How To Triple Your Money In Three Years (Kirk Spano)


The story behind the interview…

Last week, Kirk Spano wrote an article on how to trade oil and oil stocks over the next two years.

Kirk has spent years acquiring an expertise in energy investment. When he speaks on the topic, I listen.

Below, you will find a link to Kirk’s original article plus an audio podcast of our “post-game” interview follow-up on his article.

I’ve also included my full notes from the interview for those who prefer reading highlights.


Link to Kirk’s original article:

Trading Oil And Oil Stocks The Next 2 Years

Interview notes:

Lower for longer mantra in oil – public

Oil will get back to $80-120 – Kirk

Trade was oil itself

Now the trade is oil stocks as opposed to oil

Shale stocks were in start-up mode but now are lean, mean cash flow machines, especially with rising oil

The US looking to export more oil will drive more money to the bottom line of shale plays

Many companies are making money at ~$50/barrel


When hedges expire soon, companies will begin making $70-80/barrel

Typically hedge a portion of production

If already cash flow positive at $50 how much more so at $70-80?

Many of these companies could double/triple in next 2-3 years

Permian Basin in TX is most prolific

Most people are more aware of Bakken in Dakotas

Stack Scoop in OK

Eagle Ford in TX

Investors should be focusing on the Permian Basin because its cheapest and easiest to get and close to coast and export facilities

When you drill for oil you will get NG, when you drill for NG you dont necessarily get oil


Oil surplus has dropped, but NG is still in a glut but seeing drawdowns

If we get a hot summer, could see a large drawdown in NG

Real driver for NG will be exports – liquified natural gas (NYSEMKT:LNG)

FERC has approved several export facilities

Sabine Pass – Cheniere (LNG)

Due to hedging future production at higher prices and more efficient operations, oil companies will make a lot of money while demand for oil is still rising (~10 more years)

Peak Oil Plateau – supply just under demand for a period to keep oil in $80-120 range


Every spike in oil since WWII has been followed by a recession, want to keep oil around $80

Sell Chevron (CVX) and Exxon (XOM) and buy Occidental Petroleum (OXY)

Leaner, better assets, better balance sheets

Will probably double cash flow in next 2-3 years

One of largest producer in Permian Basin

4% dividend

Look for companies who have…

best balance sheet,

acreage,

Improving shareholder yield (reducing debt, buying back shares, and paying dividends)

Chevron and Exxon are facing significant environmental legal battles in coming years


Rockefellers have divested their Exxon for a reason

Encana (ECA) is going over $20 and a good opportunity

Incredible acreage

Undervalued and unloved

Potential buyout by Royal Dutch Shell

He owns 2020 LEAPS and shares

Is selling puts to collect premium on the dips

Pioneer Natural Resources (PXD)

Converting to a Permian only company

Already operating out of positive cash flow, not borrowing anymore

Chesapeake Energy (CHK)

Sold all is stock and bought LEAPS with all the money

Either CHK goes bankrupt or they do really great


Looking positive

Natural Gas

Major catalyst is exports

Trade talks with China is to get billions of LNG to exported to them

Antero (AR) is a great opportunity

Kirk owns LEAPS on AR

For indexers…youre doing it wrong. Ignore the half of the economy that is not doing well

Dominion – utility with exposure to NG exporting

If you want an easy way to get into energy, use SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Jeff Gundlach recommended as a best idea

Next Steps


I hope you enjoy this interview. If you’d like to be notified of future interviews and content from top Seeking Alpha authors and content, please click the “FOLLOW” button at the top of this page.

If you prefer to have interviews delivered to your mobile device, please subscribe on iTunes.

Disclaimer: This article is for information purposes only. There are risks involved with investing including loss of principal. Brian and Investor in the Family make no explicit or implicit guarantee with respect to performance or the outcome of any investment or projections made. There is no guarantee that the goals of the strategies discussed by Brian and Investor in the Family will be met.

Disclosure: I am/we are long CHK.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

SeekingAlpha

Leave a Reply

Your email address will not be published. Required fields are marked *