder or make $20 hr more before ISIS chops it off?
Iran? Not the best plan while sanctions are in place and Israel is dedicated to stopping a nuclear Iran.
Venezuela? Sure. It’s laughable now.
Saudi Arabia? Fat chance, they keep all the money for themselves.
Vietnam? South China Sea? Have you noticed China’s new fleet of aircraft carriers under construction?
The bottom line, its really pretty simple. The U.S is the safest most reliable source of new oil production for the foreseeable future. That’s why we favor domestic shale rich- acreage heavy US oil and gas companies.