| Investing in energy securities is a complex endeavor. Stock prices are linked to crude oil
markets, corporate assets are often hidden beneath the ground and no industry is more subject to
legislative mischief or geopolitical dislocations. |
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| We have identified three ingredients, unique to this sector, which are necessary for superior
performance: 1) A reliable system of petroleum supply and demand forecasting, 2) Captive geologic and
petroleum industry expertise coupled with oil field experience, and 3) A facility to anticipate and evaluate
domestic political and geopolitical developments. |
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| The correlation between crude oil prices, energy industry earnings and stock performance is a
reflection of the commodity nature of the business. Consequently, accurate projections of supply/demand
are necessary to optimize investment results. Projected prices are applied to existing and potential assets
of energy producers to ascertain value. Essential to such an exercise is a determination of the quality and life
span of these assets. Furthermore, production costs, transportation requirements and ecological limitations
are among numerous other factors which impact value. |
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| Energy investing is an exercise in buying assets. Overpay and results will suffer. Identify bargains
and superior performance will follow. We believe that superior investment performance requires an
advantage and there is no greater advantage than superior knowledge. |
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