IXC - IXC: Trust In OPEC They Don't See Stranded Asset Risk
2023-05-24 22:57:12 ET
Summary
- In our discussion of IXC, we want to identify a new speculative factor that interacts in an important way with oil prices through OPEC supply decisions.
- That is the fact that the oil environment highlights that peak oil is further away than many thought, and stranded asset risk of current oil assets is much lower.
- This means that OPEC is in no rush to deplete reserves and is alright with playing the long game by keeping the oil taps tight.
- IXC has substantial exposure with operating leverage to the price of the oil commodity, and therefore this dynamic, along with a continuing Ukraine war, keeps S/D favourable.
- The late-cycle multiples for oil are likely somewhat unjustified, and we are bullish on IXC and ETFs like it.
For further details see:
IXC: Trust In OPEC, They Don't See Stranded Asset Risk