Thoughts on Chris Wright as US Energy Secretary
One of the reasons OBE is so cheap, applies to the sector as a whole. The public has been engineered to believe oil is on the way out - going the way of the Dodo, or Yellow Pages.
This was done with language. In the most eloquent examples, its done with a single word. In our case, that word is "fossil". Fossil Fuel.
By adding "fossil", fuel became associated with, "dead", "extinct", "history", "the past"...........all things investors don't want. That's why the multiples are so low. OBE et al have FFO multiples in the 1-3's and PE's in the 4-8's, because investor opinion has been engineered to view the sector as going extinct.
I'm excited about Chris Wright's selection as US Energy Secretary because he apparently understands.
He is the first person I've seen publicly replace the word "Fossil" with "Foundation".
Foundation Fuels!
Foundation fuels are needed to build all other fuels - solar, wind, hydro, nuclear.
Foundation and Fossil are investment opposites. Investors invest for a better future.
Anything solid you build for the future, needs a good foundation.
Foundations draw investors, like bees to honey.
That seemingly little change from Fossil to Foundation, is an eloquent act of engineering public opinion.
When it comes from the top, it will spread. OBE has a Price to FFO of about 1.5 and a PE of about 4.5 (ish). OBE’s production, and the price of oil/gas, could stay where they are today, but just changing Fossil to Foundation could double those multiples.
Personally I will be using Foundation Fuels from now on.
If Chris Wright's appointment is confirmed, I suspect US official language in places like the EIA web page etc, will change to Foundation Fuels. A single word, can change everything. Engineering Public Opinion is a powerful tool.