Latest news with #onshoring
Forbes
4 days ago
- Business
- Forbes
Upstream Natural Gas Valuations: A Big Year
The electron precedes the molecule or so the saying goes. Well, that is not really an axiom to my knowledge, but it does seem to fit. Amid the uncertainty in oil markets, for the past year or so, optimism and valuation metrics for natural gas producers have steadily been rising. According to data from Mercer Capital's quarterly Value Focus: Exploration and Production, reports whereas a year ago show cash flow multiples (or sometimes referred to as EBITDAX in the oil and gas industry) for both oil and gas producers tended to centralize around four (4) to five (5) times, lately, publicly traded gas producers have EBITDAX multiples in the low- to mid-teens, while predominately oil producing companies' multiples have dropped. Oil & Gas EV/EBITDAX Multiples Q1 2024-Q1 2025 This has been a dramatic change in the past year compared to the industry's history. While onshore producers of oil and gas have many similar operational and economic traits, such as the shrinking inventory of top tier wells, this decoupling is representative of a fundamentally different outlook for the future of each commodity. Demand: Record Gas Demand Is Headed For More Gas has a bright future as a commodity as one of its key consumption outlets, electricity, is at an all-time high and is growing. The EIA reported a few weeks ago that after decades of relatively flat electricity demand, the desire for more current, volts, and ohms will be required for commercial growth, onshoring of manufacturing, and, of course, data centers that fuel A.I. Much of this is anticipated to be in other forms such as solar, but natural gas will be a part of this equation with 4.4 gigawatts of new natural gas-fired capacity to be built in 2025. U.S. Electricity Consumption 1990-2026 This is not short term either. The EIA also estimates electricity demand to grow by around 50% by 2040 in its latest Annual Energy Outlook. This should take some time to translate into measurable gas demand and potential price increases, which partially explains why EBITDAX multiples for companies such as Comstock Resources are relatively high. East Daley Analytics, an energy infrastructure consultant, claims that the gas market will operate in a cautious holding pattern for the time being. However, when LNG expansion terminals ramp up and electricity demand really picks up, the markets will tighten, especially in pricing hubs connected to export markets. LNG growth remains a bulwark for future natural gas demand growth from around the world, not just domestically. Market participants anticipate this as well. In the latest Dallas Fed Energy Survey projections suggest that gas prices, although not expected to get to $ per mcf like some executives would prefer, are headed towards $4.00 per mcf. Perhaps that is fueled by larger geopolitical developments such as the EU proposing a blanket ban on Russian natural gas. What do you expect Henry Hub natural gas prices to be in six months, one year, two years and five ... More years? Infrastructure Activity Ramping Up These dynamics are driving activity within multiple related segments of the marketplace. Just this week Hart Energy reported that the long embattled Constitution Pipeline in the Northeast United States is back on the table for Williams Companies. That's right, Williams is attempting to re-petition federal and state authorities for the Northeast Supply Enhancement project after Governor Kathy Hochul agreed to show openness to the construction of natural gas infrastructure in New York. Williams is also pursuing growth in its Transco system as well. Plus, in the past 45 days the Calcasieu Pass, Louisiana LNG facility launched commercial operations. That is just 68 months after its August 2019 final investment decision, a relatively quick turnaround for a project that large. In addition, the electrical utility and generation space has ramped up merger and acquisition activity. Blackstone is acquiring TXNM Energy, NRG Energy is acquiring generation assets from LS Power, and Vistra Corp. is buying 2,557 megawatts of natural gas generation assets from Lotus Infrastructure Partners for around seven (7) times EBITDA. In the last year where merger and acquisition activity has been slow, this is an optimistic indication of more building and buying to come. Supply: Good Inventory Shrinking While Efficiency Wanes Even though the U.S. has a lot more gas reserves relative to oil, there are only so many low cost wells that are profitable at gas prices below say $3.00 per mcf. Although, technology, particularly fracking, has been revolutionizing the industry, it is now around 20 years in. As my fellow Forbes columnist, Ian Dexter Palmer showed last week, fracks are long, complex, and use a lot of water and resources. Even so, the best locations are dwindling, and it will get more and more difficult to keep capital efficiency high on a per well basis. One investor group, Kimmeridge, put out a paper on this very issue a few weeks ago. The data is fascinating. While oriented towards analyzing remaining oil inventory, it covers gas too, and it demonstrates that core shale acreage in the United States is being exhausted based on estimated ultimate recovery of resources per foot of rock. In addition, the operating costs to find and develop oil and gas as compared to the operating cash flow, what Kimmeridge refers to as the 'recycle ratio,' started shrinking a few years ago and are projected to continue to shrink. This makes drilling more economically inefficient and thus incentivizes operators to wait to drill until prices make it worthwhile. There are some formations that have more runway than others, but overall, it will become increasingly difficult for an operator to drill a relatively inexpensive well. Kimmeridge mentions the Marcellus Shale as one field with a good amount of high-quality acreage remaining, but that is more of an exception than the rule according to the paper. Blending that with the increasing demand I mentioned earlier, it is a recipe for higher natural gas prices going forward. Add all of this up and it seems investors see cash flows picking up significantly in the future for upstream natural gas producers. It shows in robust EBITDAX multiples that investors in Expand Energy, EQT, Comstock Resources, Range Resources, Antero Resources, and the like appear to be eagerly looking forward to what comes next.
Globe and Mail
25-05-2025
- Business
- Globe and Mail
Keep It Simple: Buy American With Vanguard 500 Index ETF
The geopolitical events of the past year or so, coupled with tariff uncertainties, have changed the investment equation in a big way. Many investors may be thinking about "onshoring" their investments by buying American. If that's your goal, the easiest way to do it is actually to buy an investment that you hear about all day long in the financial press: the S&P 500 (SNPINDEX: ^GSPC). And one of the best options for doing this is the Vanguard 500 Index ETF (NYSEMKT: VOO). Here's why on both fronts. What does the S&P 500 index do? If you are trying to stick with American companies, the best option is probably to research every single company you are looking at. There are different ways to think about this, though. Is the company headquartered in the United States? Does it generate most of its income from the United States? Does it generate most of its earnings from the United States? There's nuance here that gets a little complex. Coca-Cola (NYSE: KO), for example, is most definitely an American company, but it generates material revenues and profits from its non-U.S. operations. If you don't want to try to get into the weeds with each company, you need to find a compromise solution. The S&P 500 is a great option. The key is that, while most investors look at the S&P 500 as a market-tracking tool, that isn't really the goal. The 500 or so stocks included in the index are selected by a committee to be representative of the U.S. economy. All the stocks that get included have to be listed on a U.S. exchange. The market cap-weighting methodology means that the largest companies will have the greatest impact on performance, but it also likely means that there will be material exposure to companies that operate on a global scale. However, those companies will still be U.S.-listed companies, which means they are American companies. One simple investment is hard to beat if you are trying to buy American, even if it means making some minor concessions. For example, Coca-Cola has long been a proud member of the S&P 500 index. What's the best way to buy the S&P 500 index? The one big problem with buying the S&P 500 index right now is that it is trading near all-time highs, despite the uncertainty in the world today. But, as the chart highlights, long-term investors have ended up winning, even if they bought the S&P 500 index before a deep downturn. Notice that the bear market at the turn of the century (the dot-com crash), the Great Recession bear market, and the bear market around the coronavirus pandemic have all been mere dips on a steady upward climb. SPY data by YCharts That chart is of the SPDR S&P 500 ETF (NYSEMKT: SPY). That was the first exchange-traded fund ever created. But it is not the only ETF that tracks the S&P 500 index today. A better choice is the Vanguard 500 Index ETF. They both do the exact same thing: track the S&P 500 index. The only difference is their expense ratios. SPY data by YCharts The SPDR S&P 500 ETF's expense ratio is 0.09%, while the Vanguard 500 Index ETF's expense ratio is 0.03%. Since they both do the same exact thing, you should probably go with the cheaper alternative, unless you think it is worth paying more so you can say you own the first ETF ever created. If you decide to buy either of these ETFs, though, make sure you buy and hold for the long term. Reinvesting dividends is also an excellent idea. Keep your investment life simple -- buy the all-American S&P 500 The truth is that you can make your investment life as complicated or as easy as you want to. If easy is your preference, as it probably should be, buying the Vanguard 500 Index ETF provides you two solutions in one. First, you are getting a broad-based index that is generally seen as the go-to market barometer. Second, you are buying an index that is American by design. And with the tiny 0.03% expense ratio, you are getting both on the cheap. Easy and cheap is hard to beat. Should you invest $1,000 in Vanguard S&P 500 ETF right now? Before you buy stock in Vanguard S&P 500 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor 's total average return is957% — a market-crushing outperformance compared to167%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025
Fox News
23-05-2025
- Business
- Fox News
Bipartisan effort launched to onshore manufacturing of key supplies never before 'Made in USA'
EXCLUSIVE: Senators from both sides of the aisle will put forward a resolution calling on Commerce Secretary Howard Lutnick to seek out new sites and critical infrastructure for high-demand products that are currently not made in America, and analyze the viability of making such products here. Senate Small Business & Entrepreneurship Committee chairwoman Joni Ernst, R-Iowa, and Sen. Lisa Blunt Rochester, D-Del., came together Friday to launch the effort – citing the dual need for onshoring supply chains while bolstering the U.S. workforce. The Critical Infrastructure Manufacturing Feasibility Act would force Lutnick to report within 18 months on critical infrastructure sectors where products face material, sourcing, or supply-chain constraints that prevent them from being domestically produced. The Commerce Department would then have to analyze the feasibility of producing that product in the U.S. – and whether such products' newly-onshore production can be established in underserved rural areas and industrial parks. Both Ernst's and Blunt Rochester's states are vastly rural. In the latter, suburban sprawl from Wilmington gives way to miles of coastal plain. In recent years, the cities of Newark and Middletown have seen a boom in industrial parks and warehouses for major companies like Amazon seeking out the First State's famously low-tax and tax-free environs. "Supply chains are key to global competitiveness and our national security," Blunt Rochester told Fox News Digital. "This bipartisan legislation will help us identify where we rely too heavily on foreign imports for critical infrastructure and explore how we can bring that manufacturing home." The Delawarean added that strengthening domestic production not only protects our supply chains, "it supports American jobs, revitalizes local economies, and reinforces our nation's resilience if global manufacturing disruptions occur." Ernst added that the bill seeks to make the U.S. less dependent on foreign adversaries for critical infrastructure and key manufacturing supply chain preservation. "I am working to make 'Made in America' the norm instead of the exception," she said. "That starts with ensuring that our manufacturers are able to get the materials they need right here instead of having to import supplies from halfway around the world. Beyond boosting domestic industry, this bill is also about safeguarding our national security by ensuring that we are not dependent on any foreign adversary for critical goods that we need." Ernst has also spearheaded efforts to onshore the pharmaceutical supply chain from China. Many key ingredients in medicines are not produced in the U.S., and instead predominantly in Ireland and China. While one is a longtime U.S. ally, the other's involvement in the supply chain could lead to national security risks, critics have said.
Forbes
21-05-2025
- Business
- Forbes
How Small Businesses Can Find U.S. Suppliers With the SBA's New Portal
The SBA is patting itself on the back for putting old data in a new wrapper. Finding competitively priced, quickly produced goods from American suppliers is still the hard part. (Photo by James Carbone/Newsday RM via Getty Images) The Small Business Administration says it is now in the matchmaking business. On May 20, the SBA introduced a new tool to help firms source goods closer to home. The 'Make Onshoring Great Again Portal' is part of the Trump administration's broader push to revive American manufacturing–one of the justifications it has offered for steep new tariffs. . The free database connects small businesses with more than one million U.S.-based suppliers. It pulls from three private platforms: IndustryNet, which tracks U.S. manufacturers; ThomasNet, a longtime industrial sourcing site; and CONNEX, built by Utah-based i5 Services, started as a state tool and later expanded nationally with help from the National Association of Manufacturers. The portal is new. The data isn't. The SBA is betting that packaging it in one place will make a difference. (Join us for a live in-depth discussion with audience Q&A on What's Next For U.S. Small Businesses And Entrepreneurs on Wednesday, May 28 at 12 pm EST. Register today.) The rollout comes with the usual self-congratulation. Administrator Kelly Loeffler said it gives small businesses a 'direct line' to American suppliers and called it a step toward rebuilding the country's industrial base. The message is that firms will stop buying from abroad if they just know where to look. The portal is just one part of a broader push. In addition to the tariffs, the SBA launched the Made in America Manufacturing Initiative, aimed at boosting access to capital, expanding the skilled workforce, and cutting what it says is $100 billion in red tape. The agency is also backing a bill in Congress that would double the SBA loan cap for small manufacturers. It's a multi-pronged effort to bring production back home. None of this, however, addresses why businesses turned to China in the first place. Labor is cheaper. Production is faster. Many items made there, as highlighted by respondents to a survey conducted this year by the Reshoring Institute, aren't made in the U.S. at all. Certain electronics, machine parts, and textiles, have little or no domestic production left. For many small firms, the choice has never been about a lack of awareness of good local alternatives–because there simply aren't any. Consider, for example, something as simple as a T-shirt. In 2024, one fashion designer sourced quotes from factories around the world and found that sampling and manufacturing costs in the United States were two to five times higher than in China, Bangladesh, Vietnam, and Pakistan. She knew exactly where to look. It didn't change the math. Matchmaking is one thing. Making it work is another. The hard part isn't finding suppliers. It's making the numbers add up. More from Forbes
Bloomberg
19-05-2025
- Business
- Bloomberg
GLS CEO on How Tariffs Are Spurring Onshoring Resurgence
Global Location Strategies President and CEO Didi Caldwell discusses the resurgence of onshoring amid the Trump administration's tariffs on "Bloomberg The Close." (Source: Bloomberg)
