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Roger Conrad

3:48

Hi Bill. They've wanted to do this for some time. I think the regulator's decision was disappointing to management for several reasons, most importantly because of the limits on dividends and measures that could actually restrain the company's ability to raise capital. The whole point of a holding company structure is to make it easier to raise capital.

Management is going through the decision now and may still find there are enough reasons to go through with it. We should find out more when Portland General releases Q3 results and holds its guidance call--which is expected in late October. But for now there's no change in my advice, whcih is Buy at 50 or less. They don't have to act unless they find it's advantageous.

Sal P

4:00

Afternoon Roger & Elliott Was wondering if there was any truth to what they call september effect . I was interested in adding to EIX . In addition to is the dividend safe . Thanks

Roger Conrad

4:00

HI Sal. September has not been kind to dividend stocks in general and utility stocks in particular. And the failure of California to pass utility wildfire liability reform--as 11 other fire prone states have--hit the stock hard. I'm not a big fan of doubling down in falling stocks, no matter how much I like them. But my analysis of Edison is that it should be a $100 plus stock in the next 2-3 years--as California either enacts reform (preferable), increases the Wildfire Fund to cover Eaton Fire damages or allows some other form of recovery.

My view is Edison will keep boosting the dividend as the wildfire case plays out. If California fails to either enact reform or boost the fund, the company could conceivable declare Chapter 11--interrupting payments to victims until the state does act. And in that case, it could suspend dividends for a time. So, no the dividend is not as safe as that of a utility that doesn't carry that risk--like Southern. But my view is the dividend keeps rising and the stock rebounds.

Don L.

4:03

With interest rates on the rise won't this be a drag on the utility sector.

Roger Conrad

4:03

Hi Don. It already has been a drag on these stocks--which have gone from leaders in first half 2026 to laggards this fall. The question is how much more they get sold off. And while I don't have a number for that, I can say that so long as earnings and guidance stay on track, recovery will be relatively fast.

Utility stocks have seen their best performances when the economy is strong and cost of money is rising--just like other stocks. And their worst have been in times of weakness when rates have dropped. Again the key is staying strong as businesses. And we'll get a chance to see that starting in late October.

Jon B

4:09

Thanks for comment above. Curious about your thoughts on Sempra? This is an example of a company that has been pivoting away from its unregulated businesses. Is this a good move? They also have a huge capex plan for the next several years. Could this be at risk due to elevated interest rates, regulatory pushback, etc? Do you think the demand for electricity or other catalysts are enough to overcome this and push the stock higher in the next 5 years?

Roger Conrad

4:09

Hi Jon. Yes, I think Sempra has made a great deal of money developing LNG assets. And monetizing that unit now--when these are popular assets--is a great way to fund the CAPEX at their regulated Texas utility, which represents locked in rate base earnings.

Sempra stock has been well above what I've considered to be a good entry point for some time. And in fact, it's offered investors an opportunity to take some money off the table several times over the last year. The most recent dip makes it again an interesting stock for purchase by anyone who doesn't already own it.

I expect another solid round of results in early November.

George

4:12

What are your thoughts on CEG? The stock is down substantially recently. Thanks

Roger Conrad

4:12

Hi George. Constellation Energy (NYSE: CEG) has been trading well above what I've considered a good entry point for quite some time--and we actually took full profits on it at the beginning of the year.

This is a great company with strong assets in nuclear energy and renewables as well as natural gas. It's gaining market share as electricity demand picks up steam. And the balance sheet is getting ever-stronger as it throws off free cash flow. And earnings in early November should be strong.

But it still looks a little pricey.

Gary

4:16

Seems to me that as nat gas production and pipeline take away capacity explodes in the Permian Basin and even greater nat gas production coming in from the New Mexico Permian Basis (with new pipeline capacity) - that companies like EXE and others in the Haynesville will be at a severe disadvantage going forward. Doesn't this introduce/reinforce the higher-cost handicap for Haynesville nat gas producers, making them less attractive?

Elliott Gue

4:16

Growth in Permian supply has been a trend we've been watching for years -- it's almost perfectly scheduled because it's based on pipeline construction schedules. So, we have known about the increase in Permian supply from late 2026 to early 2028 for many quarters. If concerns about Permian supply were the main drivers of weakness in gas E&Ps then I'd expect Marcellus names to outperform Haynesville names given their cost structure advantages. That's not what's happening -- EXE is actually outperforming EQT since the end of June when we saw the first pipeline flows on new lines out of the Permian. It's also outperforming EQT since the end of March when gas prices really broke down following the Q1 cold snap. Stocks are discounting mechanisms which means they don't react to fundamentals, they anticipate them. A rise in Permian gas supply over time is one of the most well-telegraphed fundamentals in the natgas market. Not far behind is the impact of the El Nino I mentioned earlier in the chat -- we saw warnings

Elliott Gue

4:16

of that since last spring and NOAA first warned about a strong el nino in the first half of June. So, I think those fundamentals have both been already discounted in the stocks. Third, in Q2 2026 we saw negative pricing at Waha; that flipped positive in June as we started to see some more flows out of Permian on new pipes. Since then Waha has been trading at a roughly stable discount to Henry Hub even though most of the ew capacity isn't flowing yet. This suggests to me that there's significantly less gas waiting for egress than the market had thought. Overall, in my view, growth in demand for gas between now and mid 2028 looks strong +2.5 bcf/day of new LNG exports, data centers, industrial demand. There's more than enough to absorb Permian + Haynesville + Marcellus and Haynesville retains a significant transportation advantage to the LA Guld coast

4:17

Historically, we see stocks bottom before natgas itself. Given the huge speculative bearish position in gas futures, I think we're nearing a low for gas stocks even as gas prices will remain weather-dependent into Q2 2027.

Guest

4:18

Roger, I just checked my latest activity on Fidelity. The report foreign tax withholding on a distribution paid by BEP. Since this is a distribution and not a dividend, should they withhold anything from these MLP distributions. Do you know if this is withheld by the brokerage firm or just reported by them. Last year they did not include the BEP foreign tax witholdings on their issued 1099s. Does this seem correct to you? And other than filing a 1116 form with the IRS for a foreign tax credit do I have recourse to recover from Fidelity - since these are not defined as dividend income. I would guess that you personally hold BEP? How do you handle this personally? I would like to not report items to the IRS that are not on issued 1099s due to some of the complexities of how the 1116 form is filled in - and concerns about raising audit risks.

Roger Conrad

4:18

I believe the withholding tax is in error. Unfortunately, it may not be easy to recover as companies like Fidelity are large bureaucratic organizations. The 1116 is of course one avenue you can take if you can't get satisfaction. I think they are pretty commonly filed and are not considered an audit magnet.

I'm not a CPA, however. And I strongly advise you get advice from someone who is on an issue like this. But I don't believe you should be withheld on your Brookfield.

Guest

4:23

Can you comment further on EIX. I know you issued an alert in the past month, but it certainly has been weak and wanting your opinion on the risks of buying now that the price has come back down. Similarly PCG and HE which also have suffered from fire risks have been very weak this year. Comments please.

Roger Conrad

4:23

I really don't have a lot to add to what I said in the Alert and then later in the September issue of Conrad's Utility Investor, where I did a deep dive on utilities' wildfire risks.

They have more of less moved together since the issue went to post. And there really have not been any significant developments on the business front. I think we'll hear a lot more when EIX (Oct 30 expected), HE (Nov 6 expected) and PCG (Oct 22) report Q3 results.

My view is these companies will ultimately fully recover from wildfire damage, just as every regulated utility has in the last 125 years from disaster. it's going to take time and patience on our part to get there. And there will be setbacks along the way. But anyone who can live with that should do quite well in the next 3-5 years.

Guest

4:26

Can you comment on FLNC after their most recent weak earnings report?

Roger Conrad

4:26

Fluence basically took on more orders faster than it could fulfill them. And management is now taking steps to catch up, which has resulted in two meaningful guidance cuts in two months.

My view is they still enjoy strong demand that if anything is likely to pick up even more as battery costs decline and alternatives get more expensive and difficult to meet supply. And a major contract with a battery manufacturer is promising. But I think this stock is going to languish until the company does demonstrate that it can fill orders with solid margins. it's only done that sporadically so far.

Frank

4:31

I always see Annaly Capital (NLY) with eye-watering yields, that has always been a red flag to me, but they always seem to hang around. Not quite sure how this one operates, but I assume getting in close to the peak in the rate cycle would give yield + capital appreciation

Roger Conrad

4:31

Financial REITs live or die on the margin--their investment returns less their cost of capital. Times for interest rate volatility are often an opportunity, provided REITs like Annaly can control their credit risk.

It's not so much the too good to be true yields that have put me off at times. It's the fact that these companies are effectively a black box--you never really know as an investor what they actually own and therefore where the risk lies.

I track a number of these REITs in REIT Sheet--call Sherry at 877-302-0749 9-5 ET, M-F if you're interested.

And most of them have either cut dividends this year or look like their about to. NLY is the one that's increased its payout. Maybe it avoids a cut. But I feel a lot more confident in the best in class equity REITs--which are looking very cheap right now.

DRG

4:39

The thesis about the world’s increased reliance on US Oil and Gas exports due to the Strait of Hormuz blockade, coupled with the damage to the Qatar Energy LNG export infrastructure caused by Iranian bombing seems to be in question because of the reported oil flow through Hormuz nearing the pre-war level. While Qatar’s 2 LNG train’s damage has impacted their LNG export but the 2 new trains expected to come in stream in 2027 may offset that supply loss. The point is that the priced to perfection prices of stocks of certain players in the Nat Gas food chain, the likes of WMB, TRGP, OKE etc. may be short lived as a result. The depressed global Natural Gas price is also a matter of concern despite the supply issues. Like to know your expert opinion on the long-term prospects of the NG E&P, mid-stream, LNG exports related stocks based on the reported developments.

Elliott Gue

4:39

Qatar has repeatedly extended force majeure on gas exports, now into November/December 2026. So, the flow of gas out of the Strait is well below pre-war levels. Mean, while Saudi, for example, has re-routed some oil supply through the Red Sea, oil flows out of the Middle East remain below their pre-conflict level. For natgas, we can see this in the EU storage data where storage is below 70%, which is even lower than back in 2021; if it's not a warm winter this year then look for EU to curtail gas supply to industrial consumers (EU law prohibits cutting off residential customers, hospitals, etc).

Elliott Gue

4:39

Longer term, Qatar has significant planned expansions to its North Field export infrastructure. They plan to go ahead with those. However, the first phase, North Field East, was planned for late this year and into the first half of 2027, now pushed back to early 2028 at the earliest. Further expansions planned for 2028-29 are likely an end of decade, early 2030s phenomenon now. Low US gas prices are a function of weather conditions this winter and maxxed out LNG export infrastructure. TTF (Europe) and JKM (Asia) are at ~25 to ~26/MMBtu vs. US $3/MMBtu. Hormuz was never the basis of our recommendations at any level of the gas supply chain. Our view, has been, and remains that US domestic gas demand is expanding (data centers, industrial demand) while demand is also growing outside the US (Europe/Asia). Unlike the US, most other markets don't have access to domestic supply and they're going to have to boost LNG imports to meet demand growth. With Australian production falling, US/Qatar are the only two producer

With a viable path to growing exports on the scale needed. Up until 2026, it looked like there could be a temporary oversupply of LNG in 2027-28 as Qatar ramped up alongside the US until demand could catch up by 2029-30. Now, with Qatar delayed by 1+ years, there’s no glut and buyers are eagerly snapping up long-term contracts for LNG supply well into the erly 2030s.

Sal P

4:40

Would like to know your thoughts on Nisource inc as its been a staple of my portfolio since 2010 @ $5 , Thinking money be best served in a higher paying dividend stock if there is no potential capitol increase from here .

Roger Conrad

4:40

I think NiSource is a solid utility that's been fairly expensive all year and is a little less so now. The core utility is strong. And I like the separation of serving data centers into a company owned GENCO. And that may save the utility a lot of headaches with the Indiana regulatory environment getting a little tougher.

I also think the stock will go higher over time from this level, as will the dividend. And anyone who's owned it from a low price should consider taxes. I do like some other utilities more. But I don't see any urgent reason to sell Nisource either.

4:45

Mlp’s have been hit the last month. Ytd has been strong but do you think this sector will continue to fall back further?

Roger Conrad

4:45

They're getting hit from two angles--selling of dividend stocks due to higher interest rates and concerns about a drop in oil prices (gas is already down on super El Nino fears). But you have to remember that these stocks also got pretty expensive over the past year--as people bid them up with higher oil prices. So the recent drop is really just bringing them back to decent entry points.

The important thing here is that underlying businesses stay strong. That was definitely the case when we saw Q2 results and guidance updates this summer. And there's every sign it will be when Q3 comes out in late October/early November.

We've already seen several of these mini-price cycles since the energy upcycle began in mid-2020. This year has been another. But our goal here is to build positions in good companies to ride the long-term cycle. And we're starting to see prices to do that for many of our favorite midstreams.

Tommy

4:45

What is your current view on the refinier stocks that have increased so much in the last year (e.g., MPC, VLO, PBF)? Thanks for these monthly chats. Much appreciated.

Elliott Gue

4:45

Thanks for the question. Fundamentally, the global refining market looks ultra-tight especially in middle distillates (diesel). Fundamentally, the world doesn't have enough refining capacity. China and the US are the two biggest refiners in the world and the US is fully utilized (we've been running facilities at rates approaching 100% of capacity all summer). China has spare capacity, but not much and they've mainly been using it as a source of swing supply to Asian markets. So the fundamentals are great. Our concern is that it's now in the stock s -- even our favorite high quality names like VLO are priced well beyond what I'd consider a mid-cycle refining margin environment. So, we recommended booking gains recently.

Victor

4:47

Hello guys. I just joined the chat and I'm not sure if someone asked about VST. At some point this one was trading over $200 but it came down and it seems to be forming a pretty good base. Is this a good time to add some shares of this one?

Roger Conrad

4:47

Hi Victor. I'm rating the stock a buy at 160 or less in Conrad's Utility Investor--that's after it trading above my profit taking target for many months last year.

It's a strong company and we'll see it again in results due out in early November. It's also been treated as an "AI stock," which had made it volatile. But I agree it's looking like a value after about a -14% year to date decline.

M k

4:49

I am looking to invest some capital in the near future. Which ones are most appropriate at this time-MPLX VG VST XIFR. AVA. Thanks

Roger Conrad

4:49

They're all trading below our maximum entry points heading into Q3 earnings and guidance calls. I think they're all appropriate, provided you understand what they do and what the business risks are--which we do explore at length in EIA and CUI.

Gary

4:50

seems to me that as nat gas production expodes in the Permian Basin and is even greater in the New Mexico side of the basin that

Elliott Gue

4:50

I believe this is a fragment of a question I just answered in the chat re: Permian production growth and gas prices.

Jack

4:51

Hi Elliott: It was nice to see ET rise to above 21, approaching a previous high, but then nosedive down about 10%. The same seems to have been true with Ventrure Global..... What is going on? How high can ET and Venture Global go, and over what time frame?

Roger Conrad

4:51

Hi Jack. Energy midstream stocks have pretty much universally given back gains this fall, as the de-escalation thesis in the Persian Gulf has seemed to gain adherents. Energy Transfer is still likely to post very strong Q3 results in early November, as asset expansion and rising demand push up cash flows. And we may see a third consecutive guidance increase for 2026. Venture should also have some solid numbers from its locked in contracts.

That business growth is the catalyst for long-term gains this cycle. And I think a double is very conservative for both stocks from here the next few years. But near-term, these stocks are going to get bought and sold with energy price volatility--always have been, always will be even though they have no direct exposure to commodity prices. And that's why we strongly advise not paying more than our highest recommended buy in prices.

Elliott Gue

4:51

It's not stock-specific. Energy stocks are down across the board; in fact except for technology stocks, all other sectors of the S&P 500 are down over the past couple of weeks. Natural gas stocks -- like VG -- have also been hit by weak sentiment towards gas this fall and weak futures prices ahead of the El Nino winter. However, this doesn't reflect any fundamental deterioration in VG's business -- European and Asian gas prices are still up around $25/MMBtu vs. $3 in the US, which adds up to some very lucrative spot cargoes for VG ahead of their formal LNG project commissioning.

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