A Toast to the Idiots

“Perhaps we were a bit premature in disassociating completely from the oil & gas sector - energy security is important - and oil and gas will play a crucial role in ensuring ongoing security as we transition over time to renewables”

You know who said that ?Nobody - I made it up - but you can imagine it’s the sort of shite that will be coming out of the mouths of egg-on-face fund managers that last year were proudly announcing, and marketing themselves, on their complete exit from oil and gas stocks - idiots.

My thesis is that this is part of the reason why WPL has held up so well recently when Brent/WTI oil peaked and then sold off dramatically. The egg faced ones were in there buying - relieved that they were finally presented with an opportunity to do so - idiots.

WPL finished the week at $31.37 with a solid rise and oil was up again in the US overnight.......sets up well for Monday.

When the oil price surged to $139 a week or so ago it briefly took WPL close to $35. On the face of it a nice little opportunity to take some profits I guess but boy it was certainly a ‘blink and you missed it’ opportunity. I think we’ll get there again anyway ....WPL is still very much on an upwards trajectory.

The Russia Ukraine war has really shone the spotlight on how important energy security is and how ill equipped the world is to transition anytime soon away from fossil fuels.

I wasn’t the least bit concerned when WPL got sold off its recent high a week or so ago. Brent at $139 wasn’t doing anyone any good, couldn’t last, and wouldn’t be in the long term interests of WPL anyway.

But the funny thing is, last year the prospect of $US 100 oil was painted as a horror scenario. Now that we’ve had a peek at $US139 there’s widespread relief that it’s ‘back’ to $US100. The world is being conditioned to $US100 oil and as @madamswer points out governments are providing subsidies at the bowser that supports it there !

WPL doesn’t need $US100 oil to make uber profits - $US80 would do nicely- but for every week oil stays at these elevated levels, tens of million$ of additional cashflows keep gushing into the WPL coffers.

But what has really and truly changed is sentiment .......and sentiment is everything when it comes to the stock market. The oil and gas sector is viewed more positively now - in complete contrast to the sneeringly negative sentiment it suffered as recently as Nov/Dec last year.

WPL has rarely been in a sweeter place with positive sentiment favouring the sector on top of a whole lot of other positives, several unique to WPL :

-$A low

- Oil price anywhere north of $80 generating rivers of cash

- Sangomar sitting there appreciating by the day

- Prospect of a US listing

- Efficiencies of the BHP merger still to generated

- Re-weightings when WPL officially becomes an oil and gas goliath post merger

- Real dividend yield yet to be fully appreciated due to misleadng trailing yield

On the basis of all that it still has to be a buy.

......and lets not forget that bumper dividend - looking forward to my bank account swelling this week with the biggest dividend drop I’ve ever picked up on any stock I’ve ever owned - sweet.