Make America Great Again For Investors -- April 3, 2022

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EOG: every time I try to diversify out of energy, I come across an article like this from SeekingAlpha:

• EOG is a well-known U.S. shale oil driller that pays shareholders both a regular "base" quarterly dividend and occasional "special" dividends (two totaling $3/share in FY2021). 
• In Q1 this year, EOG paid a $1/share special dividend. 
• Given the current strip, EOG could very easily pay out ~$7-$8/share (or more) in total dividends this year. 
• The company has over 10,000 potential "premium" drilling locations and is considered to be one of the most technically proficient drillers in the shale patch. 
• Meantime, EOG's large dry-gas discovery in South Texas, called Dorado, will likely be an excellent low-cost resource for a world that badly needs more natural gas.

This article is a keeper. Archived. 

The numbers simply blow me away.

Also, see recent article on Devon over at SeekingAlpha.

Points of discussion:

• Biden's decision to release an unprecedented 180 million bbls of oil over the next six months most likely ended any talk of US shale adding more rigs in this environment. All things being equal, the price of oil will only go down in the short term -- short term defined as "before the US driving season begins."
• Until Putin's War blows over, until there is more clarity regarding the effects of the sanctions on Russia, until the effects of the Biden Surge are better known, US shale operators are not going to change their strategic plan that was laid out a year ago.
• my hunch: when FIDs have to be made, they will be made in favor of minimizing risk in a Biden Surge environment, i.e., less drilling, less fracking in the Bakken 
• US shale operators, minimizing CAPEX, will let free cash flow run to unprecedented levels.
• WTI will trade in a wider range, from a high of $99 to a low of $80 while the Biden Surge plays out.
• if oil trends toward $80, some investors will panic offering a huge opportunity for risk-takers;
  
• Shale operators know the value of "market capitalization" and there's only one way to improve that number: keep shareholders happy and entice new shareholders.
• in this environment: increase quarterly base dividend, and offer more frequent special dividends
  
• Norway's wealth fund: there seems to be a bit of confusion. There was a note from someone on twitter over the weekend that Norway's wealth fund had divested itself of all oil stocks, but a google search did not confirm that. Source. Be that as it may, perhaps we are through the "worst" of it -- with large funds selling off oil stocks.
• BlackRock, the world's largest asset manager is schizoid on the subject, saying one thing last year, and seeming to say something else this year in light of $120 oil.

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Making America Great Again

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