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7/29/25 Capitalist Times Live Chat

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Victor

4:10

Hello Guys and thank you for this great service! I'm not sure if somebody asked but I would like to know your take on the latest Trump-EU deal. The EU has pledged to purchase $750 billion worth of U.S. energy by 2028 (which includes LNG). What companies will benefit the most and are we positioned to benefit from this? Thanks!

Elliott Gue

4:10

The EU already buys much of its LNG from the US and was expected to grow LNG imports in coming years, so I think this just highlights that opportunity. EXE would be a significant beneficiary via its Haynesville shale position -- the Haynesville is a key source of gas for LNG exports. EQT also likely benefits to an extent as some Marcellus volume ends up feeding LNG too. Also recent portfolio addition Venture Global (VG) is a more direct beneficiary as it's building a lot of the new terminals on the Gulf Coast using its modular liquefaction design.

What this means is that VG builds smaller liquefaction trains in a factory rather than onsite. As these trains are being built, the company is preparing the site on the ground in Louisiana. So, this speeds up the construction process, reduces labor costs and allows for VG to bring its new terminals into service gradually as they're installed rather than waiting for a start-up of all trains once the project is complete. The difference there is 2 to 3 years from

Elliott Gue

4:10

final investment decision to commercial sales vs. 5+ years. I wouldn't be shocked if VG ultimately has more capacity that Cheniere by the early 2030s and if Europe is going to import more gas near term that means more demand for terminals that can be built quickly. So, I think VG could get a lot of attention in that regard.

Susan P

4:23

Plains All American Pipeline, both the 1099-issuing PAGP and parent PAA with its K1, announced a proposed sale of oil transportation assets. You wrote it will be a taxable gain for unitholders that will be offset by a "one-time special distribution of 35 cents per share" to both entities. Is approval by Canadian regulators a concern? I need to dig further to understand the tax implications and the deal's itself, but, PAGP's 7+% yield taxed at the qualified rate appeals. I own ET, EPD, MPLX, Kinder, and DTM and debate adding to existing positions versus adding a new one. Thanks for your thoughts.

Roger Conrad

4:23

Hi Susan. i don't think the Canadian government will raise any insurmountable objections to this deal--which in effect transfers ownership of key assets from a US company to a Canadian owner, small midstream company Keyera Corp (TSX: KEY-U, OTC: KEYUF)--a company I've followed for roughly 20 years.

The tax liability comes up because of the MLP structure. And as Kinder Morgan Inc did when it bought Kinder Morgan Energy Partners and Kinder Morgan Energy Management in the previous decade, management is making a special distribution to the partners largely to cover the tax.

We like the five midstream companies you've named--four of which are in the EIA Model Portfolio. And I don't see valuation or this special tax as a reason not to buy PAGP--also a portfolio holding.

Lawman

4:24

Thoughts on Archrock and Flotek?

Elliott Gue

4:24

Flotek (FTK) is a little smaller than the sort of company we generally recommend. The stock jumped after their April acquisition of 30 units that support mobile power generation. These are under a long-term lease with ProFrac, which is a company I do follow a little more closely. For FTK that's probably a good deal because this enhances their long-term fee-based revenue. I am not a huge fan of ProFrac stock here because I think their base business (fracturing) will be pressured by the decline in shale drilling activity right now. Beyond that deal, I'd have to take a closer look at FTK to make more substantive comments. However given the decline in the stock since 2014 and their basic business -- chemicals used by E&Ps -- I suspect they're leveraged to shale drilling activity to some degree. I think that could be troubled. AROC, not among the names we recommend, but they're in the compression business, which would generally benefit from grater oil and gas volumes moving through midstream assets (pipelines, etc

Bo

4:29

THoughts on Blackstone Minerals? How strong is there balance sheet? Do you think its a good way to bet on minerals, assuming that one buys it somewhere near support? How safe is the dividend? Would you consider them shrewd operators?

Roger Conrad

4:29

Hi Bo. Like Dorchester Minerals (NYSE: DMLP), Black Stone essentially operates with zero permanent debt. And like DMLP, the policy is to adjust the dividend with cash flow rather than take on more debt. These are also royalty companies, so CAPEX needs are minimal as well, other than to enhance the value of properties to increase third party drilling.

On the other hand, these are not stocks to own if you're counting on a level dividend. Cash flow varies with (1) the amount of oil and gas produced on their lands and (2) realized selling prices for the oil and gas produced on their lands, which also affect third party production. So when gas (BSM) or oil (DMLP) prices weaken enough, so will cash flow and they will cut dividends.

If commodity prices rise, however, so will dividends--and share prices will follow them up. And that's our long-term outlook for both.

Victor

4:32

Hi Elliott, COP has been on an uptrend for the last few months. Several analysts, included Raymond James, rated it as a buy. The average price target is $116 in the next 6 months. How do you feel about it and what is your assessment on this one?

Elliott Gue

4:32

I think COP is OK longer term. Quality producer with good assets. My problem with COP is similar to some of the other big producers out there like OXY or DVN -- they just lack upside catalysts in my view compared to a more focused name like Permian Resources (Low-cost Permian production growth and a peer-leading dividend), EOG (momentum from new acquisition, no debt), the natgas names like EQT/EXE or even XOM and now CVX with Guyana. That's why COP has been underperforming the sector generally since late 2022. Also, while COP is rallying in absolute terms since April, almost all energy stocks are doing the same. It's performing basically in-line with the S&P 500 Energy Index while other names are showing relative strength.

Gary T

4:34

Hi Roger,In light of your comments on BEP and BEPC, would you recommend selling some shares of BEPC considering current pricing?

Roger Conrad

4:34

Both BEP and BEPC sell for less than my highest recommended entry point of 40. So while BEP looks to me to be by far the better buy, BEPC is still at a level where I would add to positions.

I believe at some point, the price gap between them will shrink. And unless someone really hates K-1s, BEP is looking really cheap relative to BEPC. But I'm not sure a long BEP/short BEPC strategy would work over any workable holding period. Closing the gap meaningfully is going to require improved investor sentiment toward MLPs. And while you bet on that, the short position will essentially cost you in dividends paid what you're earning. Best to just pick one or the other and hold.

Lawman

4:39

Thoughts on AETUF at this level?

Roger Conrad

4:39

Longer-term, ARC Resources (TSX: ARX, OTC: AETUF) is in great shape, with low cost Montney shale natural gas production in prime position to fuel western Canada's LNG and NGL accelerating export boom.

I expect Q2 results to be negatively affected by softer natural gas and liquids prices, offset by production gains. And second half results will be positively impacted by the close of a CAD1.6 billion acquisition of condensate-rich Montney assets at a good price.

We track ARC in the "Canada and Australia" coverage universe table, which you can find under the "Portfolios" tab on the Energy and Income Advisory website.

Jim

4:40

I stumbled across APA which is not in your web site. It has great EPS, PE, and free cash flow. Dividend is ok. For a small producer it is out of sink with the market. Is this a possibly buy? E and I client for years, JIM

Elliott Gue

4:40

Thanks for the question and for being a long-term reader. APA, the company formerly known as Apache, looks cheap on paper because it was one of the worst-performing energy stocks last year. I think he problem is that they've had a series of operational issues including that, most recently, they lowered their oil production guidance for 2025. Ultimately, I do think their cost-cutting initiatives could bear fruit but that's probably more of a 2026/27 story than a 2025 story. Generally, it's tough to execute on cost-cutting and startegic turnaround plans when commodity prices are uncooperative. I think we'd need to see more signs of a turnaround in APA before getting interested.

Lawman

4:46

Why has the share price of EPD languished?

Roger Conrad

4:46

Enterprise has returned about 3.6% year to date. That's about half the return on the Alerian MLP ETF (7.4%)m though it does compare favorably with close rival Energy Transfer LP (NYSE: ET).

My view is EPD has lagged other midstreams like MLPX because it's focused on energy exports. And Trump Administration policies have been disruptive to trade on balance--with the Commerce Department threatening to deny Enterprise's license to export three ethane cargoes to China.

During the Q2 earnings call, management was pretty clear that Commerce Dept actions have not seriously affected profitability or its $6 bil investment pipeline. And it pointed to other Trump Administration policies as being good for business.

Distributable cash flow improved 7% over year ago levels, enabling a 3.8% dividend increase and $110 mil in stock buybacks during Q2. So this company is strong as ever. We're still buyers at 33 or less.

Lawman

4:47

Thoughts on Denison Mines?

Elliott Gue

4:47

Uranium has been a hot investment theme this year and that's lifted all boats from the big names to the smaller, exploration and development companies like Denison. Uranium mining projects are a tricky business -- even established players like Cameco have seen cost overruns, delays and issues, even with in-situ developments. We'd much rather stick with an established producer like CCJ, focusing on getting long-term contracts at attractive prices, than go further out the risk curve with a name like Denison. In our trading services we've traded URNJ before, which is an ETF that hold a number of these junior uranium names. Normally I don't like energy ETFs because they hold the good the bad and the ugly of the sector. However, in this case it's not a bad way to gain access to the more speculative edge of this market.

Lawman

4:52

Whar are your favorite MLP's at this time?

Roger Conrad

4:52

I think Energy Transfer LP is looking very cheap yielding 7.2% after the dividend increase announced last week. Q2 results and guidance are due August 6 and I expect to see more fo the same growth through investment. It's lagged this year, so a good time to pick up some.

Victor

4:55

Guys, according to the July 14th EIA issue, the position size of SOBO in the actively managed portfolio is 7. Which is about 0.16% of the total portfolio. Is this the intended number of shares? thanks.

Roger Conrad

4:55

Hi Victor. That's basically what we got from our holding of TC Energy at the time of the spinoff--which was a 1 SOBO per 5 TRP ratio. That's the weighting of the stock at this time, though we might increase it at some point.

South Bow is basically the owner of the Keystone XL pipeline system. And as a small company holding vital infrastructure, my view is the end game is a premium takeover offer. In the meantime, the 7.7% yield is attractive, with a low single digit percentage dividend increase likely next year. There's also a possibility the abandoned northern leg expansion will be resurrected.

Lawman

4:57

PALAF has not participated in the nuclear stock price increase for many other nuclear stocks. Any idea why, and what do you think of this company in relation to other nuclear stocks?

Elliott Gue

4:57

PALAF has had nothing but trouble restarting their mine in Namibia due to rain and ore quality and a host of other factors. They were forced to withdraw their 2025 production guidance earlier this year and their comments about 2026 on their last call didn't sound particularly bullish either. Also, they had to sell off their Malawi mine for a pittance during the uranium bear market some years ago. I remember owning and trading this stock circa 2005-06 (I am dating myself), which was fun, but they haven't had a lot of operational success lately.

Robert

5:01

The preferred stocks of SCE J series F series start to float in Sept and March 25 respectively. Do you think they will be called in 2025? They seem like great opportunity to earn over 7% qualified dividends and nice cap gain if called?

Roger Conrad

5:01

Hi Robert. I think Southern California Edison is likely to call higher cost debt as an easy way to reduce costs at a critical time--when it faces an as yet unknown liability for last winter's California wildfires. As I answered in a previous question, the company's liability is capped by law even if it's found negligent--with the bulk covered by the Wildfire Insurance Fund.

That said, they probably will not want to issue corporate bonds to pay off preferred stock, unless the savings are immediate and meaningful. And in any case, if the call price is higher than the current price, there's no risk to principal if they are called.

Looks like these preferreds are low priced on wildfire fears, which are a lot less than meets the eye.

Mike C

5:04

Fluence Energy Inc (FLNC) has bounced back some from the lows a few months back. What do you think is the prospects going forward? Also thanks for doing these live chats!

Roger Conrad

5:04

Hi Mike. I really want to see what Fluence reports on August 11--and if sales are tracking the expectations set this spring. But with the tax credits for energy storage extended by the OBBB, it looks like the prospects for the US market are a lot better than almost anyone imagined they would be.

There are still tariffs on imports to contend with. But the company has talked about its US supply chain in the past. And I would look for more on that with earnings. The stock still a little more than half its price to start 2025, which is the result of the guidance cut earlier in the year. But as I noted in the July CUI feature, I'm cautiously optimistic the worst is in.

Lawman

5:09

What companies stand to benefit most from the OBBB?

Roger Conrad

5:09

I don't say this facetiously--the biggest winners over the next 12-18 months from the wide-ranging policies enacted in this 900 page bill will be companies and sectors that the mainstream and financial news media are proclaiming now to be losers.

I also think there are going to be numerous wholly unintended consequences, just as Japanese automobile companies like Honda Motor (NYSE: HMC) are already considered big winners from the Japan/US tariff agreement.

Bottom line is you've asked a pretty broad question and a definitive list of answers would take up a lot more space than I have here. But rest assured, these are the opportunities we're looking at now across all of our advisories. And Honda, for example, is already a big winner in a short period of time for our CUI Plus portfolio.

Lawman

5:13

What stocks are currently at dream prices that you would recommend buying at this time?

Roger Conrad

5:13

We now post "Dream Buy" lists on both the Energy and Income Advisor and Conrad's Utility Investor websites. For those unfamiliar, these are entry prices based on fundamental, technical and sentiment factors that in the past have produced windfall gains for investors who bought at or below them. Sometimes, recovery takes a long time. And if the underlying companies really do weaken, recovery may not happen at all. But it's no exaggeration to say that 9 times out of 10, we've eventually had great success with companies that went below Dream Buy prices.

Lawman

5:15

Roger, I am still holding Canfor Pulp Products (CFPUF), an old Canadian Edge recommendation. This stock has unfortunately lost most of its value. Is there any reason to continue to hold it?

Roger Conrad

5:15

It's not one we track in any of our advisories currently. The business has definitely gone sideways for a while and they are shutting facilities "permanently," including the Estill and Darlington sawmills in South Carolina

Next earnings are expected in early August. But there are a lot of headwinds here, including US/Canada trade. And I have to think there are better places to invest.

Lawman

5:20

Any thoughts on Artsis Real Estate REIT *ARESF)?

Roger Conrad

5:20

I track it in The REIT Sheet coverage universe, though Artis is not currently a recommended stock. The REIT is best considered an investment company for real estate now, rather than an operating company. The major assets are actually ownership interests in other companies, for example Dream Office REIT (OTC: DRETF).

The dividend was increased this year, always a good sign. And the boost has been even greater in US dollar terms, owing to the exchange rate. But I currently rate Artis a hold and believe there are better REITs--which I feature every issue on my "First Rate REITs" table.

If you're interested in The REIT Sheet, please call Sherry 9-5 ET, M-F at 877-302-0749.

Lawman

5:22

Are you familiar with Advansix (ASIX) and, if so, do you have any thoughts on this company?

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