Eric Nuttall

Highlights from my testimony to the House of Commons’ Standing Committee on Natural Resources - opening statement

Join me at 12ET today on @marketcall. I'll explain why oil stocks represent the biggest opportunity since the COVID lows of April 2020, why we are soon approaching the tipping point for oil, and why we see meaningful upside ahead.

Ninepoint Energy Strategies Weekly Update: what does a MOU between Alberta and the Federal Government really mean, what did we learn from 2 days in Houston, and why the oil market is nearing its tipping point:

Goldman saying the oil market has been in a net deficit of 7-8MM Bbl/d since March 1st. JP Morgan said we can only lose 800MM Bbls before the global refining system gets pushed into operational stress levels. As of April 23rd 520MM Bbls were left. That puts "D-Day" ~ July 1st.

Helima Croft: "we are very skeptical of a June grand reopening or even that maritime traffic will return to February 27 levels for the foreseeable future." Even with a July reopening, we now think the world will forfeit >1.8BN barrels of oil, a staggering sum that the world is completely apathetic to. Safety buffers (SPR, inventory surplus, ships in transit) have now been exhausted and demand is set to seasonally strengthen. We expect regional product shortages to soon begin to manifest leading to a reality check in the coming weeks. The oil price will have to act as the balancing mechanism requiring a significantly higher price, and given the to-date effective WH jawboning, will now last longer than it would have without the direct market intervention. Oil equities are discounting $70WTI or lower and we think the 2027 WTI strip of $75 is too low. Complacency = opportunity.

With details of the MOU (aka. The Grand Ransom) between Alberta and the Federal Government seemingly imminent, I would like to offer the following: 🛢️a 1MM Bbl/d pipeline to the West Coast is a "pipe dream" if not funded by taxpayers, and the likelihood of getting firm volume commitments for that scale is highly unlikely 🛢️Pathways, a ~$30BN project, was conceived in a different world than now and should be scrapped immediately 🛢️Carbon taxes make the industry at the margin less competitive and encourages investment elsewhere - the oilsands are 0.1% of global emissions - we are irrelevant 🛢️The industry does not need to be "future proofed" nor need a "social license" - the world is desperate for more energy and not a single purchaser of oil in the world asks nor cares about a barrel's carbon profile 🛢️With expansion on existing pipelines plus the Prairie Connector/Bridger project (which I'm now incrementally more confident will proceed) Canada will add ~1.6MM Bbl/d of incremental capacity, enough to get us through to the mid 2030's

Most Wall Street analysts are afraid to make a bold call. Jan Stuart of Piper Sandler is not one of them.

Biggest takeaway from meetings in Houston so far: the potential for productive capacity damage is very real yet totally ignored. Major oilfield service co: "if 19 out of 20 wells get turned back on and just go, that's awesome." A modest 5% reasonable loss = 700,000Bbl/d impact.

The generalist believes the Strait will soon open, that oil will fall back to $60WTI, and that we go back to normal. We believe in imminent regional shortages, a price spike to reduce near-term demand, and a higher enduring price floor of ~$80WTI. Uncertainty = opportunity.

Not a single purchaser of crude oil in the world asks nor cares about the carbon footprint of the barrel, instead is 100% focused on accessibility, affordability, and reliability. I do not see how we overcome this massive misunderstanding which underpins all ongoing negotiations.

Apparently not...until they are forced to.

You know things are bad when even Fatih Birol of the IEA is saying that Canada needs to get its act together and start developing more oil projects!

Ninepoint Energy Strategies Weekly Update: "the investment case is not that oil is going to spike to $200/bbl, it is that many oil stocks are discounting oil in the $60's and we think the new floor is $80WTI offering a meaningful rerate potential":

The 2nd largest US E&P is trading at a 17% free cashflow yield at $80WTI and $3.75NYMEX. Where there is uncertainty, there is opportunity.

$80-$100 Oil Floor: "We think a $70-$80 base floor is reasonable now" "Plus you need to add on a political risk premium of $10-$20" "So we think $80-$100 for the next couple of years is pretty reasonable" "It's gonna take a lot of time to repair the damage that is being done in real time" •Ninepoint PM @ericnuttall

On Monday I joined one of my favourite oil analysts, Rory Johnston, on his podcast to discuss the war in Iran and what "the day after" might look like for energy stocks: open.spotify.com/episode/16Nrt4…

Last week I sat down with Trevor Rose for an ~ hour long discussion on all things energy: youtube.com/watch?v=FvqJK0…

The challenge with directly jawboning down the oil market via tweet (or indirectly via "unnamed sources") is that the necessary price signal to reduce demand is not being sent. This means the spike that we still see coming is going to be higher and ultimately more painful.

Global onshore inventories have been falling by >40MM barrels per week for the past 2 weeks as the in-transit safety buffer has been exhausted. Ignoring 5 "imminent peace deal to open up the Strait" leaks for 19 days, this appears to be the ~ likely path forward. Will it matter?

Jon McKenzie, CEO of Cenovus, came out swinging on their Q1 conference call today. Great to see CEO's becoming more vocal about our squandered opportunity! To summarize: no other oil producing country is doing this to themselves...time for Canada to wake up!

The "battle for the barrel"™️continues with tank bottoms in certain geographies to be reached in the next few months, imminent peace treaty/MOU or not...the damage has already been done.