Elliott Gue and Roger Conrad’s Complete Guide to

Energy & Income Investing

Over 50 years of combined experience in analyzing the energy markets!

THIS MONTH’S ISSUE

M&A and Strong Earnings Will Fuel Energy Returns

January 30, 2024|

› Please join us Tuesday, January 30 starting at 2 pm for our live webchat. Thanks for reading.—EG, RC. Earlier this month, we highlighted 2024’s first big merger of oil and gas producers: Chesapeake Energy’s (NYSE: CHK) long rumored all-stock purchase of Southwestern Energy (NYSE: SWN). Now we have the first big midstream deal of the year. Fuels retailer Sunoco LP (NYSE: SUN) is offering 0.4 of its shares per partnership unit of pipeline and fuel storage company NuStar Energy LP (NYSE: NS). Energy Transfer LP (NYSE: ET) is Sunoco’s general partner and owns 33.86 percent of its common shares. That makes it the central player in this deal, just as it’s been in six other major midstream acquisitions the past two years plus. And this time, it’s using an affiliate’s shares as currency, avoiding both dilution and balance sheet concerns. Sunoco accounted for roughly 7.3 percent of Energy Transfer’s cash flow in Q3 2023. And that percentage should go meaningfully higher following the expected close of the NuStar acquisition expected in Q2 2024—thanks to estimated 3-year distributable cash flow accretion of 10 percent for Sunoco. As general partner, Energy Transfer is by far the most attractive play on this...

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with Elliott Gue and Roger Conrad

On 02/29/2024

Live Chat with Elliott Gue and Roger Conrad

The State of Energy M&A

By |January 30, 2024|

Multiple prospective targets, an imperative to cut costs, limited CAPEX opportunities, restricted access to capital markets, the strongest balance sheets in decades and a still early innings energy price cycle: All are key drivers for accelerating M&A activity in the North American energy business this year. So far in 2024, we’ve seen one major merger announced between energy producers. That’s Chesapeake Energy’s (NYSE: CHK) all-stock offer for Southwestern Energy (NYSE: SWN), uniting two natural gas-focused companies with massive opportunities for cost cutting synergies by combining operations. We highlight the deal at length in the January 16 EIA issue “Natural Gas,...

Endangered Dividends List

By |January 30, 2024|

Endangered Dividends List companies are vulnerable for one or more of the following reasons: Cash flow coverage of distributions is inadequate. Elevated debt levels with imminent refinancing needs. Revenue pressure triggered by weakness for at least one key asset. Inability to access the equity market on favorable terms to fund capital spending, forcing management to utilize more internally generated cash flow. Exposure to volatility in commodity margins from either rising or falling prices of raw materials. Aggressive general partners anxious to buy in limited partners’ cash flows at discounted prices. Regulatory reversals. Expiring contracts with little hope for renewals at...

What We’ve Learned from First Reporters

By |January 30, 2024|

Four EIA model portfolio companies have announced their Q4 results and updated 2024 guidance to date. They are: Baker Hughes Co (NYSE: BKR, Kinder Morgan Inc (NYSE: KMI), SLB Ltd (NYSE: SLB) and Valero Energy (NYSE: VLO). Two are major oilfield services companies, with results providing clues for expected spending by oil and gas producers. Greater production activity generally means higher earnings for services companies. And we’ve been high on both Baker and SLB versus their peers for some time, largely because of their greater focus outside North American shale where investment has been measured. That approach paid off again in...

Meet Our Editors

Elliott H. Gue

Founder and Chief Analyst

Since earning his bachelor’s and master’s degrees from the University of London, Elliott has dedicated himself to learning the ins and outs of this dynamic sector, scouring trade magazines, attending industry conferences, touring facilities and meeting with management teams.

Roger S. Conrad

Founder and Chief Analyst

Roger S. Conrad has successfully advised income investors since the 1980s, with a nationally acclaimed sector specialty in utilities, telecommunications and energy. He’s a managing partner of Capitalist Times author of Power Hungry, independent director of NYSE-listed Miller Howard High Income Equity Fund and contributing editor to Forbes.com.

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