Eric Nuttall

It's been a violent selloff. Started when Hezbollah said no regional incursion to the north of Israel, so risk premium evaporated, leading to a mass liquidation, and financial demand for oil collapsed. You had stop loss after stop loss being breached technically. 

All energy investors suffer from a type of PTSD, as they remember what happened in 2020, and the rise of shale in 2014. OPEC's delaying upcoming meeting generates fear that it doesn't have strong unity, the deal will collapse, and the world's going to be awash in oil again. That's not his perception.

Very minor issues in OPEC that need to be sorted before it comes out with a larger cut. Oil balances have been tight, but not as tight as expected. The reason is not demand, as that's up. He's been surprised by supply growth from US shale, Russia, and Iran.

He stands by his thesis for 2024, that shale production will be more modest. He didn't expect the White House to turn a blind eye to enforcing sanctions in Iran. All these extras have meant that while inventories are falling, they haven't fallen as much. Sentiment has taken a kick in the teeth. Need a catalyst to change this, and he thinks OPEC recognizes this heading into the meeting next week.

Any prospect for over $100 for oil is out the window for the next 1-2 years. But he thinks there's a strong floor for around $80, given that global inventories sit at multi-year lows. While we're in this trading band, that's not a bad thing. 

Though oil is down 4-5%, he has names that are barely down. There's already dislocation between valuation and price. Free cashflow being generated, even with the lower price and the foreign exchange, is still very real. The theme remains of strong balance sheets and free cashflow, with more of it being returned to shareholders.

He's been warming up to services in general. Well run. Too much uncertainty re sites it's been ordered to sell off. he's waiting for clarity on those sales proceeds. See his Top Picks.

Slight premium to other names. Overhang is its promise for M&A activity, likely to happen in 2024. 40-50% potential upside from here with $80 oil. Yield is 7.6%.

Lower beta way to get exposure to oil and nat gas. Conservative. Attempting M&A in US, but balance sheets are so strong, fewer companies need royalty deals to raise cash. Strong organic growth prospects next year. Yield is 7.5%, payout ratio at low 60% range. Trades at 8.5x, compared to the unjustified 14x for PSK.

Trades at a massive and unjustified premium of 14x. He holds FRU instead, trading at 8.5x.

Recent acquisition in BC, to try to bolster reserve life. Trades at discount to peers because not as much room to run. Lacks the currency to alleviate that. 3x multiple is appropriate. 4% upside, not as much as other names.

Doing the right things: modest growth, maximum free cashflow, pays a dividend, aggressively buying back stock. Would be a core holding if it weren't for the jurisdiction. Compelling value, trading below 3x with free cashflow yield 16%. There are better opportunities for capital appreciation.

Spending more money on a project, free cashflow won't be for 2 years, and market's attention span is very short. Concern they'll be burning cash to pay the dividend. Balance sheet indicates sustainable dividend, unless oil price really nosedives. Insider buying. Too small for him. Yield is 10.5%.

His numbers show burning $25M of debt to satisfy dividend next year. US nat gas supply's at all-time high. Won't cut dividend, unless gas price goes down materially due to a warm winter. Strong balance sheet. Trades at a premium. 13% downside from here. Yields almost 12%.

Roughly 40 years of inventory. Successful at using free cashflow to pay down debt. Paying more to shareholders. 17% free cashflow next year, trades at 3.5x cashflow. WCS differential should shrink next year. Still very good upside.

Awful. Finally hit numbers for the first time in modern history. Management's motivated to make sure execution continues. Trading at 3x $80 oil, 21% free cashflow yield, paying down debt. 68-114% potential upside at $80 oil.

Recovered from overhang of the Ranger deal, which made the company better. Respects CEO, great asset base, clear vision to using free cashflow to pay shareholders more and pay down debt. Second-highest free cashflow yield in NA.

Recently re-established a small position, about 3%. Paying 75% of free cashflow to shareholders, debt free, significant discount to US peers. Big enough to attract institutional investors once the sentiment tide turns to energy. 50% upside at $80 oil. 

You get growth. Dividend is 10.1%, yet has excess cashflow after that. He also sells calls on it. Doesn't see capital appreciation. Uses it as an attractive income vehicle.