Transcription
[music] Hello everyone. Welcome to the Vancouver Resource Investment Conference. How you all [music] doing today?
[music] Hello everyone. Welcome back to VR Media, your most trusted voice in metals and mining. I'm your host, Daryl Thomas, and today we have the pleasure of interviewing a friend of mine, Josh Young. We have to bring on an oil expert and you know of Bison Interest and Bison Insights. How you doing today, Josh?
>> I'm doing great. How are you?
>> Man, doing doing pretty good. You know, a little tired. You know, I'm here at the Rule Symposium, so I'm I'm, um, you know, been up burning the midnight oil and so, uh, so it's it's pretty constant, but having a good time as always. Uh, so I want to start high level, just what's happening in the oil market? Can you, can you help us understand, like, from your perspective, what are you seeing? You know, we had the Strait of Hormuz, uh, situation. Oil spiked significantly, came down to about $70 a barrel. Um, and then it's trading up a little bit today, um, as we're recording this on July 7th. So, what, what is happening in the oil market?
>> Yeah, I was, I'm trying to think of the quote. There's something along the lines of, there's years where very little happens, and then there's days where years happen. And so it feels like in the oil market in the last few months, there's sort of been years happening over the course of, you know, days and then just a few months. And so, um, what we saw was this sort of geopolitical sort of shock and I guess sugar rush for the oil market and for oil-related equities. And then, uh, they took away the sugar or the punch bowl or whatever towards the end of May and saw the inevitable, uh, collapse and sort of the, the sugar rush turned into, uh, exhaustion and depletion of energy, uh, from, let's say, middle of May, oil, WTI $107 or so, uh, down to a recent low of, I think we got it down to as low as $67 a barrel for WTI. High. So, almost a 50% uh, correction. And so, where, where that puts us, I, I think we're at the early stages of a multi-year oil bull market that started around COVID, uh, with the sort of real collapse in drilling activity and the rollover in well productivity here in US shale on a per foot basis. And what we've seen is as that productivity has rolled over, we've had to drill more lateral feet, longer laterals, more frack stages, less productivity, and we're sort of running as a, sort of typical oil cycle. As you'd see, the existing discoveries are sort of running thin. And the average cost of production, despite company's best efforts to hide it, is rising. And the number of new discoveries is continuing to disappoint every year. And so this is just sort of a very nice, I think, longer-term bull market for oil, maybe early stage, maybe mid-stage. And this, uh, Iran conflict, which may not be over, and, you know, as of the day we're talking, we saw oil up 5%. We saw potentially a restart of the conflict. We'll see. But it's almost like a sideshow from this longer-running oil bull market that that has sort of fundamental drivers and, um, that were sort of progressing towards potentially much higher prices and higher valuations.
>> Yeah. So, you've been in this sector a while. I mean, you've been an investor for a while, and different investors take different approaches. Some, you know, typically will think about the long term and they just, they just hold for the long term. Then you have others like, uh, that I've interviewed, Rick. I mean, when uranium would get ahead of itself, Rick would sell, uh, because he knew it was getting ahead of itself, and then he would buy back lower. And so, how are, how are you kind of managing that price volatility? Um, you know, 'cause some people may have been holding oil stocks and then oil goes up to $107 a barrel. Hey, I'm going to start trimming. And then, then it falls back to $67, $70 a barrel, and they start adding back, you know, their position. And so how do you kind of navigate, you know, that in terms of, uh, you know, your investment, you know, philosophy or or whatnot?
>> Yeah. So, uh, I'm going to borrow another Rick Rule line. Uh, my short-term price forecasting is unmarred by success. So there's no, my short-term crystal ball is broken. I don't know. Um, what I know is that when prices went up a lot, I did trim some of my most oil-levered holdings. Um, I, I wrote about that actually on Bison Insights. A couple of my ideas that did the best out of the ones I had shared. There was one 9.7x and there was one 3 and a halfx. And again, these returns, they're not indicative. You know, don't rely on that. But, you know, the, just measured from the day before I published to the day I announced the, the exit of the ideas, that was the, those were the numbers. Um, so I exited those, um, to free up some cash because inevitably, at whatever point, um, you know, you get to this sort of parabolic move in stock prices and commodity prices, inevitably, there's going to be some sort of correction. And so I thought the conflict would continue longer, and it's possible that that was right, and we'll see. But there's definitely been a pullback since then. And it's been a great opportunity to deploy capital that I freed up as I was trimming, as, you know, prices had gone parabolic, um, into opportunities that have opened up where, in some cases, I think some of these stocks, I don't know that they should have gone up as much as they did, um, during the Iran war. But then, in my view, they certainly shouldn't have fallen as much as they did in the last month and a half. So there have been some great buying opportunities. I can't say I'm the world's best trader. It's not like I called the top or anything like that. Um, but I did sell some. I did get out of a couple of sort of the most levered positions and was able to use some of the proceeds from that to go deploy into some of some of these stocks that, in some cases, they're actually trading well below the prices of where they were at before the Iran war started. So, it's sort of like the market's looking through the three months of extraordinarily high prices they got and the cash flow they got to fund development, to pay off debt, to, you know, buy back stock. Um, and the market's sort of ignoring that. But that money is real. That cash flow is real. And the progress towards their goals are real, and I think deserve higher prices in some cases than they're getting right now.
>> Yeah. So, when whenever you see some type of geopolitical shock like like we've seen, and you have this longer-term, you know, thesis, this longer-term, you know, outlook, how do you, as an investor in the sector, it seems like the geopolitical shocks typically, like, you know, noise at times, you know, where you, you may get like a, a spike in the price and then, and then you get a correction like, like you mentioned. I mean, we saw the same thing with gold. You know, gold was running up leading to the, to the, uh, to the war, then, then it sold off significantly. You know, we've seen that even with Russia-Ukraine, where gold ran up when, when the, uh, invasion happened, and then it sold off. And so, are you typically viewing that, like, not giving that as much weight? Um, I mean, we, we have some, we had had times, you know, in kind of recent history, I guess, after, you know, 9/11, the war on terror and such, where, where oil stayed elevated for, for some time. And so, how are you typically thinking about that as an oil investor?
>> Yeah, I think the, the nothing ever happens sort of crowd, which is sort of what you're alluding to as the, like, fade every move up. Um, I think I think that's a very sort of dangerous approach. Um, there was this guy that was famous for recommending to everyone that they sell call options as sort of like a yield strategy. And there was this famous moment, I think he was recommending selling call options on natural gas, which, by the way, none of this is investment advice, but don't do that. Um, [laughter] and he had this famous video where he was like, apologizing to everyone because apparently not only did he lose all their money in his accounts, he also apparently incurred additional liabilities for them in their account. So anyway, he's back apparently. I saw him quoted in some newspaper or whatever recently. But I think there's, there's sort of this real risk in fading volatility too aggressively. And and the reason I would say that is that there are some cases where volatility goes away and that's it. Like, if you look at in 2019, uh, the Houthis bombed, or the Iran RGC backed Houthis bombed, uh, Saudi oil field and oil processing facility, and it sent oil up a lot for two days, and then it fell a lot. Um, and so that was a spike to fade, clearly in retrospect. But the folks that treated the 1973 oil embargo like that had their faces ripped off, as the embargo ended, and then prices went up, and energy stocks, I think, tripled or something after that war was over, and even after the embargo started to get lifted, and then prices fell, and then they went up another 5x or something in a few years later in 1979. So I think there's a real risk in that sort of short volatility type trade or reflexivity. And so I think, um, while it makes sense, similar to how if a stock I own 10x's, I may go starting and selling, uh, call options against it as sort of a path towards eventually exiting the position through selling tranches of calls. I think maybe exiting small portions of positions in response to this sort of thing makes a lot of sense, and that's what I was doing. But I think there's, there's sort of this perception of very low volatility and very few things ever changing that's been popularized by a low volatility environment. And I think the more popular that sort of view is, the more risky it is, and the more likely it is that more things happen rather than fewer things happen. And again, this is easier to say today than it was yesterday. Yesterday we were, you know, a month in, almost, to this Iran peace deal, and it looked like there were volumes increasing through the Strait of Hormuz, and today now there's been three or four tankers hit, and sanctions have now been reimposed on Iran and so on. But I think that that argument sort of holds regardless, and I would be really careful. I think there's a lot of sort of inertia towards this, and a lot of folks who have sold a lot of magazines and newspapers and other stuff and funds on this whole sort of short volatility, uh, sell anything that's changed view, and I think that's it's very risky. Um, and I like to be long that change via companies that generate a lot of cash flow and increase their intrinsic value over time to be able to sort of have exposure to the convexity while also compounding value. Um, which again, is sort of the complete opposite of that sort of nothing ever happens or, you know, sell the geopolitical shock sort of, uh, reflexive, uh, mantra, which, which many, many folks I think have espoused to to their benefit from a sales perspective, but to the detriment of the returns of the related things that they that they push or advocate or whatever.
>> Yeah. Yeah. How are you thinking about these, uh, reserves and, uh, strategic reserves being drawn down significantly, like around the world? Like you could see, you know, China has some drawdowns, the US had some drawdowns and such. Um, is that a nothing burger, or is that, does that play any significance as far as like, you know, for the price of oil?
>> Yeah. So again, that's like one of those perfect examples where people say the bearish narrative is, oh, well, we count that as supply, and so the market was well supplied, and you didn't need it, even though we clearly needed it just now. Um, so, you know, you just can't count it. Um, one of the ways you can tell that that's not a powerful, let's say, medium-term argument, again, it was bearish in the short term and effective, and I think the effectiveness of relying on the SPR in this situation is going to be a very powerful argument. It may not be overwhelming in all cases, but in many countries, seeing the effectiveness of strategic petroleum reserves as well as the profitability of them. If you look at the build cost and the maintenance cost versus the ability to go sell oil into a crisis to adequately supply your market, you know, at a $30 or $50 or something dollar premium to what you paid to buy that oil. Um, I mean, it's like a pretty powerful success case. But what people I think are missing in making that argument that makes it so, uh, I think faulty and so compelling sort of on the other side in favor of these SPRs is that the SPR sales in the US were actually loans. So the US sold oil, but the buyers of the oil are obligated to actually resupply more oil than they bought from the SPR in the future. And that kicks in, it looks like in Q3 of 2027. So, there's going to be hundreds of millions of barrels, it looks like, purchased by commercial purchasers in the US starting in Q3 2027 to refill the strategic petroleum reserve here in the US. And it's going to be more oil by about, I think something like 20% or so, uh, more oil that's purchased to refill it with than was depleted, again, because of the nature of those sales. So they were more like interest loans that will have to be repaid in kind. And so again, that to me is sort of structurally bullish, and I think maybe beneficial for sort of my medium to longer-term bull market thesis for oil. But obviously, they were bearish in the short term because there was more oil that came onto the market in the short term. But even that, to me, like just taking one more sort of element of the logic on that and the impact of that, even that was sort of bullish medium to long-term because having enough oil in the market like we did prevented more extreme demand destruction. And so we borrowed from tomorrow, literally, the commercial purchasers borrowed oil to buy it from the SPR to be able to sell it into the market, uh, and to sell it to refiners to refine enough product to adequately sell the supply the market now, and they will be returning that in the future, larger. And so, uh, by sustaining demand and adequately supplying demand in most, but not all markets, despite this large disruption, demand was able to sustain, and there was not the level of demand destruction that many folks were either hoping for or projecting or whatever through this crisis. So SPR's sort of that demand destruction was a real risk if this thing got out of hand. If oil got to like $250 or whatever, uh, on the back of this crisis, and if there were real long-term shortages, there not being those shortages because oil was supplied from commercial and strategic reserves meant that demand was sustained. And now we're seeing, for example, the, the sort of easiest to observe, uh, high frequency demand for oil, you can see with air travel. And you can see the biggest shock, not surprisingly, to demand was Middle East air travel, right? Because commercial air travel, because no one for a month or two was flying into the Dubai airport or the Kuwait airport. Unfortunately, I think both of those were attacked by drones and missiles and so on. And there's now been a resumption of flights. And it looks like there's actually inline or higher year-over-year commercial flight activity right now to the Dubai airport than there was a year ago. So again, that's a spectacular recovery, and that's an indicator, I think, of robust demand, which matters a lot for sort of the longer-term thesis for oil. Again, I think disappointing folks that were really hoping for really high prices for a really short amount of time, but very beneficial for sort of sustained demand and minimized impact to the consumer and to sort of consumption trends, uh, from this crisis.
>> Okay, got it. So, there's a school of thought out there that says we we have an oil glut. Um, I'm kind of confused because if there's a glut, and maybe they're talking about the oils in the ground or or whatever the case may be. Um, but if there's a glut, why are we drawing down strategic reserves, you know? Um, and so that that's kind of a question I've been thinking about, you know, uh, when, you know, I've talked to people who believe like there's more oil than and others say like, you know, the, um, Permian Basin is is, you know, declining, and the shale oil declining, and everything. So, if there's a glut, why are we drawing down these these strategic reserves? That's kind of that's kind of >>
>> We're not just drawing strategic reserves, we're also drawing commercial inventories globally. And so, um, yeah, it's a very weird narrative. There's been this super glut narrative. I think the IEA kicked it off in 2023, and there was supposed to be a big super glut then, and it didn't happen. And so then there was supposed to be a big super glut in 2024, and the IEA would put out these numbers, and then magically, a bunch of investment banks and reporters and independent supposed experts and pundits, everyone just sort of copies the IEA stuff, but it's been wrong every year. And so we did, so I have a, a high build scenario for one quarter of last year. So there was one quarter, which was typically a low demand quarter, where there was, I think it was close to a two million barrel a day build, but there was also a quarter last year where it was something like a million and a half barrel a day draw for one of those quarters. So it was sort of not, maybe there was marginal oversupply for, you know, the year or quarter or something, but it was certainly not the super glut, four million barrel a day, five million barrel a day. And the IEA came out, I think it was 5.5 million barrels a day or something that they're forecasting as a glut for 2027, which is just, I mean, it's just spectacular in the context of how wrong they've been every year since they started projecting this and and sort of pushing it out. And one of the, the interesting things I think a lot of folks missed was, if you look at January and February of this year, where there was a near consensus that there would be this sort of four million barrel a day super glut, the IEA forecast it, EIA forecast it, most of the investment banks had it in their decks. Most of the, you know, alleged oil experts and pundits and whatever all over podcasts and TV and everything, that these were the consensus numbers, right? But you look at January and February, which are low demand months, and there were no builds. There were actually like, couple hundred thousand barrel a day total global draws across crude, refined products, everything. So there was no glut. And then they said, oh, well, there was the war, and so it was fine. And then they tried to balance out their wrong numbers on the war, uh, by saying, oh, well, there was this glut, which again, you just don't, it's just not in the numbers at all. Um, so I'm going to go with the radical bet that since they were wrong in '23, wrong in '24, wrong in '25, wrong in '26, um, I'm going to go for 2027's probably not their year. And, you know, hopefully I'll be forgiven if I'm wrong for one out of five, um, on those super glut forecasts, but it does seem like their forecasting mechanism is broken. My short-term crystal ball is broken, but it seems like their medium-term forecasting mechanism is broken. And that seems to me more like a policy decision and a sort of measurement and forecasting calibration error than it does like some sort of innocent error that just keeps popping up every year and being, I mean, four million barrels a day is enormous. I don't even know where you get it. I've looked at their numbers and it's just like, wrong, wrong, wrong, like I don't know, but it, it's pretty, pretty amazing when you think about just how big of an error that is. And if you roll that error forward, right, and you look at the original, like the two million barrel a day super glut forecast for '23, and then essentially three for '24, and then five or four or whatever for '25 and '26. Um, if you com, if you, uh, I've never done this, but if you like, make it cumulative, right? You say, okay, well, you know, let's say it was two and three. I mean, you're talking about like all of the oil production for Saudi Arabia, Kuwait, Iraq, and UAE. Not not capacity, but all of their like full production. Um, I mean, just the numbers are astronomical and completely nonsensical. So, anyway, that's my, that's my sort of long-winded response. The short response is that it's not in the data. It hasn't been in the data for a long time. And I think that the burden of proof for anyone sort of forecasting that would be very much on them in terms of being able to prove definitively that this time is different, because the last four years that they've projected that, it has not panned out.
>> Yeah. So why do you think the IEA puts those, uh, numbers out? Do you think it could be, you know, um, I mean, just a bunch of folks with PhDs that don't know what the hell they're talking about? Um, like, why do you think that those numbers are coming out when they're not consistent with what we're seeing in in real life?
>> Yeah. I mean, it seems political, but I think I'd rather not speculate on on the specifics on on why that's happening.
>> Yeah. Yeah, for sure. Yeah, I got you. I got you. Uh, so where do you think the best opportunities are in this, uh, in this sector? Uh, so are you looking at certain regions, jurisdictions? Are you looking at more, uh, producers, royalties? Are you looking at all of it? Just curious and where do you see the best opportunities, um, within within this sector?
>> Yeah, so, um, I've been looking at all of it. There's actually a subsector that I've started buying puts on. So I don't short stocks, but, um, let's just say midstream downstream to me looks real pricey. And there's sort of one specific area there. I'm not, not, I'm still finishing my research on it, but it looks pretty overhyped. There's a lot of folks that are getting increasingly loud about it. But these things are cyclical. People forget that during downturns, you know, midstream companies turn off their dividends, and sometimes that debt issues, and refining margins aren't always as sticky as people think, just like high oil prices aren't always as sticky as, uh, oil, uh, bulls or oil producers or whatever like to think. So, where I'm finding the most opportunity right now is in, sort of weirdly low valuations, is in small oil producers, particularly ones that either have, um, some sort of asset retirement obligations that folks can't get comfortable with, or where they're sort of a mix of oil, natural gas, and, uh, natural gas liquids. And those two areas, the the asset retirement obligations, I think people sort of model wrong and think about wrong. Uh, there's companies that completely go out of business because of very high asset retirement obligations, but, um, there's ways to navigate them, and there's also potential upside from various projects in terms of recompleting wells or, you know, they say the best place to find oil is in the oil field. So in many cases, uh, not not many, in specific cases, there's companies that have these obligations, but also have huge upside from these same fields or nearby fields. And then also in the drilling services side, and certain other on the onshore side. So there's many sort of famous value investors and cyclical guys that are still touting offshore as this sort of supposedly undiscovered area, but the valuations are high. And it just sort of, if you look for oil opportunities on the internet and you say, "Hey, what's a good oil investment opportunity?" There's like 50% chance that you're going to get, uh, some sort of offshore driller pitch from some famous investor. And so, um, what you're not going to find, I've found, is, uh, small onshore drillers and other services companies who, weirdly, are sort of left for dead at a time where, you know, I'm not saying that like the Permian, for example, or the Montney in Canada, or various other plays are are dead, but they certainly are becoming more and more services intensive in order to sustain previously expected production levels and production growth trends. And so, uh, sort of this combination of misunderstood smaller producers that are very high cash generative, very high margins, and just sort of hated or misunderstood, and then, uh, these onshore services companies that are very also very cheap on cash flow, but also I think have very nice tailwinds and could end up very busy for a very long time relative to what I, what activity looked like, let's say, last year or two years ago.
>> Yeah. Yeah. So, I, I was getting into the, the, the offshore, uh, drillers and and producers and such, and and I was like pretty, I would say I was, I was doing a lot of research on that, and I was actively investing in that sector. I haven't touched it in in quite some time. Um, you know, I did see there were some acquisitions and and some of the share prices, you know, began to do do a lot better, but yeah, there was a lot of pain in that particular, uh, part of of the, of the, uh, sector. And then, um, I've always been like, you know, dabbling in in the oil field services, uh, you know, companies like Schlumberger and Halliburton, and, um, you know, they, they perform well. Obviously, Schlumberger came came down from from its, uh, recent highs and such, along with the oil prices, but it seems like they still are doing some, some major deals in in many different parts of the world. And so, oil field services, do you think that's, that's, uh, still a good place? Um, and then you mentioned that you're a little bearish on on the midstreams. Yeah, midstream, downstream. Um, I think there's there's some sort of misconceptions there that that I think people are sort of extending out recent trends too much, and I think there's a lot more risk there than people appreciate. And one of the sort of interesting exercises that I do with all of my individual holdings, as well as every sort of area whenever I get interested in it, I try to find the last period of time where it was hated and where the stocks were doing very poorly for, let's say, a multi-month or multi-year period. And I try to find those are good times to find every negative thing about that area. Like, you can find, you know, for an oil producer, you can learn about how, you know, oil producers have operating leverage and financial leverage and asset retirement obligations and maintenance capital requirements. There's all kinds of things to learn about these companies from downturns. Well, it turns out midstream companies have similar issues, and refining companies have similar issues, and sort of there's this whole other complex within sort of the oil value chain. And, um, it is fascinating to see folks sort of in this pounding the drum of this time is different with parts of the value chain that are proven to be cyclical by looking in the long history of their existence. Um, and then hearing the proponents of them pushing the sort of this time is different. There's a forever bull market for X, Y, or Z thing. And it's like, well, sorry, [laughter] that's just not how cyclicals work. The more comfortable you are with them, the, uh, less well they're likely to do over the next, let's say, two to five years. Sorry, but that's just the reality. And so, um, you know, it's like with these oil producers, like they're very uncomfortable, especially like a stock goes down 30% or 50% in a month or month and a half. I mean, it is very uncomfortable to buy more or to buy a position, to start a new position in a stock like that. But that's where the value is, and historically that's where I've been able to find things that have doubled or tripled or whatever. And, um, you mentioned the offshore drillers, the having been interested, there was this sort of wave of interest in the drillers in the sort of, let's say, 2021 to 2023 context. But what's interesting to me is that that wave, from what I can tell, has been pretty persistent. You see when you look at the filings, there's a number of different value funds that have added to positions in those. And so while individual investors, some may be less interested in that sector because of the poor recent, let's say, poor two or three-year share price performance, um, it does seem to still be attracting a lot of sort of generalist capital. But the, the trends for that sector or that subsector to me are less, they're less positive. Uh, you're seeing, let's say, for drill ships, a lot of them get contracted at okay margins, but not great, for three years or five years. And so, okay, like that makes it real hard to want to own the equity when if you're going to try to bet on higher rates, well, you know, maybe you're going to have to wait a while, or similar with, let's say, tankers, where they're having to, they're locking on these things, or, you know, supply boats, or various other, other sort of elements. And so, um, it does seem like there's sort of this inertia on some of these theses. And at the same time, there's a number of, let's say, onshore drillers or other onshore services companies that have some of those same very bullish, let's say, longer-term dynamics that the offshore drillers have, but they're not getting stuck into these multi-year contracts just to stay busy. And so they have a lot more sort of operating and financial leverage, let's say, shorter-term to recovery. And then in some cases, like for the onshore drilling rigs, there's an increasing number of rigs that are necessary just to maintain current production levels for US shale, both oil and natural gas. And so when you think about needing more of a service and more of like the physical equipment just to stay flat, um, it starts to get very interesting. It starts to you start to shift, I think, your view on those sorts of things. There's a, uh, water disposal and water processing companies that are now being rebranded as infrastructure. It's fascinating to see. There's this one Canadian company that got bought out. It was just, it was water disposal, a very low multiple business, sort of whatever. But they rebranded. They got into some landfills and some other stuff. And then magically, they sort of rerated closer to from a, let's say, three to five times multiple to what was it, 12 to 15 times or whatever. And the company that bought them is even more valuable. And the, the story there was similar, where it was just, hey, you needed more and more water disposal to keep production flat. So you had this sort of longer-term trend that was disconnecting from the commodity price and becoming more of a secular story than a cyclical than a cyclical story. And I think that sort of trend is starting to happen. Um, you saw it with the drilling rig count where even though prices were way below the the sort of incentive price for oil, um, you still saw drilling rig activity that was way higher and margins that were way higher than the upstream guys expected. And then similarly on the on the gas rig side, where, you know, gas prices collapsed after 2022. They went from $9 to $9.50 or whatever to in some places actually negative prices, like in the Permian. But for dry gas, you saw dry gas down to $2.20, $2.50 something like that in the Haynesville and the Marcellus, and you still saw increased level of sustained activity versus prior down cycles because of this necessity to drill more to sustain production. So, um, I think it's really misunderstood and sort of, I don't know if it'll end up at double-digit multiples like you saw for the water disposal to infrastructure sort of transition, but in some ways, if you squint, onshore drilling rigs and related services are sort of infrastructure. They're heavy iron, this heavy steel, they cost a lot of money, and they're sort of necessary to sustain base levels of production. So, um, again, I'm not calling for crazy multiples, but I think them trading at a third or a fifth or whatever replacement cost is too extreme. And I think the general trend, I think there's some long-term tailwinds for these companies that that could, um, drive a rerating where in future cycles, maybe you see them trade down to like 0.7 times book instead of 0.3 times, and then, you know, trading to three times on the upside instead of trading to like one and a half or two times in bull markets.
>> Okay. And so, uh, lastly, uh, nat gas, uh, how are you viewing that?
>> Gas right now? So the lower oil goes, the more bullish I get for natural gas. There's sort of this like forcing function, at least for the US and Canada, where the less incremental drilling there is for oil shale, you get gas with your oil, and then your oil declines fast, and your gas production doesn't decline nearly as fast. So if an oil well starts at 80% oil, you know, by year three, in many cases, it's 50% or less oil. And so a lot of these are sort of short-term oil wells and long-term mixed or gas wells. So the fewer oil wells you drill, the higher your like medium to longer-term natural gas price is going to be, and vice versa. And so, um, if we're in a $75 oil world, then we probably should be closer to $4 an MCF for gas, let's say, 12 months out versus the current forward curve and check. But it was getting closer to, you know, $3 spot and maybe $3.50 forward. So, I think I think there's some upside for gas if we have sustained, let's say, moderate oil prices. If we have low oil prices, let's say oil goes to $50 or $60, you could easily get to a $5 sort of medium cycle gas price. And then if you get to $100 plus for oil, maybe you're going to be closer to that, let's say $3.50 or $4 price for gas. Um, the nice part for gas is that there's this huge data center boom, which everyone talks about, but it turns out that a lot of those are using natural gas for power, despite project promoter and financer and developer and whatever claims. And then, um, the bigger factor so far has been these LNG facilities. They keep coming on with multiple BCF a day of incremental LNG export capacity. And so far, there's been much more demand for that LNG than supply. Very similar sort of super glut narrative. Goldman and some other folks were pushing that a few years ago. And it just keeps getting pushed out every year. And yeah, the Iran war impacted things, but there's other, there's other factors that I think are are sort of more powerful, uh, like a global sort of electrification and data center development outside the US and Canada. And so I'm, I'm, let's say moderately bullish. I think over the, let's say, five-year term, I think we should see oil at all-time high or near all-time high prices. Thus my $250 WTI cap. But for natural gas, I think reasonably, outside of some sort of big boom from some sort of, uh, either weather event or supply disruption or something, I think, you know, upside maybe $5, $5.50 gas, uh, which is very high versus current prices, but I don't think I don't think you get back to that sort of 2022 type setup for more than a few months.
>> Got it. Got it. Yeah. Thanks for sharing that. Well, Josh, appreciate you coming on the show and everything. Uh, where should the audience go to read some of your publications and all of that?
>> Yeah, sure. Thank you very much for having me. Um, so I have this newsletter, bisoninsights.info, where I write about specific oil and gas stocks and some oil macro. And then I run an investment firm, which is my day job, and that's at bisoninterest.com, where I invest money for family offices and high net worth individuals.
>> Got it. Got it. Well, appreciate you and your time today, Josh. You all be sure to go check out Bison Interest so that you can get information. Thank you all for watching. Be sure to hit the subscribe button. And Josh, appreciate you for your time.
>> Thank you.