What if you get an overcapacity in data centers what happens to the natural gas thesis? I think royalty companies like TPL and LB is a better play here.
What happens if there are too many datacenters? Don't they get used for something? Pricing might be terrible (for the datacenter) but they don't sit there dark, do they?
I do not know but what I see is build at whatever cost. I think there are better risk/reward opportunities out there than US gas and AI. For example consumer staples are beaten up pretty badly and they are hated right now. I am looking at GIS, KHC, and CPB. I'm long BABA as a play on open source AI. Blind Squirrel mentioned in one of his interviews Uzbekistan! I am looking into this.
Yes, I've been looking at the alcohol stocks and wondering if they are like tobacco stocks 3 years ago. The dividend yields aren't 9% but the theme is similar, that alcohol consumption is in structural decline.
US nat gas probably won’t be trading at $2/mcf anymore, but the supply response even at $4/mcf happens very quickly. I don’t think it’s likely we see more than brief spikes over $6/mcf at least for the next 5-10 years.
I think one thing that might bottle neck the supply response is building more pipelines. It’s hard to do. Plus there has been some consolidation in the industry and everyone is sick of low gas prices.
Everyone is definitely sick of low prices, but the pipeline bottleneck actually lowers pricing at the wellhead for the producers since they are competing for limited space to get their gas to market.
I will say that is a place where your thesis on Expand may play out just fine. I just think that until we see an actual indication that supply can't just keep increasing steadily, price spikes will be short-lived.
If you look at average production per day in the US, the chart has been a pretty steady up and to the right rise from 63BCF in 2006 to 134BCF currently.
This isn't to say that I'm not a fan of NatGas. Peyto has been one of my best investments having held since 2019.
Erik - I love how you always think two steps ahead. North American nat gas might be the cheapest energy molecule in the world. And everyone has given up on it ever moving higher. Data centers going off grid and plugging directly into nat gas is likely the bridge until nuclear comes on line.
The way natgas and producers trade tells me there will not be such bottleneck in gas itself and/or that supply response will be big and fast when and if prices rise!
I have been tempted many times by natgas with the AI trade but I'll leave this market to the energy pros. They don't seem to be excited.
Erik’s on a roll! Prefer this to LNG.
LNG is the sleep at night grind it out over years play. This idea is more hated and has more potential upside.
You remind me of re-running US gas balances out 3 years now that indeed one of the extra big LNG capacity is in jeopardy.
At default of focusing on challenges, trading is hard and especially hard to be consistent on.
Risk management capability can be a good thing as long as executives have a firm hand on risk taking.
I have seen many bad stories in all energy compartments over 20 years.
Don’t let traders lose would be my main advice to the CEO!
Thank you Fred. We should put you in charge.
Ahah, too kind.
Natty/ copper. Probably the final boss bottlenecks. I have Antero and Glen, but a basket is probably simpler.
No stick with the single names. You will know the companies better and have higher conviction during the wobbles.
Worse (or better) I'll just keep BTFDing!
What if you get an overcapacity in data centers what happens to the natural gas thesis? I think royalty companies like TPL and LB is a better play here.
What happens if there are too many datacenters? Don't they get used for something? Pricing might be terrible (for the datacenter) but they don't sit there dark, do they?
I do not know but what I see is build at whatever cost. I think there are better risk/reward opportunities out there than US gas and AI. For example consumer staples are beaten up pretty badly and they are hated right now. I am looking at GIS, KHC, and CPB. I'm long BABA as a play on open source AI. Blind Squirrel mentioned in one of his interviews Uzbekistan! I am looking into this.
Yes, I've been looking at the alcohol stocks and wondering if they are like tobacco stocks 3 years ago. The dividend yields aren't 9% but the theme is similar, that alcohol consumption is in structural decline.
💯
US nat gas probably won’t be trading at $2/mcf anymore, but the supply response even at $4/mcf happens very quickly. I don’t think it’s likely we see more than brief spikes over $6/mcf at least for the next 5-10 years.
I think one thing that might bottle neck the supply response is building more pipelines. It’s hard to do. Plus there has been some consolidation in the industry and everyone is sick of low gas prices.
Everyone is definitely sick of low prices, but the pipeline bottleneck actually lowers pricing at the wellhead for the producers since they are competing for limited space to get their gas to market.
I will say that is a place where your thesis on Expand may play out just fine. I just think that until we see an actual indication that supply can't just keep increasing steadily, price spikes will be short-lived.
If you look at average production per day in the US, the chart has been a pretty steady up and to the right rise from 63BCF in 2006 to 134BCF currently.
This isn't to say that I'm not a fan of NatGas. Peyto has been one of my best investments having held since 2019.
Great job on Peyto!!!!
Erik - I love how you always think two steps ahead. North American nat gas might be the cheapest energy molecule in the world. And everyone has given up on it ever moving higher. Data centers going off grid and plugging directly into nat gas is likely the bridge until nuclear comes on line.
Yes. It is the cheapest energy in the world right now.
The way natgas and producers trade tells me there will not be such bottleneck in gas itself and/or that supply response will be big and fast when and if prices rise!
I have been tempted many times by natgas with the AI trade but I'll leave this market to the energy pros. They don't seem to be excited.