Spot On

[Gregmal]

https://adventuresincapitalism.com/2021/06/02/esg-energy-stops-growing/

 

The retards are creating a time bomb. This is so fascinating to watch and I reached similar conclusion as the above pondering this quite a bit over the weekend. Particularly the XOM vote implications. I know @SharperDingaan has touched on some of the ways to play it. Who else is playing this? Like some other themes, there's really not much that can realistically stop this from playing out. I'm hardly an energy expert so right now my exposure is largely through XOP, XLE both shares and LEAPS and well as some SLB options. 

What stops this? As is the case a lot of times, the key risk is selecting the wrong investment vehicle. But energy/oil more or less has to go higher over the next few years, at least until 2024. 

[JRM]

It looks to me like we're exporting LNG to China so they can manufacture solar panels to ship back to us.  Doesn't seem very ESG.

I read that the IEA put out a projection that renewables need to scale up 12x between now and 2050 in order to eliminate carbon emission.  Not 2x, not 3x, ... 12 X!

500,000 lbs of dirt (the right dirt) must be excavated and processed for enough material to make the battery cells for one Tesla.

In short, we don't have the resources readily available to make the renewable transition quickly or affordably.  Natural gas is still required to bridge the gap until technology improves, and we will still grow oil demand until 2035 according to the IEA.  

And no, Bitcoin mining is not going to stabilize the grid.

Link to my very popular thread on minerals required for renewable transition: 

 

 

[longlake95]

The hypocrisy, regarding ESG and energy, in the general public and some in the investment community is nauseating. Everyone is piling on carbon based energy like it’s a armageddon’s little brother. So the narrative is sell anything energy cuz it’s bad....but those same people generally won’t or haven’t change there own consumption of energy, even though “options” exist. But it’s ok to own anything techy, like an Apple....not willing to admit these devices use a ton of specialty metals, that people dig giant holes in the ground to harvest, sometimes with child labour...think the DRC... Oh but wait.... you have to own anything EV/solar related, that’s the future! Oh but wait, EV’s use 4x the amount of copper that a ICE vehicle uses...wind and solar use a ton of copper...so let’s go dig more holes in the ground cuz we need lots of copper...that’s ok though... The whole thing is whacked.

 

How about we incentivize the private sector through the profit motive, to allow the use of ALL resources (carbon based or not) in a  MUCH cleaner sustainable way. It’s arrogant to sit here In Rich Western countries and poo-poo oil and coal. If you were trying to keep your family warm or cool in Bangladesh and have some electricity to educate your children you wouldn’t and shouldn’t give a rats ass about ESG. Poor countries deserve cheap stable energy like we have enjoyed for 200 years.

 

Rant over.

 

 

 

 

Edited June 2, 2021 by longlake95

[Gregmal]

Oh yea, the hypocrisy is crazy but nothing new. Its hard not to at first get mad at it because it makes no sense and will ultimately lead to a worse situation than we have now. Then you think about it, and slightly more than half the country supports this utter nonsense which is even more amusing. But I think Kuppy hit the nail on the head when he says "my job is to examine the world and figure out how to profit off human stupidity. "...Which is how Ive tried to go about these things. 

Green energy and climate initiatives have NEVER made money(unless you bet against them). But they always become popular fire pits for other peoples money when we have a Democrat in office. The shitbag fee gatherers now see a tidal wave of money pouring into ESG, and as the blog post linked says, they see an opportunity for marketing and increasing AUM(and subsequently their fees)...they have no concern over performance, which will undoubtedly be terrible...and little concern for the money of others they are using. This is why institutional money is really the dumb money. These retards dump stocks because they get kicked from an index. They refuse to own sub $5 stocks. The sell spin offs because of genius logic like "its too small to move the needle" or it "doesnt fit into the portfolio"...They refuse to buy things that have hair or are "out of favor" and then dive in when its much higher.....but we've seen repeatedly this sort of theme play out and its a tremendous opportunity for the investor who is not bound by this bullshit or actually needs to make money with their investment dollars rather making money off the dollars they invest. 

Ill leave you with this:

https://apnews.com/article/e098bc76b19743e7a1587b8681e4b6b3

 

Total fuckin retards many of these people and institutions are.....best way to deal with it is to leave your emotional baggage at the door and just profit off the stupidity of others. People can make it a red issue or a blue issue but Ive generally found that I like green better. 

[SharperDingaan]

Like it or not ESG is here to to stay, it is becoming more instutionalized, and it is being applied to EVERYTHING - not just oil/gas. Even the accounting profession is moving from double entry to triple entry accounting, to accommodate ESG reporting - and it will apply to external reporting in all industries. Might take a while to fully integrate with both USGAAP, and IFRS, but it is here. It is also arriving with concurrent global agreement on the standardized measurement of carbon credits - with other pollution measurements to follow. 

Today's XOM shareholders are whining, but tomorrows will be clapping as XOM uses sale proceeds to both retire debt and buy in shares. Lots and lots of nice cheap shares - net of the stranded asset write-off announcements! Ultimately we are all going to pay a lot more for what we use, the price is going to include the cost of pollution, and the new 'industrial revolution' will be in clean-up/green industry. Enormous opportunities for all, but most of the existing o/g managements will need to be replaced.

The majors cant just sell assets to get their footprint down - they need to fundamentally change how they operate. For the most part we have the technologies, it is the mindsets that need to change; fire/retire, and let the younger folks do their thing.

Different POV.

SD 

 

Edited June 2, 2021 by SharperDingaan

[cubsfan]

Greg - that CALPERS press release is classic!

[lnofeisone]

5 hours ago, Gregmal said:

Green energy and climate initiatives have NEVER made money(unless you bet against them).

Or there is a huge Federal incentive.  

The sustained marketing campaign blitz against O&G has been phenomenal. I think that created opportunities for oil and gas but in the intermediate to longer term (5-10 years) gas will outperform. No secret, energy is a large part of my portfolio (even more so if you consider solar panels as part of my energy portfolio). I have few regular names (KMI, ET, WMB, MPLX) and few sleepers. I think one sleeper that has slowly been fixing itself up over the last few years is TGP - nat gas shipper. It is boring (no more IDRs), projected to increase dividend, and it's a shipper.

[thepupil]

if you want to go crazy, BPT is an interesting OTM option on oil. it is very likely worthless and is designed to become worthless with the passage of time as the royalty recieved is equal to the WTI price minus an ever increasing number (see below for rough guesstimate) and production is declining. It stopped paying distributions in 2020 and is about to run out of cash and at risk of being dissolved any day.

But if oil keeps going up, the royalty will be positive again and distributions will flow. If oil went to $100 (and stayed there) there'd be something like $15 of future distributions. On an intrinsic value basis, that kind of 4-5x is not that interesting. you'd make more money in futures options. but given BPT's history of trading wildly above intrinsic value as retail can't properly price it*, you could see the stock move to a multiple thereof. At $100 for 2022, BPT would distribute ~$2/share (per quarter, $8/year). all it takes is some dumb seeking alpha folks to value it at a 10% yield for an 20 bagger at $80 (though it'd be at 4x intrinsic value then). 

probably worth a few 10's of bps and nothing more. 

also my super in depth work on VAL has rewarded me with 25% over my 8 long days of hodling a huge 50 bp position. 

*I dug up an old model from 6 years ago and may not be properly pricing it myself, but i assure you mine is better than 99% of BPT's holders

 

2021: $60

2022: $65

2023: $72

2024: $78

2025: $86

2026: $94

2027: $101

Edited June 3, 2021 by thepupil

[spartansaver]

40 minutes ago, thepupil said:

if you want to go crazy, BPT is an interesting OTM option on oil. it is very likely worthless and is designed to become worthless with the passage of time as the royalty recieved is equal to the WTI price minus an ever increasing number (see below for rough guesstimate) and production is declining. It stopped paying distributions in 2020 and is about to run out of cash and at risk of being dissolved any day.

But if oil keeps going up, the royalty will be positive again and distributions will flow. If oil went to $100 (and stayed there) there'd be something like $15 of future distributions. On an intrinsic value basis, that kind of 4-5x is not that interesting. you'd make more money in futures options. but given BPT's history of trading wildly above intrinsic value as retail can't properly price it*, you could see the stock move to a multiple thereof. At $100 for 2022, BPT would distribute ~$2/share (per quarter, $8/year). all it takes is some dumb seeking alpha folks to value it at a 10% yield for an 20 bagger at $80 (though it'd be at 4x intrinsic value then). 

probably worth a few 10's of bps and nothing more. 

also my super in depth work on VAL has rewarded me with 25% over my 8 long days of hodling a huge 50 bp position. 

*I dug up an old model from 6 years ago and may not be properly pricing it myself, but i assure you mine is better than 99% of BPT's holders

 

2021: $60

2022: $65

2023: $72

2024: $78

2025: $86

2026: $94

2027: $101

Ectm is a similar idea although it was much more interesting at 30 cents. Should distribute around 12 cents this year using the futures natural gas strip and a 50 cent hub discount. If natural gas prices go to 4 or more, it gets very levered to the upside. It’s my largest position, partly because of the run, and partly because at 30 cents I felt my downside was pretty limited. 
 

I would have posted sooner about this idea, but I was trying to buy as many shares as possible and it’s reasonably illiquid.

[thepupil]

the math on that sounds much better than BPT