Today I’m looking into a new Stansberry Research presentation featuring Steve Sjuggerud and his lead analyst, Brett Eversole, focused on the oil sector.
In short, both Sjuggerud and Eversole are predicting higher oil prices for several different reasons, and Stansberry has put together a “brand-new model oil and gas portfolio” to give readers the “chance to profit” from this “situation.”
I actually thought this was one of the more intelligent presentations I’ve come across. Instead of being filled with “get rich” hype or fear-mongering, Eversole laid out a pretty compelling, objective-sounding thesis. At least, that was my impression.
In any case, it still leads to a sales pitch at the end because to access the “Oil Boom Portfolio” (which consists of five stocks), you have to join True Wealth Systems for $2,000.
The clues were extremely vague on these five picks, too.
I was able to figure out what at least one of them is (the fifth one), though, which I’ll share with you shortly. But first, let’s unpack Sjuggerud’s “oil boom” prediction.
Breaking Down Sjuggerud’s Oil Prediction
Steve Sjuggerud only spent a couple of minutes talking at the very beginning of this presentation before handing the mic over to Brett Eversole. But the gist of what Sjuggerud said was that he believes oil and energy prices are going up.
“… I am dead-certain that all the evidence and facts tell me higher oil and energy prices are on the way.
“I expect it to be the biggest, most concerning, and yet most profitable story of the next six months.”– Steve Sjuggerud (source: https://orders.stansberryresearch.com/?cid=MKT667330&eid=MKT671193&assetId=AST258297&page=2)
From there, Eversole laid out his thesis that, due to government policies and “specific actors” on Wall Street, there has been underinvestment in oil and other fossil fuels, which could lead to “energy shortages and unimaginable price hikes.”
“In short – thanks to the policies of our political elite and specific actors on Wall Street, new investment in oil and other fossil fuels has completely stalled, even in light of sky-high prices.
“And this simple supply-demand dynamic can only lead to one thing: energy shortages and unimaginable price hikes.”
The law of supply and demand tells us that if demand exceeds supply, higher prices are inevitable. And once prices rise, more supply comes online due to the increased production incentive. This, over time, can lead to supply exceeding demand, which leads to reduced prices and underinvestment in new production before the cycle starts over again.
And as Eversole pointed out in the presentation, this supply-demand dynamic can be especially pronounced in the oil and gas market due to the massive amount of capital needed to bring resources out of the ground and how long this process takes.
However, Eversole also made the case that, despite higher oil prices, not enough new supply is coming online. And he believes there are two main reasons for this. The first has to do with government policy, and the second is Wall Street (specifically, Wall Street’s push toward reaching net zero greenhouse gas emissions).
“… why aren’t oil companies drilling, refining, and delivering more oil now that prices are on the rise?
“And how does this create a massive opportunity for ordinary investors?
“Well, there’s two reasons for how we got where we are today…”
“In short – Biden has gone far further than other politician in American history in terms of shutting down pipelines, blocking approval of new projects, and even capping the number of refineries in operation, which is essential for making the raw oil taken out of the ground useful for consumption.”
“But believe it or not, we can’t lay all the blame at Joe Biden’s feet. In fact, his policies are only a small portion of the reason we’re facing today’s energy problem.
“The much more important reason is one few would expect. And it also explains why acting today could be so profitable…”
“You see, Larry Fink, BlackRock, Vanguard, and State Street aren’t the only ones who are actively preventing America’s largest oil companies from securing future energy resources.
“In fact, Black Rock is just one of 273 global asset managers, who manage a total of $61 trillion, who’ve all joined the pledge to force the companies they invest in to get to net zero greenhouse emissions by 2050 or sooner.”
“When prices rise, so does production. But you can see here that the relationship is breaking down. Rig counts are up. But not nearly enough.
“Please understand, this is a watershed moment…
“Today, the normal increase in production that historically follows spiking prices… isn’t happening.”
“And on top of it all the supply chain for the parts and equipment needed to operate these installations is as backed up as any other sector, possibly worse.”
So to sum up my take on Eversole’s thesis…
He believes demand for oil and gas is likely to continue increasing in the decades ahead, despite the push toward renewables, and that government policy, Wall Street, supply chain constraints, and other factors are keeping supply lower than it otherwise might be, which in turn could push oil prices significantly higher in the future.
How high does he think oil prices could go?
Eversole didn’t make a specific prediction on price but instead “suggested” that $500 oil isn’t out of the question, which, as a side note, is the same price Bill Bonner has predicted.
“So, when I mentioned earlier that some analysts are calling for $500 oil…
“And that JPMorgan predicts that $380 barrels are possible in the near future…
“Are you starting to see why that might not be such a crazy prediction after all?”
Another interesting thing about Eversole’s thesis was that if oil prices surge and major oil companies aren’t reinvesting as much of their increased revenue into bringing new supply online, then that money could potentially be sent “right back to investors” (in the form of stock buybacks or increased dividend payouts).
Here’s how he puts it:
“… by stopping future oil production, these activist ‘environmentalist’ investors are freeing up MASSIVE amounts of cashflow that they can send right back to investors.”
“It’s a one two punch. Slow supply to drive prices higher. Then skip reinvestment so that record sales turn into record profits for investors.”
Of course, nobody has a crystal ball. So as compelling as his take might be, there’s no guarantee that anything he’s predicting will actually take place.
In any case, according to Eversole, there are “two ways to play this situation” (buy large-cap oil stocks or follow his recommendation).
“Now there are two ways to play this situation…
“You could invest in one of the oil majors, like ExxonMobil, and benefit from the practically inevitable rise of oil prices and the massive dividends I expect these companies to continue to kick off.
“Or you can take another approach.
“Because today you have the perfect opportunity to scoop up shares of smaller, lesser-known energy companies that have avoided being swept up in this mess altogether.”
What’s he recommending?
In short, Eversole and Sjuggerud have put together a “brand-new model oil and gas portfolio” they’re calling “The 2022 Oil Boom Portfolio.”
“That’s why I want to send you a brand-new model oil and gas portfolio we’ve put together to give you the chance to profit from this situation.
“It’s a portfolio of five recommendations chosen specifically for this exact moment in the energy market.
“We’re calling it The 2022 Oil Boom Portfolio.”
This portfolio consists of at least five companies that Sjuggerud and Eversole are tracking. And while I wasn’t able to uncover them all, I think I know what one of them is.
What Are Steve Sjuggerud’s “Oil Boom” Stock Picks?
The clues Eversole shared about his and Sjuggerud’s five “oil boom” picks were extremely vague, to the point I almost didn’t write this post. But the last pick was one I immediately recognized as it’s been pitched numerous times before by different gurus.
Here are the clues he shared about it:
“Today you’ve seen why new pipelines aren’t getting built… and why politicians are doing their best to shut down the few that are still in operation. And this is exactly why you need to see the details on the fifth company we’re including in today’s model portfolio. It’s one of the largest pipeline companies in the United States. Previous booms have caused their share price to increase by more than 250%. But what makes this recommendation even more exciting is the crazy high 7.5% dividend. It’s been growing its dividend distribution for the past 24 years and shows no sign of letting up.”
Based on those clues, I think this pick is Enterprise Products Partners L.P. (EPD).
Firstly, EPD is a Texas-based midstream natural gas and crude oil pipeline company with one of the largest pipelines in the United States.
Second, previous stock price rallies have seen it go up by more than 250%.
Third, their current dividend is sitting at just over 7% (and may have been closer to what Eversole said, depending on when the presentation was filmed/written).
And finally, Enterprise Products Partners has been paying an increasing dividend since 1998 (aka “for the past 24 years”), which was the main clue that tipped me off about it since this is one of the main things every stock picker I’ve seen pitch this company highlights.
As for Sjuggerud and Eversole’s other picks, the clues were far too vague to guess them all, but I have a general idea about what one of them might be.
Here are the clues:
“It is a company we refer to as the “Royal Gold” of oil and gas…
“And we call it that for good reason. Unlike most companies involved with the exploration and drilling for oil… this company doesn’t require any capital expenditure because they don’t own any hardware… just the rights to the oil under the ground. They lease drilling rights… And as the demand for oil rises, so could their profits. Not only did this stock soar almost 6x last time around… Nothing else in the sector offers a return potential like this.”
What Eversole’s describing there sounds a lot like a royalty company in the oil space. In other words, a company that doesn’t drill oil itself but instead owns the land and leases that land to other companies (that do drill) for a profit.
So with that in mind, and given the clue about the stock soaring “almost 6x,” I think he might be talking about Texas Pacific Land Corp (TPL).
I’m nowhere near certain of that, though; it’s a ballpark guess.
And given the lack of clues, I have no idea what the other three are.
Still, EPD is very likely one “oil boom” pick, and TPL could be another. And if you want to know what the others are, you’d need to join the True Wealth Systems service.
Recommended: Go here to see my #1 rated stock advisory of 2022
What Is True Wealth Systems?
True Wealth Systems is a “systems-based investing research” service sold by Stansberry Research and run by Steve Sjuggerud and Brett Eversole.
According to the presentation, the service’s approach “covers dozens of markets, sectors, and commodities.” And as a subscriber, you get access to the details of the five “2022 Oil Boom Portfolio” stocks and ongoing monthly recommendations.
The cost of joining the service depends on when and how you sign up, but as part of the presentation, it costs $2,000 for two years’ access.
Sjuggerud’s lead analyst, Brett Eversole, believes we could see higher oil prices in the future, which the presentation suggests could benefit those positioned in the right stocks.
Unfortunately, I can’t predict the future, so I don’t know what will happen regarding oil prices or related stocks. But it’s hard to argue with some of the points Eversole made, so it will be interesting to see how it all unfolds from here.
As for Sjuggerud/Eversole’s picks, I’m confident I know what at least one of them is (EPD) and ballpark guessed another pick, but I have no idea what the other three are. So if you have any guesses up your sleeve, chime in below! Either way, thanks for reading.