steven fiorillo
Investing In Energy Infrastructure
10/5/2025, 10:20:26 PM
Economic Summary
- Global oil and gas production and consumption are forecasted to grow in the near term, supporting demand for transport and export infrastructure (e.g., LNG hubs at Sabine Pass, Corpus Christi).
- Data center electrification and broader computing demand are projected to materially increase electricity and fuel needs by 2050, indirectly boosting natural gas and pipeline utilization.
- Large midstream firms operate take-or-pay or fee-based contracts, creating predictable cashflows and making pipeline assets toll-like with high barriers to new supply due to permitting complexity.
- Significant capital remains on the sidelines (about $7.5 trillion in money market accounts), and expected Fed cuts could drive rotation into dividend-paying energy names as yields on safe cash decline.
- Upstream oil production is capital intensive with steep decline curves (~20% annualized), requiring sustained multi-billion-dollar annual CapEx to maintain volumes, which supports long-term consolidation and value for large producers.
Bullish
- Midstream pipelines benefit from take-or-pay and fee-based contracts, providing stable toll-like cash flows.
- Rising LNG exports and data-center electrification increase demand for gas transport and pipeline throughput.
- Energy Transfer appears undervalued with a high distribution yield (~8%) and low valuation multiples.
- Majors Chevron and Exxon trade at attractive free-cash-flow multiples and have strong FCF drivers (Permian, Guyana).
- Companies with large, irreplaceable networks (Enbridge, Kinder Morgan, ONEOK) have structural moats and steady dividends.
- MLP/MLP-ETF exposure (AMLP) offers diversified access to midstream income-generating assets.
Bearish
- Growth of renewables and long-term energy transition could reduce oil demand and pressure upstream economics.
- Permitting, local opposition, and multi-jurisdictional regulation make new pipeline buildouts slow and uncertain.
- Upstream production faces ~20% annual decline rates and requires massive recurring CapEx to maintain or grow volumes.
- Commodity price volatility and potential OPEC/production responses can hurt free cash flow and capex plans.
Bullish tickers
ETENBKMIOKEEPDXOMCVXDVNFANGEOGGRNTNOGAMLPBMNRTOST
ET
Bullish
Large midstream footprint, take-or-pay contracts, low valuation multiples and high distribution yield make ET an income/value play.
Bearish
Regulatory, permitting risks and operational incidents could pressure volumes and distribution sustainability.
ENB
Bullish
Extensive pipeline & utility footprint, decades of dividend growth and strong LNG/export exposure provide resilience.
Bearish
Cross-border politics and shifting energy mixes could pressure parts of the business over time.
KMI
Bullish
Controls a large portion of U.S. natural gas transport (~40% cited); irreplaceable infrastructure supports stable cashflows.
Bearish
Exposure to commodity cycles and potential regulatory headwinds on pipeline expansions.
OKE
Bullish
Strong footprint in mid-continent and Williston; strategic position in regional transport hubs.
Bearish
Regional concentration risks and demand shifts in specific basins could affect throughput.
EPD
Bullish
Diversified midstream operator with fee-based contracts and significant scale in liquids and gas pipelines.
Bearish
Exposure to commodity-linked volumes and midstream cyclical demand fluctuations.
XOM
Bullish
Attractive free cash flow multiple, strong upstream projects (Permian, Guyana) and dividend appeal as rates fall.
Bearish
Highly capital intensive upstream business vulnerable to oil price declines and large maintenance CapEx needs.
CVX
Bullish
Trading at low free-cash-flow multiples with strong dividend history and transformational Hess/Guyana upside.
Bearish
Significant CapEx required to sustain production; renewables transition is a long-term competitive factor.
DVN
Bullish
Quality basin exposure and potentially attractive for dollar-cost averaging in durable assets.
Bearish
Upstream cyclicality and commodity price exposure can compress margins in downturns.
FANG
Bullish
Diamondback has attractive underlying Permian assets and long-lived basin economics.
Bearish
Upstream producers face production declines and capital intensity that can hinder returns.
EOG
Bullish
Solid fundamentals and asset quality drew interest on financial review; attractive upstream operator.
Bearish
Sensitive to oil price swings and industry CapEx cycles.
GRNT
Bullish
Low overhead, working-interest model with accretive M&A and growth potential.
Bearish
Smaller, non-operated exposure can be volatile and dependent on partner operators.
NOG
Bullish
Niche growth potential via selectively partnering in high-quality assets.
Bearish
Has experienced rough patches; upstream volatility and operator risk remain.
AMLP
Bullish
Provides diversified exposure to MLP/midstream income streams and distribution yield.
Bearish
Covering ETF returns may lag broader market and performance depends on MLP sector dynamics.
BMNR
Bullish
Presenter is bullish on BMNR and Ethereum exposure as capital appreciation opportunities.
Bearish
Crypto/alternative tokens carry high volatility and regulatory uncertainty.
TOST
Bullish
Mentioned as a potential research target; some investors like its long-term opportunity.
Bearish
Restaurant-tech companies face competitive pressure and adoption risk.
People mentioned
MattSteveChrisAmitTannerTom LeeAndrewMitchFreeberg