Tag: the energy report

Weighing the Risks in International Oil Plays

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The Energy Report: Amin, you started your career in the consumer credit industry, where you were involved in risk management at a major bank. How does that translate to the securities industry?

Amin Haque: The company I worked for was MasterCard International Inc., and as director of risk management, my focus was on macroeconomic risk management in international jurisdictions. That gave me a very good foundation for evaluating sovereign, political and currency risks. In my four-year career with MasterCard, I focused on countries in Africa, the Middle East, South America, the Caribbean and the Asia Pacific. These are the same regions where many of the exploration and production (EP) companies I'm interested in operate. My previous experience is proving quite useful as an oil and gas analyst.

TER: When you look at a company, do you consider the jurisdictional risk first?

AH: Jurisdictional risk differentiates a company focused in North America from one that operates internationally. For the latter, geology, exploration history and reserves matter as much as they do for a North American company, but equally important considerations are geopolitical or currency risks. These issues affect operations as well as profit repatriation.

TER: Do you focus on the downside? Continue reading "Weighing the Risks in International Oil Plays" →

What Every Investor Should Know About Income and Growth: Kenny Feng

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The Energy Report: Kenny, you are a former MLP portfolio manager. You've also been an analyst at a bulge-bracket investment bank, Goldman Sachs Group Inc. (GS:NYSE), where you followed the energy and power sector, as well as MLPs. Is Alerian similar to Standard Poor's or Russell Investment's indices?

Kenny Feng: Yes, it's similar in that we are purely an indexing firm that maintains benchmarks for the MLP sector. But we are also an education provider for the asset class and aspire to be the Wikipedia of MLPsthe first-pass information source for an investor who comes across the sector through an article in Barron's, a commercial on CNBC, a conversation with a friend or financial advisor, or even through one of these interviews at The Energy Report. So besides the statistics we provide, we also speak at conferences and conduct free teach-ins to educate the investment community about MLPs.

TER: Do you manage any assets?

KF: No, and because we don't manage any assets, the investment community views Alerian as an unbiased source of information. We field questions for investors across the spectrumfrom individuals who have $100 to invest, to the multibillion-dollar institutions that are conducting due diligence on the sector prior to making a percentage allocation to the asset class.

TER: How does Alerian make money? Continue reading "What Every Investor Should Know About Income and Growth: Kenny Feng" →

Oil and Gas Volatility Creates Winners and Losers: Robert Cooper

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The Energy Report: It's been about one year since we last spoke, Robert. What do you think have been the most significant developments in the North American oil and gas industry since then?

Robert Cooper: It's a dynamic business, and a number of changes have occurred. First, the macroeconomic backdrop remains murky, resulting in persistent volatility in equity and commodity markets. Investors remain wary of putting on riskier trades because the visibility simply isn't there. The fear that some Monday morning we'll wake up with a negative surprise is inhibiting risk taking and impacting small-cap growth equities, particularly.

"The winners tend to be experienced managers with proven track records."

Second, the rapid increase in U.S. oil production has negatively impacted Canadian producer net-backs. The spread between Canadian light oil prices and the U.S. equivalent has been much more volatile than historical rates. The lack of pipeline capacity has exacerbated this trend and given rise to alternative methods of transportation, such as oil-by-rail. But overall, the "differential risk" has been added to the list of risk factors investors assume when investing in the oil and gas sector.

Finally, the natural gas market, after a period of massive oversupply, has, in our view, self-corrected and appears to have returned to balance. Continue reading "Oil and Gas Volatility Creates Winners and Losers: Robert Cooper" →

Making a Killing in Mature Oil Basins: Josh Young

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The Energy Report: Josh, what is a "mature" basin? You're famously bullish on them.

Josh Young: Mature basins have well-known reservoirs and well-defined geologic characteristics. Hundreds or thousands of wells are already producing in such basins. North America has a range of them. My portfolio is almost entirely exposed to these mature basins.

"There is an old adage: 'The best place to find oil is an oil field.'"

Some of my largest positions are in mature basins in Texas, Oklahoma and Kansas. One company is active in the Sedgwick basin with the emerging Mississippi Lime play, a horizontal redevelopment of vertical Mississippian wells, which were originally drilled over the course of decades. And another company is active in the East Texas field, which has produced for almost 100 years and is in the process of being redeveloped. Continue reading "Making a Killing in Mature Oil Basins: Josh Young" →

Africa and Kurdistan Show Great Oil and Gas Potential: Lionel Therond

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The Energy Report: Let's start with Kurdistan, Lionel. It's one of the hottest countries in the world for oil and gas exploration, especially in terms of production share contracts. A few prescient firms, such as WesternZagros Resources Ltd. (WZR:TSX.V) and Genel Energy Plc (GENL:LSE) control promising properties in Kurdistan. What's the back story?

Lionel Therond: Prospects have never been better for players in Kurdistan. The key factor has been the recent entry of Turkey into the export debate. Allow me to explain: Turkey has an energy-hungry economy ready to buy oil and gas production directly from Kurdistan as long as the physical routes exist for exports. In response, the Kurdistan Regional Government (KRG) has started building pipelines toward Turkey, which should be operational at the end of 2013/early 2014.

"International majors are voting with their feet and entering Kurdistan."

That was a paradigm change. We had been waiting three years for an agreement between the KRG and the Iraqi federal government on the commercial conditions for exports, and Baghdad's initial stance was to declare all licenses in Kurdistan illegal. But with new export routes that could potentially bypass Iraqi territory and lead directly into Turkey, Baghdad's agreement is no longer necessary, which has brought the Iraqi government back to the negotiating table. Continue reading "Africa and Kurdistan Show Great Oil and Gas Potential: Lionel Therond" →