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6/30/21 Energy & Income Advisor Live Chat
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AvatarElliott Gue
6:05
Fundamentally, if you look at OIH, there's a wide gulf in performance this year. The top performers are the very distressed names like NBR and OII which have recovered from a troubled financial position at the end of last year. These are the low quality names that usually see the strongest gains early in a new bull market. Also you have the names like SLB, which I believe actually benefits from the current environment. Then, laggards like BKR, HAL and NOV. What distinguishes the laggards is, I think, leverage to parts of the market that may never recover to their former glory such as shale services and deepwater drilling. I think oi services, perhaps more so than almost any other group, will be a story of the "haves" and the "have-nots" over the next few years.  the Have nots may be permanently impaired or, at least, diminished from their pre-crash prospects while the 'haves" have multiple avenues of growth.
AvatarRoger Conrad
6:05
We definitely try to keep abreast of what's really out there and companies actually making money that are developing it. But I think at this point, if you're really interested in building wealth with renewable energy you should look at adopters--which win regardless of what technology emerges triumphant. In fact, the more effort the developers put in, the fatter their margins.
AvatarElliott Gue
6:05
I'd also note in regards to your last question about batteries, that SLB has unveiled a suite of technologies and processes aimed at reducing the cost of lithium extraction...
Michael L
7:00
Are you concerned that TTE will lag other majors, especially XOM, because they have moved their focus, at least to some degree, away from crude to more "environmentally friendly" projects? I'm interested in TTE because it seems to be conservative, but don't want to miss out on the energy market rally over the next few years. Thanks
AvatarRoger Conrad
7:00
Hi Michael. Good question. If that does prove to be true, it will be because of perception rather than the actual substance of earnings for TotalEnergies--and it will also affect virtually every other super major oil company with the possible exception of ExxonMobil and Chevron. Basically, TTE is going to be fundamentally an oil and gas company for most of this decade even with the current focus of CAPEX. The vast majority of earnings from from Gas, renewables and utilities segment, for example, is the company's LNG projects. I think investors will get a reminder of that with Q2 numbers and guidance due out July 29, which are going to show the company getting a huge lift from realized selling prices for oil that are $20 to $30 a barrel higher than their $40 "cash breakeven" after all CAPEX and dividends paid.

I do think that the other producers we recommend in the EIA portfolio are likely to prove more leveraged to oil and gas prices than the super majors--even ExxonMobil. But I don't think you'll be left
AvatarRoger Conrad
7:01
out of the cycle by being in the super majors--including TotalEnergies. They're just as you say a more conservative way to play.
7:44
Ok. Well that looks like a rap for this month's Energy and Income Advisor live chat. Our deepest thanks to everyone who participated today. We will look forward to chatting with you next month.
7:45
As a reminder, you will be receiving a link to the complete transcript of all the Q&A shortly. And it will also be posted in the EIA website.
Thanks again everyone for joining us today. Elliott and I wish you a very Happy 4th of July. Here's to a profitable summer!
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