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January 2025 Capitalist Times Live Chat
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AvatarRoger Conrad
1:50
Hello everyone and thank you for joining us today for our Capitalist Times live webchat for January.
 
As always, there is no audio. Just type in your questions and we’ll get to them as soon as we can comprehensively and concisely. This chat will last as long as there are questions in the queue to answer. We will send you a link to the transcript of the complete Q&A tomorrow morning. And the transcript will also be posted thereafter on our websites.
 
As usual, we’ll start with questions we received from emails prior to the chat.
 
 
Q. Roger, I am sure you will get many questions and comments regarding NextEra Energy Partners. I am puzzled why Next Era Energy’s management would think anyone would want to invest in this vehicle alongside them in the future. Their reputation going forward of, “ heads I win and tails you lose”, would not exactly inspire confidence.
 

Separately, might the impending change in Canada’s government breathe new life into beleaguered BCE, or are they hopeless stuck with one arm tied behind their back?

Thanks so much for your counsel.
Willy
 
Hi Willy
 
I’m going start with BCE Inc (TSX: BCE, NYSE: BCE). The Canadian telecom will announce its Q4 earnings and update 2025 guidance on February 6. I’m expecting to see largely reaffirmation of this year’s capital plan, including holding the dividend at the current rate. And I look for operating numbers to be in the guidance range, which has been negatively affected by unfavorable Canadian regulation that favors new entrants.
 
Assuming that’s what happens, I think we can look forward to some very favorable changes on the regulatory front with the resignation of the previous Canadian PM. That should help company earnings. And I think we’ll see a recovery in the Canadian dollar, which will lift the USD value of the share price and dividend.
 
1:51
 
If for some reason, BCE reports something less favorable, I may look at a swap to another global telecom. But at this point, my intent is to stick the BCE, collect the high dividend and bet on recovery.
 
Second, I hope you were able to see the Alert I sent to Conrad’s Uitlity Investor readers yesterday—including extensive comments on the NextEra Energy Partners (NYSE: NEP)/XPLR Infrastructure situation.
 
If not, here they are again. Sherry also sent them to Energy and Income Advisor readers this morning as a “Trending Topic.” We have not covered power stocks like NEP/XPLR in EIA for some years. But the comments relating to the DeepSeek selloff’s impact on natural gas stocks are certainly of interest. And we will be exploring them in depth in the upcoming issue of EIA, which will be out early next week.
 
Here again is my analysis on the post-strategic review XPLR:
 
“Last week, I shared some thoughts on potential outcomes for the Partners/XPLR strategic review. And as it turned out, management did indeed
announce a plan to aggressively pay off the remaining 5 CEPFs—convertible equity preferred financing—with parent NextEra Energy maintaining control.
 
What I didn’t anticipate was the plan would be structured to accomplish the CEPF pay off—as well as fund capital spending opportunities to repower wind facilities and install energy storage—without issuing equity. And that basically means not paying a dividend probably at least through the end of 2027.
 
That’s admittedly my projection, not NextEra’s. Instead, it’s based on a statement by new CEO Alan Liu during the earnings call: Over the next 2 to 3 years” the company will “use a combination of its available cash flow and some balance sheet capacity to invest in the buyout of selected CEPFs at attractive returns and to advance our organic growth opportunities.”
 
It’s fair to say the initial reaction from investors to Partners/XPLR’s recovery plan has been skeptical. That’s certainly understandable. Since October of 2023, NextEra management has progressively
cut guidance for the unit. And—with 20-20 hindsight—it’s clear they’ve had a progressively narrowing range of options to pay off the CEPFs without triggering extreme dilution from issuing new stock or overloading the balance sheet with new debt.
 
The solar, wind and solar energy assets have run well, producing reliable cash flow under contracts with an average life of 13 years. The average credit rating of its 80 customers is BBB, minimizing credit risk. And dsuring the guidance call, management noted 10 gigawatts of potential transmission-accessible battery collocation at its onshore wind facilities—which are not at risk to Trump administration policies. If energized, that would basically double XPLR’s total generating capacity.
 
The company has $2.2 billion of debt at the “holding company” level coming due by the end of 2027, backed by $3.8 billion in interest rate hedges. And S&P (BB), Fitch (BB) and Moody’s (Ba1) have all affirmed its credit ratings, which should boost planned refinancing efforts.
1:52
Management plans to spend $945 million this year to pay off CEPFs, followed by $150 million in 2026 and $465 million in 2027. It’s also in “discussions” to restructure the $1 billion CEPF buyout payment due 2030 into four smaller installments through 2034.
 
The 2025 CEPF payment will be partially funded by asset sales, including the Meade Pipeline business. After that, the primary fuel is expected recurring free cash flow of $600 to $700 million “before growth investments.” That money will be allocated between investments and returning cash to shareholders, including later in the plan stock buybacks and “potentially the re-initiation of a distribution.” And executing this plan will be an all-new management team, “all of whom are and will continue to be employees of NextEra Energy.”
 
I have several observations. First, parent NextEra does not want to relinquish its ownership interest of the 10 GW of generation assets held by Partners/XPLR. It did not want to invite in a financial partner from a position of
weakness. And it did not want to give up on this affiliate being a source of funding, even if the purchases must be funded by operating cash flow.
 
Second, Partners/XPLR assets continue to run well. The company’s 2024 EBITDA was up 4.5 percent from last year and well within the guidance range at $1.959 billion. That’s despite wind resource at 98 percent of normal fleetwide. And management affirmed the 1.6 GW repowering program is on track for completion by mid-2026.
 
That’s all very promising. And it’s enough for me not to reflexively sell following the dividend cut, with the stock down more than 50 percent decline over the last 12 months and selling for barely 30 cents per dollar of consistently solid book value.
 
On the other hand, XPLR isn’t going to be paying a dividend for at least 2-3 years, even if it executes its plan flawlessly. I see no reason right now why it won’t ultimately succeed—now that cost of raising equity capital is no longer in the equation. But by suspending dividends entirely, many
investors are going to consider management’s actions as a betrayal of trust.
 
As we’ve seen with Kinder Morgan since it cut dividends in late 2015, once broken trust can take a very long time to repair. And that will probably limit gains in the stock even after value hunters replace income investors as owners. There’s also the possibility NextEra will eventually lose patience and fully privatize XPLR, as it’s still the major shareholder. But I’ll be inclined to move on from this one once we see some rebound.”
 
In brief, I think XPLR shares are worth considerably more than the less than 30 cents per dollar of book value they do now. But as I wrote there, the stock will not pay a dividend for at least the next couple years as they pay off their CEPFs. And I don’t expect to see much upside action until their recovery plan is considerably further along, as the company has likely alienated its investor base.
 
 
Q. Hi Roger:
Deutsche Telekom (Germany; DTE, OTC: DTEGY) has really shot up lately and is at its highest price in 5 years. It's getting close to your highest entry price. I'm tempted to sell it but wanted to ask if you think it has much more upside Regards, Kerry
 
A. Hi Kerry
 
DTEGY is basically a cheaper way to own T-Mobile US—and that’s been the basis of my recommendation, though the European operations have been solid of late as well. TMUS is an investor favorite and though the business is performing well the stock is quite expensive now. DTEGY is less so. I think there is more upside from here for it.
 
 
Q. In a recent Utility Investor email you mentioned the Wood MacKenzie projections being based on LNG exports alone. I have heard that the timeline for energy expansion is LNG exports, then Nat Gas generation, and the nuclear generation given the time to build out the infrastructures. Can you expound on this and can you name the companies you recommend that would be more focused on LNG exports vice data centers
1:53
data centers vice generation. Also, please discuss how the export facilities in Louisiana vice Texas affect your thinking. Thanks—Karl E.
 
A. Hi Karl
 
My point in that post was that natural gas is in a growth phase. And that will be the case even in the unlikely event expected demand growth for generating electricity doesn’t materialize. That’s bullish for these stocks, especially after the sell off on the DeepSeek news.
 
Some names we recommend with a particular focus on feeding LNG exports are Kinder Morgan (the leading pipeline company connecting LNG facilities, Energy Transfer (pipelines plus ownership of the Lake Charles LNG facility) and Cheniere (LNG facilities). I also like TC Energy and Pembina as plays on Canadian LNG.
 
 
Q. Hi Roger. If no one else has already asked, can you please update us on NEP/NEE, TAC and HASI? Regards—Kerry T.
 
A. Hi Kerry. I’ve covered NEP pretty extensively already in this chat.
My only comment on NextEra Energy (NYSE: NEE) itself is basically that business is booming both at the Florida utility and the unregulated NextEra Resources unit, which is the only US wind and solar company on the scale of China’s giants. They had pretty strong earnings, which I highlighted in an Alert to CUI readers last week. And this week they again affirmed their long-term earnings guidance ranges.
 
 
Transalta took a hit along with other natural gas-focused power producers this week, as investors worry projections for stronger electricity demand won’t materialize for artificial intelligence. And shares have also been weakened by a soft Canadian dollar. But the end of the day, this is a company with earnings strongly underpinned by contracts. And I expect a pretty smooth report on Feb 20.
 
I’m confident we’ll see the same thing at HA Sustainable Infrastructure Capital when they report Feb 13. Shares have weakened a bit since the election, as some have worried it will see less business under the Trump
Administration. Actual orders, however, continue to expand and the company has put capital resources in place ahead of earnings. I think we’ll see a lot of these stocks move as it become clear they’re not leveraged to IRA tax credits—which I think will survive in some form as they enjoy considerable support from Republicans in Congress.
 
 
Q. Good afternoon, Roger,
 
A belated Happy New Year to you, hope you and yours are healthy, well and safe. We've enjoyed your safe advice for close to 19 years now, thank you very much. 
 
I know your proclivity re individual stocks vs funds, and nearly all my holdings are individual rather than funds, REITs or ETFs, but I have a question re consumer stocks. I recall 'back in the day' you recommended B&G Foods, which I held for a time,
1:54
and I might be having a "senior moment", but I wonder if you cover anything in this sector currently? I'm looking at KO, PG, COST, et al, but I also wonder if an ETF like XLP or similar might be a viable choice in this field.  
 
Thank you, as always, for your comments and thoughts.
 
Chuck Blitstein 
 
A. Hi Chuck
 
Happy New Year to you! This one is already getting interesting.
 
XLP will give you exposure to consumer staples, which tend to be pretty steady performers though they have lagged the S&P 500 along with most everything else the past couple years. I have recommended a few stocks in this group the past few years, notably Kraft Heinz (NYSE: KHC) in the food products sector. I consider that stock pretty deep value at this point--with investors really focused on inflation's impact at the bottom line. And that remains a concern for all consumer staples--particularly with the unpredictability of tariffs' impact on supply chains. KHC for example was recently singled out erroneously by
Canada's PM Trudeau as not making its Heinz Ketchup sold in Canada in Canada--and therefore as a possibility for countervailing tariffs. That doesn't seem likely. But it is a reason why this sector is selling at discounted valuations.
 
 
Q. I can’t seem to find EQT (Equitrans?) in the Aggressive or Conservative Portfolios, or in the Utility Report Card. What are your thoughts on it? Thanks—Larry W.
 
A. Hi Larry
 
Equitrans has been fully acquired by its former parent EQT Corp (NYSE: EQT). We track the company in Energy and Income Advisor, rather than Conrad's Utility Investor--as it's primarily a producer of natural gas now with transmission assets. It's a strong buy at a price of 40 or lower, as well as
1:55
a portfolio holding. It's a very low cost producer, with costs going lower thanks to acquiring the midstream assets serving its wells.
 
 
Q. This company came available this week at $25 ... Your opinion appreciated! Thanks—Monrie J.
 
A. Hi Monroe
 
I think Venture Global's launch didn't exactly go as the company had hoped--being a long-time developer of LNG export facilities (founded in 2013) and given the new administration's enthusiasm for permitting new facilities. The founders are richer. But the company wound up selling -40% less stock than it wanted to and the price has slumped since. 
 
The company does have real earnings. And while they're going to have to bid for new business, they have proven themselves as a competitor. But this is at its core a pretty slow moving business. Facilities take years to be sited, permitted, funded, procured for, constructed and commissioned--and no one
develops one until the capacity is at least mostly if not 100% contracted. Builders like Venture also generally take on the risk of cost overruns due to delays, higher commodity prices, labor costs etc. So while this has been a successful company, growth is likely to be lumpy over time. And that may have curbed the enthusiasm of buyers.
 
Again, this is a substantial company that makes money. And we intend to give it a hard look, particularly after the disappointing IPO. 
 
 
Q. Roger,
 
Long a time follower, my father started following you decades ago when you had the Utility forecaster and he bought drip recommendations because at that time going through a broker was so expensive. 
 
I bought Vistra (inside my IRA) in 2021 at $20.08 (as you recommended) and last year I sold half when you said to take some profits.(was about to tell another half at $198 before the big decline on 1/27).  
 
 
I placed the Vistra sell money into three dream price stocks one of which was AGL Energy Ltd ADR at $7.02. I'm in the US and getting hit with a 30% foreign tax on my dividends. Given the 30% tax is this still worth holding?
 
So appreciate you and all you have done for my family! –Tim W.
 
Hi Tim
 
Thanks for those kind words.
 
You should only be taxed 15% on dividends from Australian stocks. And you should also be able to recover what is withheld when you file your US taxes as a credit. Of course, if you hold AGLXY in the IRA as you did the VST, recovery may be more difficult. And it may be better to look to a US stock, of which there are several with equivalent yields.
 
I do like AGL Energy as a long-term play on Australia, as it is the country's leading electricity generator and energy retailer. I think the dividend declared next month will be meaningfully higher than it was a year ago, as the power market remains strong and the company continues to invest in cash generating assets, particularly energy
storage. And I think the Australian dollar is very likely hitting a multi-year low here at less than 63 US cents--which would have a direct positive impact on the USD value of the share price and the dividends paid.
 
The action in Vistra shares continues to be pretty unmoored from value, though as I’ve said many times management has consistently executed strategy. We still have a position in the service and I do personally as well. But I’m going to be tempted to take a bigger chunk off the table on one of these hedge fund-fueled rallies.
 
 
Q. OK. I should qualify this -- US energy stocks, of course, do benefit from a growing Indian economy. Happy New Year, Folks. Two questions. First, ARLP has had quite a run -- more than 30% in a year, and about 13% since the beginning of this year (at the time of this writing). You once considered this coal company to be mostly a dividend play. Do you think it might be time to take some partial profits or do you have a higher price in mind? 
 
1:56
 
 My second question deals with India. None of the advisories I currently receive from you seem to deal much with the Indian market. You recommend positions leveraged directly or indirectly to China, Canada, South America, England, Australia, Europe -- but I don't see India exposure. Is there a reason for this? Or am I overlooking something? How do you feel about an India fund such as IFN? Many thanx, Jeffrey H.
 
A. Hi Jeffrey
 
Those are really good questions. 
 
I have been thinking of taking a profit on ARLP for a while. What's stopped me has been that we have a very bullish outlook for natural gas. And coal prices tend to follow gas, which should improve the coverage ratio for ARLP this year. And while I don't see a lot of upside for the stock from here, the 10% dividend is attractive so long as the company can hold it. So I'm sticking for
now, though with an eye on gas prices.
 
The challenge with India is not the country's prospects, which are considerable. It's basically the legacy of Congress I that continues to keep the country somewhat closed financially at least to individuals. That's a major contrast to China, for example, which has been eager to attract foreign capital. And I think it's held India back.
 
As you point out, it is possible to participate through funds and The India Fund (IFN) is probably as good as any. But other than owning "investable" Indian stocks, it's hard to know what they own at any one time--so what you're really getting is just a fund that will benefit when investors get excited about India. I do have two companies with substantial exposure to the country in the power sector--Brookfield Renewable (NYSE: BEP/BEPC) and CLP Holdings (HK: 2, OTC: CLPHY)--and both are doing quite well there.
 
 
Q. Hi Roger,
Are you at all concerned about Alexandria (ARE) since President Trump has frozen or cancelled activities at the National Institutes of Health or do Alexandria's tenants even rely on federal funding? Thank you.—Teresa P.
 
A. Hi Teresa
 
Given how many executive orders have been signed in so many areas--and particularly those concerning federal grants and funding--that's a fair question about Alexandria REIT. The company's rents, occupancy and collection rates, however, will not be affected unless tenants are forced to default on leases. 
 
Not all of Alexandria's tenants are investment grade rated. And if the federal government doesn't resume making payments for scientific research in a timely way, some smaller biotech firms especially could feel a strain. 
 
The company released its Q4 results this week. Numbers were pretty much on target, though the company reported it's been hit by California wildfires in Q1 so far. FFO improved 5.6%, EBITDA by 11.6% and revenue 8%. Collections were 99.9%, EBITDA margins
high at 72%. And management sounded hopeful about the incoming Trump Administration, including likely repeal of the medical excise tax in the IRA. The development pipeline is apparently 90% pre-leased, and leasing activity appears to remain robust with 1.3 mil square feet in Q4 the fourth consecutive quarter with 1 mil plus volumes. Leasing was up 17% over 2023.
 
Bottom line, I think Alexandria REIT is still trading at a very depressed price despite still strong operating performance. And again, unless the federal government really becomes an unreliable partner for the biotech sector—they rolled back the funding freeze I see—I don't see what's happening now at the Trump administration as a major threat to this company.
 
 
Q. What is your take on Dominion Energy (NYSE: D)
1:57
concerning the Trump Administration’s hostility to offshore wind projects? –Lee O.
 
A. Hi Lee
 
The ongoing 2.6 GW Coastal Virginia Offshore Wind project is fully permitted. It’s also supported by VA Governor Youngkin and the state AG, both Republicans. Federal action to halt construction would be unprecedented and invite court challenges—not to mention severely disrupt electricity supply for several years in the region, and by extension power supply for where the majority of US data centers operate. 
 
That’s probably why we didn’t see anything in any of the executive orders about CVOW. Dominion will probably have to wait a while to develop the adjoining parcel it purchased off the North Carolina coast. But that was almost certainly their intent anyway. And they didn’t pay much for it in any case.
I expect to hear more Feb 12 when D reports Q4 results. But at this point, CVOW looks like a go—especially after the recent reduction in cost.
 
As for offshore wind in general, there was a massive slowdown in projects long before the Trump Administration took office. All offshore wind is on federal lands. So projects that haven’t yet been permitted aren’t likely to be. But as any power sector executive will tell you, there are no bad power sources just bad projects. And Dominion’s CVOW looks like a model for future development.
 
Q. Hi Roger,

Interested in your thoughts on BCE. Their 3rd quarter report (page 9)
commits to maintaining dividend of $3.99/share (Canadian?) for the rest
of the year, with a current yield around 12%. They also say that they
will pause dividend growth until payout and leverage come into line with
target ranges. 
12% is certainly attractive, seemingly with little
downside -- is there a catch to this picture? Also would like your
thoughts on Canadian equities in general - banks, REITs in particular.

Different subject: today's REIT sheet spreadsheet confuses me - the
"indicated yield" doesn't look right for some entries. E.g. Realty
Income's yield is more like 6%, not 1.95.

Appreciate all your advice, keep up the good work.—Gil E.
 
A. Hi Gil
 
Thanks for those kind words. 
 
1:58
To answer your questions, BCE will release earnings February 6 and plans to update guidance at that time. I'm not expecting any changes in the proposed dividend policy as it attempts to close the fiber acquisition in the US this year. Canada has been a tough market for telecoms the past couple years under the Trudeau administration--which has consistently favored new entrants at the cost of reduced system investment. A change in government could change that in a hurry later this year. But in any case, my view is BCE has circled the wagons well. And stable sales and cash flows should enable free cash flow to fully cover the dividend and planned debt reduction. If I hear something different in results, I may move on from this company. But at this point, I plan to stick. And it's also noteworthy the Canadian dollar is now very cheap on an historical basis at less than 70 US cents--so a rebound could have a very beneficial impact for BCE.
 
Thanks for the REIT Sheet comments--trying to do something a little
and have some kinks to iron out.
 
 
Q. The USA needs an upgraded power grid to support the upcoming AI Data Centers. What corps will benefit from the construction/ installation of this new upgraded Grid ??—Thanks Bob W.
 
 A. Hi Bob
 
Good question. There are only a few companies left that do this kind of infrastructure work--as there haven't been a large number of orders for decades. The main problem with investing in them is the order flow is very lumpy, competition keeps a lid
on bids and contracts typically put the risk of cost overruns on them.
 
That's why I generally prefer companies that focus on the IT and data aspects of infrastructure building like Itron Inc (NSDQ: ITRI)--though I'd like to see that stock priced under $100 before really recommending it. I think GE Vernova is interesting, though I'd like to see a price under $300. They have their hands in literally everything to do with electricity.
 
 
Q. As a subscriber to both services I am wondering how the Trump tariffs will affect the Canadian oil and gas industries and their valuations. Also how will this effect Mexican and other foreign Metals producers?—John A.
 
A. Hi John
 
Thanks for writing.
1:59
At this point, it's hard to say what tariffs will be imposed, on who, on what products and how much. And we'll just have to wait and see what happens. What we do know is Canadian heavy oil and Mexican metals are used by industry and there are no viable replacements anywhere in the world--let alone the US. The US government will collect the tax and American businesses and consumers will pay the higher prices.
 
 
Q. Roger:
Is “the company won't be able to use tax credits on US renewable energy projects” also a possible reason for BEP getting hammered the last month? Or different issues? Thanks—Barry J.
 
 
A. Hi Barry
 
I think all companies identified with wind and solar
development have been hit by worries the new administration will roll back tax credits. And in Brookfield’s case, there’s the added concern policies will hurt developing economies where the company is investing—these are basically the same headwinds affecting the stock over the past year. And at a dividend of almost 7% the expectations are very low to say the least. And some people are expecting them to reduce earnings guidance when they release Q4 numbers tomorrow. But I think we’ll see a pretty problem free result—and whether you buy BEP or BEPC (the C-Corp shares), I look for strong returns the next 2-3 years—just as we saw during the first Trump administration by the way.
 
 
Q. Thanks for all your work to make sense of investing for us amateurs. I jus read an article in the Economist that electricity infrastructure is booming around the world. Hitachi, Siemens Energy and Schneider Electric
were mentioned as big winners. What are your thoughts on investing in this infrastructure? Thanks!—Larry W.
 
 
A. Hi Larry 
 
It's been a long time since the EPCs (engineering, procurement and construction) companies were market leaders. The main reason is it's been so difficult to win contracts for major new projects, and then to execute them cost effectively against volatility in labor costs, commodity prices, regulation etc. 
 
I think these are still big challenges. And the result is most projects you see are smaller and more incremental, rather than massive like for example nuclear power plants. And because of that, there are fewer barriers to entry and it's more difficult for the Siemens of the world to dominate. Of the companies I track involved with electric infrastructure,
I think Itron (NSDQ: ITRI) is fantastically positioned. It's been tough to buy at a good valuation--and it looks a little pricey to me. But its focus on integrating data science including AI is precisely what utilities need to run more efficient and reliable grids. And this kind of investment can achieve the same result of improved operations without a massive and sustained capital outlay. I would definitely be a buyer on a dip to 100 or lower.
 
As for new generation and other infrastructure to meet AI demand, companies have basically been focused on a combination of solar and natural gas the past few years. The primary reason is it can be built along with energy storage in 12-18 months--versus several years for anything else and decades for nuclear. And that means costs are not only low at the outset but can be locked in. I see no reason for that to change the next few years. So companies building gas and solar are going to have a lot of business.
 
 
 
 
Susan P
2:06
Thanks for your thoughts on Black Stone Minerals. One other question occurred: Might this Royalty LP be an acquisition candidate for a bigger energy company wanting more acreage to drill for nat gas (and/or oil)?  Thanks again for your help.
AvatarRoger Conrad
2:06
Hi Susan. It's certainly possible a larger company would want to buy Blackstone's lands. And while buying MLPs can create tax complications, this company essentially has no debt and operates from cash flow. The assets are somewhat leveraged to gas prices, with $3 per million BTU appearing to be a key decision point drilling on Blackstone's lands and accounting for 97% or so of cash flow. We see that as a long-term positive. I think the drop in gas prices in the wake of the Deepseek news on less power hungry AI is way overdone. But it may delay a dividend increase as part of management's stated plan to restore the previous 47.5 cents per quarter rate. BSM remain a buy for investors interested in a high yield and willing to accept some volatility in nat gas prices affecting returns particularly in the near term. A potential acquirer could be one of the companies drilling on its lands (they're not large) or another company that accumulated royalty interests.
Phil B.
2:09
Hi Roger,

I’m wondering if you have plans to institute coverage of GE Vernova any time soon in CUI? Although it pays a small dividend, it certainly has been lively since its spin-off from GE. Many thanks for your excellent advice over many years
AvatarRoger Conrad
2:09
Hi Phil

It's possible--since GE Vernova has so many ties to the US power industry and is definitely what I would call "Utility Technology." I should say that like everyone who held GE, I have a sizable position. I think it's probably a hold at this point, even after the Deepseek selloff in power stocks connected to gas. And the yield isn't really much at 0.26%. But the company is pretty much at the center of everything in US power--as it's been since Edison threw the switch!
Fred
2:11
Elliot has said that this is the year for Natural Gas. I would think that Blackstone Minerals would be a slam-dunk in that environment. Do you still favor it?
AvatarElliott Gue
2:11
We actually have a pretty long issue going up about the Year of Natgas theme probably this weekend or first thing next week. We still like BSM and they will benefit from increased royalties for natgas drilling. I'd also highlight EXE and EQT as direct beneficiaries on the producer side. While weather drives gas prices in the short term, the real story since mid-December has been the increase in the strip for Q3 - Q4 2025 and through 2026. The calendar strip is just the average price of gas futures for delivery in a particular quarter (or year). Even after the pullback in the front month, the 2026 strip is still trading either side of $4/MMBtu, a level at which companies like EXE and EQT can produce copious cash flows. EXE in particular could show an explosion in FCF as it brings on wells under its DUC/deferred TILs program from last year for a minimal capital cost.
Susan P.
2:12
Thanks for the opportunity to ask questions of both Elliot and Roger.

Your coverage of Blackstone Minerals (BSM) has been detailed and helpful. I understand the variable nature of its distribution (e.g., last year's cut from low nat gas pricing and "time out" contract clauses with operators). Elliot has correctly predicted nat gas pricing would rise as seen in January until it dropped a bit last week. For sure, weather is a factor but I am wondering what LNG exporting might mean for nat gas pricing?

More specifically, do you see BSM benefiting much from LNG exporting since the reversal of the pause of the last administration? And if so, when might increased production on its acreage potentially be reflected in the royalties BSM receives from its leases.
AvatarRoger Conrad
2:12
Blackstone's lands are in a good place to serve LNG market--the gas produced isn't as low cost as "associated gas" pumped with oil in west Texas. And the producers on its lands as I said need a $3 price to really step up drilling--they've had that this year of course. But I think they'll be cautious now given the drop. I see Elliott just answered a question on gas prices--and we will be posting a pretty extensive analysis early next week in the regular EIA issue.
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