RE:RE:Oil now 32.5% higher than 2020 4th q averageIt's very unpopular to be buying oil and gas stocks right now. You're right. It's also very easy to be critical of oil and gas in a period of abundance and oversupply. We aren't there anymore. Huge structural underinvestment of oil and gas is going to result in sizeable undersupply as demand returns to pre-pandemic levels through 2021. And it's already happening.
https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/?sref=7G40yu8z
Also, we will see how some of these funds hold their conviction when you've got companies like Suncor with a 20% free cash flow yield to equity next year. You can buy that company, or you can invest in a company with a 4% levered rate of return in renewables (due entirely to subsidies). I know which one I'm buying.
The reason Suncor will be a survivor and Juniors will struggle longer term is that Suncor actually has the cash flow to invest in the broader energy portfolio, like renewables or offsets that lower their carbon intensity. So they can paint themselves with ESG and make the investment palatable. A Junior drilling the Viking in Kindersley, despite great returns, is going to struggle to find meaningful outside capital.