By the end of 2020, the global oil and gas industry looked to be facing major challenges. The industry had dramatically under-invested in growing production. There was enormous balance sheet leverage, the track record of returns over the prior five to seven years was relatively poor, and debt reduction and the payment of dividends was prioritised over capex and growth – the industry was spending at maintenance-levels of capex only.
This came while our analysis, which includes thorough industry engagement, showed demand for fossil fuels may not peak until the end of the decade, despite much needed and important moves towards decarbonisation by many of the largest oil and gas companies.
So, without the production to meet demand and global energy markets on such fragile footing a significant price cycle could be expected
On top of that, natural gas is an important stepping-stone, or transition fuel, in the path to a decarbonised economy.
These are some of the reasons why Antipodes’ global portfolios had been overweight energy leading into the current market volatility.
With a price cycle underway as economies emerged from COVID-19 lockdowns, the conflict in the Ukraine has added fuel to the fire. Sanctions on Russia, and Russia’s importance in the global energy system, has seen the fragility in energy and commodity markets laid bare.
Building longer-term exposure to energy and commodities
In our latest podcast episode, I was joined by Antipodes’ Portfolio Manager of Hardware, Industrials and Commodities to discuss energy and commodity stocks, now and into the future.
We discuss why Antipodes has been increasing exposure to energy and commodities, the implications of sanctions on Russia and the impact to the Ukraine, along with the longer-term outlook for the sectors.
In part two, hear a discussion about some of Antipodes’ best investment ideas for exposure to energy and commodity markets – resilient businesses that can take profitable market share in today’s uncertain climate, as well as on a longer-term basis.
Part 1 (1:00)
- Why Antipodes’ global portfolios have been overweight energy.
- The impacts of the war in Ukraine on the energy and commodity sectors.
- Decarbonisation and the longer-term outlook for energy and commodities.
Part 2 (14:30)
- Technip Energies (EPA: TE) & Siemens Energy (ETR: ENR).
- Nutrien (TSE: NTR).
- Exposure to gold stocks – Newcrest Mining (ASX: NCM) & Barrick Gold (NYSE: GOLD).
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