Super-Spiked Podcast

WATCH the video on Substack by clicking the play button above or on YouTube (here).STREAM audio only on Apple Podcasts (here), Spotify (here), or your favorite podcast player app.DOWNLOAD a pdf of a moderately edited transcript using the blue Download button below.Super-Spiked is not a political podcast and you all know we despise partisan politics as a subject. But it has been a pretty big stretch of elections over the past few weeks, most notably in the U.S., but also Brazil and British Columbia. As always, we will aim to provide longer-term takeaways, i.e., long takes, as opposed to the short-term hot takes that are more common. Our focus is on how management teams and board directors should think about what all this means for the long-term outlook for the energy sector. (1) Initial election takes are rarely correct. * If you look at US presidential election years, it has made sense to fade the initial hot take of whatever was widely anticipated. * For example, peak “net zero / ESG” was actually at the start of Biden’s term and the correct decision would have been to fade it.* Trump was supposed to be pro oil & gas but the sector struggled mightily until the Trump Administration initiated a new war in the Middle East that no one anticipated.* Post midterm shifts argue for gridlock. Democrats won by such a large margin that the marginal vote is unlikely to be the far left socialists or eco warriors.(2) Geopolitical Super Vol backdrop reinforced.* As we have stated many times previously, we view war as bad and peace as good. We hope the crisis in the Middle East and Russia-Ukraine both end as soon as possible.* With that said, all of the surprise election results we are seeing not just in the U.S. but in other democracies as well, including the unrest in Paris and elsewhere in Europe, speak to a world order undergoing and arguably in need of significant change.* Instead of a four-year everything changes dramatically cycle, perhaps we are now in a 2-year hypercycle. * That can be unsettling for management teams and boards. It is our view that energy’s natural hierarchy of needs will always prevail. Everyone needs abundant, reliable, affordable, and geopolitically secure energy. If you have projects, be it oil & gas upstream, midstream, or downstream, grid power or BTM (behind-the-meter) power, or are involved in a broad range of new energy technologies, your job is to power through election volatility and to provide the stability that is lacking in our politics.* Individual projects for sure can be impacted by specific election results. B.C. natural gas & LNG may well be a new opportunity that some should pursue as an example. * But at the macro level, the world is demanding more oil, natural gas, refined products, power generation, transmission, distribution, grid enhancements, electric vehicles, ICE (internal combustion engine) vehicles, LNG trucks and diesel trucks. None of that changes based on election results. * The path varies, but we already knew that.(3) So are we saying nothing ever matters and there is no change?* No, we didn’t just say that. What we are saying is the idea that companies need to yin and yang every couple or four years is what shouldn’t happen.* As an example, it was a bad idea for traditional oil & gas companies to go “all in” on a low carbon energy transition in 2020.* It similarly didn’t make sense for companies to abandon environmental and climate mitigation promises in 2024, with an example being taking efforts to limit methane leaks and flaring.* Staying on a true north path of fortress balance sheet including cash is king, competitive full cycle returns, and advantaged growth will always win over time. * Do we think the path for data centers and power slows meaningfully? There is a significant need for more data centers and more power. How changes in Texas impact ERCOT we will leave for others better versed on that topic than are we. But make no mistake, power demand, generation, transmission, distribution, and grid enhancing technologies are going to remain a huge focus for our country and this state of Texas(4) What does intrigue us most and what are we watching?* The continued case for Canada. * We hope Texas doesn’t become less business friendly. * We root for peace in the Middle East and Ukraine, but we are skeptical election results meaningfully change the path of those conflicts.Timestamps:0:00 Introduction 1:05 Initial election takes are rarely correct4:40 Geopolitical Super Vol backdrop reinforced7:14 So are we saying nothing ever matters and there is no change?9:11 What does intrigue us most and what are we watching?11:14 On A Personal Note📜 Credits* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.⚖️DisclaimerI certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.Subscribe to receive all content. Also available at Veriten.com. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com

WATCH the video on Substack by clicking the play button above or on YouTube (here).STREAM audio only on Apple Podcasts (here), Spotify (here), or your favorite podcast player app.DOWNLOAD a pdf of a moderately edited transcript and the slide deck using the blue Download buttons below.Oil markets are again trading the $100/bbl level. We’ve been here before including at the height of the COVID recovery and start of Russia-Ukraine in 2022-23. The point of this week’s post is to assess where we are in the current macro era today and compare and contrast the current set-up with prior periods of high prices. Our aim, as always, is on helping management teams and board directors navigate a Geopolitical Super Vol energy macro backdrop. Three things jump out at us today: (1) Back end oil remains firmly anchored in the $65-$70/bbl range, a general price band we think is sensible. (2) We are in year 5 of the Geopolitical Super Vol era characterized by persistent forward curve backwardation...”oil glut” has been a terrible call, even as we recognize sharp pullbacks, especially when the curve is steeply backwardated, are inevitable. (3) Investors are slowly shifting from the doubt of “you-guys-will-always-waste-money” world view to having a more open mind about the outlook. It’s probably too strong to say we are fully glass half full for traditional oil value chain names, but there does seem to be a growing recognition that traditional energy companies can generate competitive profitability with the right business model and asset mix. Our bottom line conclusion is that we still think sector weightings across energy, power, and key metals and minerals can about double from here. Certainly there is still a long way to go in the current Geopolitical Super Vol era and a period of overall healthy profitability and to varying degrees top and bottom line per share growth. Timestamps: 0:00 Introduction 6:20 Oil Market Structure: Constructive vs Stable Back 12:00 Investor vs Corporate Mindset: Trading vs Investing 19:20 CAPEX and Debt Remain In Check 21:45 ROCE Tale of the Tape 30:26 ROCE Tale of the Tape (continued) 33:34 Geopolitical Super Vol Re-Rating Potential Still Exists 36:19 On A Personal Note: Closing Day 📜 Credits* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.⚖️DisclaimerI certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.Subscribe to receive all content. Also available at Veriten.com. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com

WATCH the video on Substack by clicking the play button above or on YouTube (here).STREAM audio only on Apple Podcasts (here), Spotify (here), or your favorite podcast player app.DOWNLOAD a pdf of a moderately edited transcript using the blue Download button below.A recurring theme from many of our recent meetings and engagements is around the role of China in energy markets going forward. Here are nine China-related thoughts in the context of our Geopolitical Super Vol macro framework.* China’s massive trade surplus with the rest of the world is not sustainable. * Industrial diversification away from China is inflationary, and at least in the short-term, higher in energy intensity than the status quo. * From the perspective of energy, peak trade surplus by China likely coincides with peak energy usage in the country. A plateau in its oil and coal demand seems possible in coming years under the assumption that the rest of the world makes headway diversifying manufacturing away from China.* Whether China can transition to more of a consumer market from a heavy industry, export oriented economy is a question that is beyond our ability to intelligently comment as an energy specialists and is the key to its long-term energy growth potential.* We do not believe peak or plateauing oil demand in China means peak global oil demand is here, as the other 6 billion people on Earth outside of China still have massive unmet energy needs. * China is still building coal plants even as it is meaningfully ramping solar, wind, batteries, and nuclear. This is a real lesson the U.S., Canada, and Europe ought to embrace. Build and definitely don’t close baseload power generation as you are adding renewables and other new technologies. * Increased volatility in China oil imports likely mutes the extreme ends of the oil price trading range, as we expect the country to add to strategic stocks on pullbacks toward $50/bbl or lower with reduced imports when oil is trading above $90/bbl. * For companies in the oil value chain in particular, cash is king.* For the power value chain, higher inflation means higher borrowing costs. All the turmoil in the world creates supply chain risk. Let us conclude with this takeaway: China did not matter to energy analysis prior to 2004 and may become less relevant within the next few years (to be clear, China will remain important but may no longer be the top driver is our point). The Asia Tigers stopped mattering in 1998. Japan and Western Europe stopped mattering a few years before that. So if we think about macro eras, which countries are the driver evolve as well.There is only one long-term direction of travel for the world and that is one of more prosperity and progress over time, even as the path can sometimes be rocky. There are still at least 6 billion people ready to move up and to the right economically. The 2030s may well be more about some or all of those other 6 billion people than it will be about China.📜 Credits* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.⚖️DisclaimerI certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.Subscribe to receive all content. Also available at Veriten.com. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com

WATCH the video on Substack by clicking the play button above or on YouTube (here).STREAM audio only on Apple Podcasts (here), Spotify (here), or your favorite podcast player app.DOWNLOAD a pdf of a moderately edited transcript and the slide deck using the blue Download buttons below.One of our core Super-Spiked themes since inception nearly five years ago has been the idea that companies in deeply cyclical commodity sectors should aim to have a fortress balance sheet, and that you run the business to ensure that you can not only survive but actually thrive through industry downturns. Preparation for bad times is what enables success during the bull markets. It’s what positions companies to keep pace with and beat the broader S&P 500 over the decades through all the ups and downs. From the breakup of Standard Oil in 1911, its largest surviving pieces plus Royal Dutch/Shell not only survived but thrived over the next 100 years until the end of the China/BRICs super-cycle in 2014. We are currently in an era where oil prices are around $100/bbl and refining margins are over $60/bbl and companies exposed to upstream and downstream oil commodity value chains are increasingly flush with cash. Today’s video adds a corollary to our fortress balance sheet ethos and that is “cash is king.” We have little doubt that Street analysts on upcoming 3Q2026 earnings conference calls will be querying management teams on what they will do with the cash and many will argue some large portion ought to be immediately returned to investors. If we are sticking with our pragmatic approach to energy, some of the surplus will and should go back to investors. But there are a number of arguments made about returning all or the bulk of cash back to investors that we do no agree with. The strategic value of cash, especially in a deeply cyclical commodity business, is often under appreciated by both investors and management teams. It’s not simply having a fortress balance sheet. It’s about having a degree of balance sheet strength that enables significant counter-cyclical buybacks, M&A, or CAPEX. We would argue there is no such thing as having too much cash on hand, especially given our Geopolitical Super Vol macro framing. 0:00 Introduction 2:42 Cash is King 9:37 Pushbacks On Retaining Cash 15:48 On A Personal Note: In Honor of Malcolm Young 📜 Credits* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.⚖️DisclaimerI certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.Subscribe to receive all content. Also available at Veriten.com. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com

WATCH the video on Substack by clicking the play button above or on YouTube (here).STREAM audio only on Apple Podcasts (here), Spotify (here), or your favorite podcast player app.DOWNLOAD a pdf of a moderately edited transcript using the blue Download button below.This week we have a twist on our Q&A styled commentaries, which we are calling “Good Call or Bad Call.” We focus on oil markets with four topics to go through. The point of the post is to shed light on signal from noise and when to push back on consensus narratives.(1) About a month ago, U.S. Energy Secretary Chris Wright made headlines stating that oil flows out of the Strait of Hormuz and the Middle East in general were much higher than everyone realized. His comments were broadly dismissed as happy talk from an administration that was desperate to see lower gasoline and diesel prices ahead of upcoming midterm elections. Was it a good call or bad call to doubt Secretary Wright’s comments on Middle East oil flows?(2) Has it been a good call or bad call to believe in the oil glut narrative?(3) Is it a good call or bad call to think recent changes to U.S. fuel economy rules announced by the Trump Administration will gut mpg improvements and boost gasoline demand?(4) Has our Super Vol framework been a good call or a bad call?📜 Credits* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.⚖️DisclaimerI certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.Subscribe to receive all content. Also available at Veriten.com. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com