[Music] I'm Charlotte McLoud with investing news.com and here today with me is Joseph shacker president and author at the shakar energy report and a 40-year veteran of the industry on both the buy and sell side thank you so much for being here great to have you my pleasure Charlotte good to be with you really good to be speaking with you it's our first time talking so we got a lot to go over for sure today we're going to take a look at oil and gas in 2025 but before we go there I want to take a brief look
back at 2024 and ask you if there any trends that stood out to you this past year things that surprised you what would you want investors to take away about 2024 well it was almost like A Tale of Two Cities the first half of 24 and the second half of 24 in the first half of 24 uh we got up as high as $87.6 7 cents us for WTI uh and then in the second half of the year um when you know the first half of the year the perception was that the industry was in a short supply and that there was going to be um you know much higher prices and
many of them were talking in over 90 and I started seeing the US data and the US data was showing that demand was lower than the prior year so we were seeing weakness in demand as uh people were squeezed by their home budgets and so they weren't using as much uh energy uh as they had because food prices were up mortgage prices were up you know everything related to home ownership education Etc clothing we we're squeezing them and so um we started saying there's a risk of sub $70 uh us
for WTI that did occur in September of 2024 and we went down to $652 7 I'm just looking at the chart on my left and uh um and uh we've been in that 65 to mid 70s range uh since then uh we're now about 70 and a quarter today uh and I think we're going to probably test the lows in the coming weeks because we're seeing more weakness out of China data and so there's an issue there uh the other thing is OPEC has been increasing production they keep on talking uh about to limiting
production but the data that came out in their uh December report which uh uh there's a monthly report that OPEC calls the OPEC monthly oil market report came out on December the 11th and they show that the uh production increased by 104,000 to 26.7 million barrels so OPEC was lifting production as demand was coming down and that's why we've seen prices near-term weaker and of course the China data um has been subdued um where there's a positive for 2025 Is Us demand is now Rising if you go to the the we we have
some there's a report that comes out by the eia the Energy Information Administration in the US which is called the weekly petroleum status report usually comes out on Wednesday except during holidays and it's now showing demand increasing this year versus last year that's the first you know we started seeing that about a month or two ago and I started getting more positive saying we're going to have maybe a test of the low because of China but once that's over everything looks good for
2025 and I'm looking for higher prices most people on the analytical side are using um you know 70 to $74 for their forecast for 2025 and um I'm in the camp that I was using you know low 70s in 2024 when they were in the 80s I'm now looking for potentially 80 to $82 for the average in 2025 and I can go by by quarter I think the first quarter might be as low as 68 to 78 a rising in the second quarter 74 to 84 and then in the second half of the year I think we'll see good economic growth in the
states uh China will be doing better because I think their stimuluses will finally kick in and the the Asian countries near China which are hurting because China's weak and a lot of them work with China uh they're going to do better so I'm looking for 78 to 86 but the big thing is I think we're looking at 90s on a consistent basis in Q4 uh with a range of 84 to 96 so going from $70 to $90 uh Q4 of this year to Q4 of next year that will wake everybody up Energy's been a very poor performer tax
loss selling has been pretty horrible right now uh for most people take look at their stock quotes they'll see that uh both and we've seen that also for uh materials materials hasn't really done very well this year either but I think in in 2025 Commodities will be an outperformer relative to other subgroups of the S&P TSX or the S&P 500 and I think we're going to see very strong performance especially if I'm right with $90 WTI I think there's a lot of stocks out there
that could be 50% or more to the upside between the end of this year and the end of next year so I think it's an area that we think after being cautious we're now in firmly in the bull camp and we're thinking people should be taking advantage and we've been writing about this in our reports take advantage of the tax loss selling that's going on right now uh and because we think that these are Bargains uh that will that you'll be happy to own a year from now yeah we're we're definitely in the
thick of that tax loss selling right now so that gives us a really good look at 2024 and a little bit of what's coming in 2025 so we'll try to unpack some of the different topics that are going to get us to those higher prices there's a lot to to get into but where I thought we could start is I know a lot of people have questions about Trump's upcoming second term in the US so there is a lot of optimism I think about drill baby drill and his Energy Secretary appointment but then many questions
about tariffs confusion about the promise that he's going to cut Energy prices in half so I wondered this is this is a broad question but if we could take a look at what Trump could mean for oil and gas when he is inaugurated in January yeah the US U from the eia data is producing about 13.6 million barrels a day which is record production and you you know you Exxon Mobile is talking about between now and the end of the decade doubling their production of of their you know on their lands because of
new technologies um of better drilling uh capabilities U more you know better Frack techniques all the things are doing and so I think we're going to be looking at potentially two to three million more barrels coming out of the states in the next between now and the end of the decade which is a pretty big increase but a lot of it takes time uh the some of the things you need is regulatory changes so lands that are federal lands especially in New Mexico that the Biden is not allowed to be drilled they need to have those
regulations changed once the regulations change then companies can go in there and do their seismic and you know sign up for the land uh deal with the land owners uh you know in ter terms of royalties and then they need infrastructure so just because you drill a well and you find a reserve if you can't bring it to Market that's a problem so infrastructure becomes an issue and on the other area of course is going to be the Gulf of Mexico Gulf of Mexico historically has been very attractive it really doesn't get the
attention because of its Federal lands and Biden again has held people from Drilling and then the other wild card is Alaska at one point Alaska was was producing 2 million barrels the day day now it's a half a million barrels a day almost Flatline uh they want to get into onmore they want to get into other areas and again Trump has said that he would support uh opening up lands Federal lands for drilling so you know it's going to take time number one for the regulatory changes to go through then
the companies have to do their technical work then they go and you know arrange to get access to the lands then of course you need the equipment brought in and of course bringing equipment up to Alaska all the way up there is not the easiest thing especially when there's not a lot of rigs in the area right now um so all of that takes time but once they do I think there's a chance not in 2025 for an increase in production maybe a little bit because the permium you know things get better on the on the Texas side uh
but it'll be for New Mexico and Gulf of offshore Gulf of Mexico and Alaska probably a 2026 27 but by the end of the decade we could see 3 million more barrels now the key is the companies won't spend that money um and it's very expensive to drill in Alaska and offshore Gulf of Mexico unless the rates of return there and the companies now are focused on return to shareholders and so they're going to decide do we use our free cash flow to buy back our stock because we think it's cheap do we pay
dividends or special dividends or do we drill and grow and the only way they're going to drill and grow is if the economics are there so if the B if Trump comes in and says okay the price of gasoline is 450 it's going to be 250 nobody's going to drill for oil because they're not going to get the economics if you know for the product to be supplied at 250 a gallon so to me um the drill baby drill can work but prices going down 50% cannot now tariffs is an interesting thing uh I think T you know
America in the beginning you know after it became a country did not have income taxes they had tariffs because they were trying to build up the industry of America same story we're hearing right now from president Trump America first we want to have our own a you know we want to do our own semiconductors we want to you know build cars here we want to build our own you know everything here uh move your factories back to the States uh don't build China don't build in New in Mexico and think you're going
to get into the United States Market we're going to put tariffs on it because you're using much low lower labor and we want to make sure that people in in America get the good paying jobs and uh and so that's where why we want these tariffs uh for us in Canada the manufacturing sector in Ontario and Quebec probably have more reason to be worried than the energy sector in Saskatchewan Alberta and BC um simply because um the Midwest refineries that take our heavy crude uh and then create
all the products that they produce including gasoline diesel tc they use Canadian heavy cruds if there's a 25% increase in that that means the price of gasoline to the consumer goes up by 25% that doesn't do what Trump wants it to do it's the reverse and so the refineries in the midwest which got him elected and Texas which is also the Gulf Coast which uses our heavy cruds they used to use more Mexican and and Venezuelan Mexico doesn't spend enough money drilling to replace it declines
and so they're not growing and of course Venezuela is is uh is is got a a government that you know should not be in power because it's an illegal government because it didn't win the election uh and of course Trump probably will put pressure on Maduro uh when you gets elected uh and uh you know that's where the price of oil could go higher there's two two courses that we're sanctions and more aggressive politics by the Trump Administration could mean higher oil prices is not lower one of
them is of course embargoing Venezuela and Venezuela um ships I got the number here of 876,00 barrels a day in the month of November the other one is Iran and Iran produced 3.32 million Barrels in November of 2024 and you know they could lose a million or two if there's an embargo and sanctions that are on a more aggressive stage uh under the Trump Administration so you remove you know one two three million barrels from the capacity out there and all of a sudden OPEC has the ability to you know non Iran OPAC has
the ability to bring on some production and that also means higher prices to attract everybody to spend money to bring on new production so uh the politic geopolitics are positive for oil the economic issues of let's say the tariffs are going to hurt countries where um they um that are sending Goods to the United States now Germany with their cars um you know China with everything in Walmart and Target uh you know that when you buy uh if those 25% T tariffs go on those economies will be weaker Canada as well Mexico as well and
so if they're weaker their usage of of of energy will go down so that's the tradeoff between um you know Venezuela Iran where you where you sanctioned them and then where you hurt them others with tariffs so to me I think the tariffs are a negotiating point you know he likes to he likes to throw uh you know mud in the you at people and then and then set get them so nervous that they sit down and negotiate and he may be really wanting them to spend more money uh you know the 2% number that they talk about for NATO
spending uh for military um and a lot of countries in Europe are not um Canada of course is not um so that could be one issue the other could be the Border you know Sentinel Crossing and and uh you know illegal immigrants coming down Canada's not the problem it's the US border with Mexico that's really the one where the people are crossing in uh but we do have problems for some that do get into Canada and then sneak into the states so we're not totally without you know the finger pointing at us but to me
it's more the drug issue where the Canadian border more porous and of course it's such a big border with not you know it's definitely not a border wall um so that's really an issue okay okay I think that really helps explain what's going on in the US we've got this major political shift happening down there I want to throw in just because Canada has come up a couple of times the question about Canada I have to imagine up here that we are getting closer to a federal election which also could change
the situation for oil and gas in the country are you watching anything there is that going to be important in 2025 yeah there's there's you know we should have a federal election because of uh you know the the NDP saying they're not going to support the the Liberals but the but the but the block um you know would probably support them because they can always get a few more goodies for Quebec so uh the remember I'm in Alberton so there's a bit of cynicism here uh but there's a G7
meeting in June of 2025 in Canon ascus which of course is you know the B Canon ascus area and so I think Trudeau wants to be on the scene as the prime minister still so I think he's going to probably try to drag it out and then the more cynical side of me says uh a lot of MPS um you know um are are are vested for their pensions in February but a lot of them aren't until early October so the cynicism in me says uh maybe they're going to want to hold off until after that all the election in October which
they're required to before the end of October and then the election is afterwards but the m end up getting their full pensions so a little sinicism there but I think a little TR to it little truth to that as well yeah yeah very very tricky what could be happening there and if we go beyond North America looking at the geopolitical S situation we still have the Russia Ukraine war continuing tensions in the Middle East ongoing as well how do you see that Weighing on oil and gas moving forward into next year what are you watching
there well um the Middle East uh you know one way you know Iran's proxies have been hurt has balah is gone as a fighting force um Syria of course you know Assad has gone and turkey really is the player now this you know calling the shots more than the US probably uh Iran is not a power anymore and then the ones that are still active proxies are who the hooes have been still sending missiles into Israel and Israel and the United States are retaliating there was an article uh this morning in the news that uh the Suez
Canal because of the attacks by the hoodies uh Egypt has lost 70% of the revenues that they normally get for the traffic going through the Suez Canal and that's a big money earner for the Egyptian and the Egyptian currency has fallen to a significant low uh because of that and their economy hurts because of that so uh that's an issue um you know we know Trump wants to have a solution with uh the Ukraine issue with Putin um again it's going to require concessions on land which Ukraine has
said they didn't want to do but it's you know reality on the ground says it's not going to change uh but I think that once we get to January 20th I think that's when we start looking at some diplomatic AC action there and I think part of it's going to be um you know the strength of you of of of Ukraine's Position will be holding land in Russia where they did that curs offensive if they still control AIT quite a bit of land then then they have a stronger bargaining position I'll trade land for land you
know kind of thing like that and then we demilitarize you know the Border um you know there's talk of maybe un u peacekeepers go between whatever the new border is between Ukraine and and Russia so there's a little bit of a buffer there uh to support Ukraine um Independence um so there's a lot of interesting issues uh we cover that almost every week in our ion energy uh so people can just go to our website ion energy.com and we cover the macro side and it's a free product like that
four-letter word free product that we do and it's really for us to to to to to send out to clients uh what's going on geopolitically mackerel for oil and then the company stuff and you the individual company research that's where our paid product is um and so uh for people who want to get more familiar with with oil and gas and you're now on that list receive you know receiving it um you can just go to ion energy.com um and uh under our subscription page and sign up and uh and this way every week you'll
probably you'll have something come in your in basket which talks about the US eia data what's going on with OPAC what's going on geopolitically uh where do I see near-term price of oil going how do was it it affects the investment market for energy stocks but then the we do not give any of the information related to specific energy stocks uh that's in that's in our P product yeah I've been I've been receiving that now for a couple of weeks at least and definitely a wealth of information there
so we'll make sure to include the link for people who would like to sign up or learn more about that I want to ask you a little bit more about what's going on with OPAC so you talked about OPAC at the beginning and how production had actually raised over a particular period of time I know that OPEC has cut its oil demand growth forecast for 2025 been delayed plans to restart the Halton production so what is going on there what key points are you watching when it comes to OPEC well the beginning of 2024
uh OPEC U expected the demand growth in 2024 to be 2 and a half million barrels but as we got through Q2 and they saw that the problems were happening with the US demand they started lowering those numbers and the most recent report shows that they're looking for an increase only of 1.5 million that's I I've been looking at 1.4 million for this year so they've been bringing their number down U as they're seeing the demand numbers weaken they next year are looking for a number I think a I think a
number was 1.4 million barrels of growth because they're seeing this sluggishness out there I think it'll be a little bit better 1.5 but the better comparisons will occur in the second half of 2025 as I'm talking about that $90 WTI price so I think people um you know should be watching what OPEC do and the monthly report is there and they can read about it in ion energy if they don't want to have to search the sources uh and we cover what they're doing uh but the there's a mix of interesting things uh
where the increase came this month was Libya was up 141,000 Nigeria was up um you saw Ren uh up 37,000 but you saw numbers like Iraq down 45,000 Venezuela down 20 so there's a mixture of of what's going on there interestingly Saudi Arabia was down 10,000 uh but there's still 8.96 million if you look at the world people need to understand this uh the US is 13.6 they're the largest producer in the world you then have Russia at 9 million barrels a day then you have uh Saudi Arabia at
8.96 then you have Canada at 5.9 people don't realize how big a producer of energy we are on the liquid side and so we are and if people start worrying about security of supp I don't want to buy from Russia I don't want to buy from OPEC or Saudi Arabia uh then they realize you know Canada is a very you know number one hopefully it's a Dependable provider of it and of course with you know the TMX pipeline going through the West Coast um and of course all the Enbridge lines and um going down
south and you know the South Pole lines going down south uh we have the ability to deliver oil down to the Gulf Coast now and that can then be shipped to wherever Europe or whatever uh but it would be there's no way we're going to get a pipeline to the east coast I think that's a dead issue but could there be an expansion on the west coast lines if there was a conservative government uh and if there was a a government in BC that was supportive um I think um you know there's a chance for more export
potential on the west coast before the end of the decade really interesting and at the beginning of the conversation you gave a really detailed look at your oil price prediction for 2025 quarter by quarter how are you seeing natural gas this coming year that's a tougher one um let me go through the a little bit Global on natural gas the highest prices for natural gas right now are in Europe because they've had cold weather um and their storage has come down quite a bit and very fast um and so it's between us5
to $17 per mcf for their ttf as they call their pricing there versus you know we you know there's differentials names for each of them in Asia the prices of natural gas are 13 to 15 Us in the United States they're 350 360 right now us and in Canada we're a buck 70 buck 80 Canadian for the Canadian domestic price so we are the lowest price around there um my for Canada cold weather helps so if we have a very cold winter prices both in Canada and the states will go higher uh but the real thing is in the second half of
2025 the LG Canada first phase comes comes on and that will take about two BCF a day that will tighten things up we have a we have produc in in what you know in Canada about 1819 BCF a day so two BCF on top of it is is pretty good and then of course during the winter we draw down the the storage so I think there's there's going to be better pricing for natural gas starting in the second half of 2025 what happens in the first half is weather related okay okay you're right that is a lot more complicated so thank
you for going through that one yeah so so if we look forward we've got all of this information about what is coming in 2025 and for investors I think they they hear this and they Wonder okay so how should I position when it comes to the companies and don't need to talk about specific names because I I would think that's what you want people to subscribe for but just in general uh any thoughts on best opportunities in 2025 yeah right now a lot of the small and mediumsized companies both oil and natural gas
companies have been are trading near their 52 we lows uh and they're doing that because of U you know people made a lot of money in in um you know in you know number one they're down because of the lower commodity price that's first but the stocks are down from where they were at the beginning of the year when we were in the $80 number uh because we're 70 something today uh and the key is that uh people who made money and book gains in you know Tesla or Nvidia or any or big Tech in Canada or even the
bank stocks in Canada did well wherever they booked gains they're going to have to pay taxes to Ottawa in April for their capital gain so what they do is they they look in their portfolio uh with their investment advisors and say look you have a loss of you know you made $20,000 gain in this Tech stock you've got a $112,000 loss today in this energy stock or material stock why don't we trigger that that will then offset the gain you made and you'll pay less capital gains tax whatever the capital
gains tax rate is because we still don't know that from the fence what it's going to be but that saves you from paying tax so between so the the problem you have is the institutional books are closed already but individuals can sell until December 30th because of the one-day settlement rule so we still have one or two days next week Monday Tuesday of next week where tax loss selling is still alive you know active and I'm hearing from talking to companies where their stock is being beaten not because
of this tax loss activity that there are that there still are Brokers telling them that they have paper that has to be sold and so that's why you're seeing you know when you look at some of the quotes they're not they're not very pretty um so that's where I think from the people who know the stories who do their homework and again I I'll put an add you know a little marketing for us uh we cover 38 companies between EMP companies Energy Service um you know royalty trust and there's Bargains right across the
board and if you read our ion energy uh you'll see that we have a holiday special on right now uh for people who want to take advantage of it and uh it it says it'll be till the end of the month but uh we'll extend it because of this interview uh through the end of Friday next week so people who want to take advantage of the you know the $100 off on the annual or 50 on the quarterly uh you know if you want to just dip your toes in you know go get the quarterly see if you like it and then switch to
the annual uh but I think people will find it very very informative oh that's a great offer thank you very much and okay so that definitely now it sounds like is the time to be looking at this and maybe sorting yourself out a little bit for 2025 just a little bit more on the company side briefly I was mentioning to you that I see our audience getting a little bit more interested in the oil and gas side right now although we focus a lot on mining are there any Geographic areas that you like for companies I think a couple of
areas that we've been getting questions about are the monney and du for formations yeah you know Canada you know people don't realize it but you know just like the permium is such a big play for the us our monney DU is a massive uh aerial extent with fabulous productive capacity and we've got names like you know turmaline is there Paramon is there Arc is there um so there's tremendous large names you know termine is a 600,000 Boe a day company cnq is in there um you know they're all you know
everybody's in there on the medium size there's a lot of companies that are in there as well um you know you you you've got uh you know names like New Vista you've got you know you you got names uh um like Birch cff you've got others that are that are there and then the the benefit is you also want to be involved in the service sector because if we're going to see uh better activity the the frackers like Tran and stepp will do well the Drillers like total IGN Precision will do well um and and then
you want to be involved um in the international side because the the size of the priz of many companies on the international size is significant and so there are companies operating in Colombia offshore Thailand um you know there's offshore Africa uh there's a lot of places to look at and when I you know I've been through a couple of cycles and maybe I'll I'll just go over this macro piece here we've really had a lot of trading markets where it was very hard for investors to make money unless you
were very Nimble and very very in touch with the sector but there are times when you have multi-year bull markets 74 to 81 was one of them the price of oil went from sub3 to 36 was the formation of OPEC that's when we found the H Bernie on on on the East Coast uh and so there was some massive upside there um and and companies in Alaska were you know were successful uh Gulf of Mexico were successful and then of course we went into a trading Market because we had 1980 81 we had you know 14% interest
rates on the log in 21% and central banks said this inflation has to be shut down and they went pushed us into a severe recession and the price of oil went from 36 down to 10 and it kind of waffled around you know war war things would drive it up a little bit but it wasn't until 1999 when China decided capitalism for the economy under a communist umbrella and China was producing about four million barrels consuming three and a half and with the door opening for capitalism their increase in consumption went to like 12
13 million Barrels in you know between 1999 and 2008 that drove the price of oil to 47 WTI and then of course we had the fiscal crisis financial crisis of 0809 which infected Global economies and the price of oil got hit again and then of course we had covid and then and then March of 2020 I think started the third cycle for my career and I think this cycle will go till the end of the decade so I think that anytime you see corrective periods like we are now these are Bargains I'm taking advantage of it
personally in our reports for to the the SEO our reports uh we disclose what we're doing we don't but we can't until we recommend the stock we can't touch it uh we have to give our our our clients five days notice first before we can buy it and if we want to say sell the clients here first and then five days right now we're on the buy side and we're taking advantage of the bargains that are out there and our clients will see that in our next January report okay very good yeah and you touched on
something that I wanted to ask you about which is I know in your newsletter you've talked about how we're in this broader energy super cycle that goes to the end of this decade or so so I think that kind of situates us are there any points that you would leave us with as as we're getting to the end here I think we covered a lot but this is I mentioned a sector that's new to me so any anything else you would highlight for investors yeah what I'm looking at is a commodity super cycle because it's been
underinvestment in it so not only is it energy oil natural gas but it's the raw materials copper nickel aluminum lithium rare Earths all of these areas are going to benefit so the other side of that you do your interviews hopefully they'll all say thank you thank you but the reality is all of the Commodities have been underinvested in for so long that we to bring on more production takes time building of infrastructure takes time uh so it's going to be a massive cycle and before this cycle is over I think we're
going to be above that 147 that we were in 2008 we'll get overheated again so we're going to go now from fiscal discipline and where you know shareholder returns and free cash flow to you know remember in the old days it would spend spend spend and grow grow grow without looking at the fiscal economics I think by the end of the decade we'll get stupid again and that'll tell you when it's the time to sell and people say to me Joseph how do you know when it's time to sell well the
key thing is some of the companies have very smart managers and owners and Mike Rose for example had you know Berkeley sold it out uh then he created du sold that to Shell I think he sold the first one to anod Darko he's got turmaline now when he says it's time to sell that will be the bell ringing for me I don't have to be smart I just have to watch the smart people okay I think that makes a lot of sense all right well this was really good I think this is so helpful looking back at 2024 forward to 2025 and
even Beyond thank you so much for for coming on to talk about what's going on in oil and gas my pleasure it's good to be with you sh really good to have you once again I'm Charlotte McLoud with investing news.com and this is Joseph shakar With the shakar Energy report thank you for watching if you like this video make sure you hit the like button and subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below [Music]
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