There are very few business models that work in the energy patch right now—especially upstream, where the producers are. The industry produces too much oil globally and too much natural gas in North America—that oversupply has driven prices into the ground.
Even in the downstream markets—where the refineries are—they have produced too much gasoline and distillates and sent pricing through the floor. Their business model still works, but crack spreads—the difference in price between 3 barrels of oil and the products they produce—are rapidly getting thin. Crack spreads = profitability.
I want to own a company whose business model works at these energy prices. I found one, and I’ve made it my largest position. I expect record revenues and record cash flow this year—and next. Over the last ten years they have built up the business from scratch—and are so profitable, they have NO debt and pay a dividend. I think 2017 revenue will be over $1 billion—and management grew it from the ground floor.
That’s clearly a business model that works. I mortgaged my house to buy this stock. I put it in my son’s tax free savings account.
And every month, I get to pull out a big chunk of change—just over $3500 of passive income. It’s like free money!
Oil and Gas Investments Bulletin