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Shales From The Crypt

@ViscosityRedux

Long-short energy trading. We communicate in charts. Tweets are our own. Not investment advice. Conduct your own due diligence - please

viscosityredux.substack.com
Joined October 2019
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Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)Photo by Shales From The Crypt (@ViscosityRedux)
Exit, pursued by a bear, by @ViscosityRedux Europe's natural gas crisis - so bad, so fast, worse to come. Truly abysmal situation with no winners. viscosityredux.substack.com/…
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Multiples have expanded for all save VLO
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The sector is still a little cheap to derived fair value, though not as cheap as 5/6. And DEFINITELY not as cheap as it was on 5/9
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Energy still preferred sector 2Q may be a (phenomenal) peak for refining earnings, & we may be getting to the “this is as good as it gets” phase Reducing refining; adding OFS length for the next phase of the cycle Still love select nat gas E&Ps; Oily E&Ps later this summer.
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Forward estimates are flat to up. COP down a hair
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The space did turn around. By day 15, today, performance was nearly in line with prior signals’ avg +6% gain from entry
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Of the names we flagged, performance was better than the sector: VLO +2% CHK +12% AR +20% COP +6% MRO +10% HAL +10% HP +7% PTEN +20%
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Commodities got hit hard
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t15 follow up – the day after we posted we were adding length to Energy, the market & sector had a 3.5 std dev selloff Not a great start
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Image from Shales From The Crypt (@ViscosityRedux)
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viscosityredux.substack.com/… The Shortage of Everything Energy
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Signals. Adding length to the energy book today. We use a tool that incorporates a number of macro variables to screen for the energy sector trading above/below fair value. The output:
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Fav subsectors on fundamentals remain refining and nat gas E&Ps - adding to core positions in VLO, AR, CHK. Also picking away at some laggards in oilier E&P (COP, MRO) and choice OFS (HAL, HP, PTEN). Happy hunting.
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+/- 1% deviations are noise of course. Earlier this morning, the model showed the sector 7% undervalued, which garners attention. Normalized results for the sector after hitting 7% undervalued (t0) graphed below. n=113 (2 yr lookback) Hit rate @ t10: 72% Hit rate @ t15: 79%
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viscosityredux.substack.com/… Follow the numbers
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viscosityredux.substack.com/…
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viscosityredux.substack.com/… If you thought $100/bbl crude was high, what do you think of $150/bbl distillate? h/t @crudegusher
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viscosityredux.substack.com/… There is no rescue coming to the crude market this year from North American oil. Energy company executives are being paid NOT to drill today.
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viscosityredux.substack.com/…
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viscosityredux.substack.com/… Global Energy, through political necessity, global will, and economic mandate, is charting a new course.
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Confirmation coming from higher up the food chain. Sec State acknowledges discussions with allies on Russian oil embargo
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More previews of EU plan to pivot away from Russian natural gas imports … towards a tight LNG market
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Image from Shales From The Crypt (@ViscosityRedux)
Image from Shales From The Crypt (@ViscosityRedux)
Image from Shales From The Crypt (@ViscosityRedux)
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