Expand Energy (EXE)

Got stopped out last summer. Almost his entire energy exposure is made up of Canadian long-life assets, with a tilt toward oil.

NA's largest natural gas producer, roughly 6% of total production. Largely in Texas (Haynesville), also where a lot of the data centres are being built (Marcellus). Trades at only 4.8x cashflow at $4 gas, meaningful discount to US and Canadian peers. Trades at 13% free cashflow yield at $4 gas. 

So the base case is $4. If the stars all align and the cold weather persists, there will be a shortfall in gas (and the price will get bid up). If gas gets closer to $5, FCF yield goes up to ~22-23%. Easily 20 years of stay-flat inventory. High-quality management. Yield is 2.10%.

(Note the short timeframe.)  His portfolios hold 20-30 companies, the best they can find. If they see something better to do, they try to trade up in quality. They grew a bit more cautious on natural gas, while other sectors have continued to do well. Still a good company, but they moved on to better opportunities.

Largest natural gas producer in NA, at 6% of total volumes. Production is closest to areas of demand growth, which gets them a premium price. At least 20 years of stay-flat inventory. Energy is only about 2.3% of the S&P 500, which offers a huge opportunity in mispriced stocks. Has 11-12% FCF yield at $4 nat gas (marginal cost of supply).

A continuation of even normal weather could make nat gas head for $5, and FCF of this name would almost double to ~21%.

Largest producer of natural gas in the US/NA. At times of low nat gas prices, US producers curtail production and stop drilling. We haven't figured this out yet in Canada. So the US is a better nat gas market.

Assets are closer to areas of demand growth, such as AI data centres, so they get a better realized price. Well over 20 years of inventory. Buys back stock. An extension of the bullish thesis on AI. Yield is 1.96%.

There are few US players in natural gas (he's very bullish nat gas), given data centre demand for energy. They have 20 years of stay-flat inventory in basins that are close to Canada's new west coast LNG facility. He expects nat gas to trade at $4-5, while others are more bullish.

Merger between Chesapeake and Southwestern. We're going to need more energy and power production in the US and around the world, and natural gas will be the first stop to do that. Intention in the US to export more LNG. Largest supplier in the Gulf Coast. 

Does have debt to pay down, so not sure how that will impact dividend growth. There is economic risk, but as things normalize, natural gas is an area you want to focus on. Yield is 2.20%.