Goin' Golar: A Thematic Analysis of LNG
Harvesters,
Back in August I was fortunate enough to run into an oil family friend of mine - like most people from the great state of Texas, this gentlemen has deep roots in the global energy industry. Earlier this year, we witnessed an unparalleled fundraising process among private equity firms and hedge funds - betting on a trade that has brought such incredible wealth to so many families, a trade that predicts the unpredictable, the trade that has evolved into an axiom overtime - that the price of crude oil will always recover, no matter what.
Credit funds, vulture/distressed funds, opportunistic debt funds, and pretty much any other strategy to tackle energy debt emerged and infiltrated pension funds across the world - per data out last week, the inflow of money to these funds are as strong as ever. This in turn brings up the paradox, the credit market - not the price of oil - has now became benchmark for future production; using this logic, this trade will happen simultaneously - when we [funds/energy firms] can no longer raise capital, the trade will come to fruition. Until then, we'll continue to burn money - which in the energy industry, this money comes in the form of Natural Gas.
Coming from a town that produced at one point the two richest men in the country, Clint Murchison and Sid Richardson, it's easy to get wrapped up in the history behind and us, and more importantly, the opportunity ahead of us. So there I was, in Athens, Texas, speaking to my friend about oil over a glass of whiskey just as two friends did almost a hundred years before us - I would be lying if I said the optimism bias that plagues so many of us did not begin to overtake my mind like the perfume of a prom date.
Later in the evening, with drink stiffer and stories more elaborate, my friend told me something that became the core of my thesis: "This has been an unconventional oil boom - and people are making a huge mistake thinking it will be a conventional bust. We're going through a monumental shift Taylor, we've been doing business the same way for a century - that's about to change. People need to stop thinking about how much money they're losing and instead think about how much money they could be making." He went on to say, "It's all a waste - you had truck drivers making $160K, it was crazy. This has nothing to do with the price of oil, this has to do with something else entirely..."
Golar LNG epitomizes the theories that we discussed that night, and more importantly, the thesis that we build in the days and months subsequent to that disastrous hangover the next morning. This business, for the big players - the successful players - is thought about in years a decades, not days an months. The ideas behind the growth in LNG over the next several decades reflects this philosophy - a philosophy that originated almost a century ago, between two friends, in a small East Texas town, about a worthless byproduct from kerosene drilling now known as crude oil.
As always, please contact me at taylor@pinecapitalpartners.com for any questions or comments.
Best,
Taylor Mann
Pine Capital
P: (903) 952-1010
Back in August I was fortunate enough to run into an oil family friend of mine - like most people from the great state of Texas, this gentlemen has deep roots in the global energy industry. Earlier this year, we witnessed an unparalleled fundraising process among private equity firms and hedge funds - betting on a trade that has brought such incredible wealth to so many families, a trade that predicts the unpredictable, the trade that has evolved into an axiom overtime - that the price of crude oil will always recover, no matter what.
Credit funds, vulture/distressed funds, opportunistic debt funds, and pretty much any other strategy to tackle energy debt emerged and infiltrated pension funds across the world - per data out last week, the inflow of money to these funds are as strong as ever. This in turn brings up the paradox, the credit market - not the price of oil - has now became benchmark for future production; using this logic, this trade will happen simultaneously - when we [funds/energy firms] can no longer raise capital, the trade will come to fruition. Until then, we'll continue to burn money - which in the energy industry, this money comes in the form of Natural Gas.
Coming from a town that produced at one point the two richest men in the country, Clint Murchison and Sid Richardson, it's easy to get wrapped up in the history behind and us, and more importantly, the opportunity ahead of us. So there I was, in Athens, Texas, speaking to my friend about oil over a glass of whiskey just as two friends did almost a hundred years before us - I would be lying if I said the optimism bias that plagues so many of us did not begin to overtake my mind like the perfume of a prom date.
Later in the evening, with drink stiffer and stories more elaborate, my friend told me something that became the core of my thesis: "This has been an unconventional oil boom - and people are making a huge mistake thinking it will be a conventional bust. We're going through a monumental shift Taylor, we've been doing business the same way for a century - that's about to change. People need to stop thinking about how much money they're losing and instead think about how much money they could be making." He went on to say, "It's all a waste - you had truck drivers making $160K, it was crazy. This has nothing to do with the price of oil, this has to do with something else entirely..."
Golar LNG epitomizes the theories that we discussed that night, and more importantly, the thesis that we build in the days and months subsequent to that disastrous hangover the next morning. This business, for the big players - the successful players - is thought about in years a decades, not days an months. The ideas behind the growth in LNG over the next several decades reflects this philosophy - a philosophy that originated almost a century ago, between two friends, in a small East Texas town, about a worthless byproduct from kerosene drilling now known as crude oil.
As always, please contact me at taylor@pinecapitalpartners.com for any questions or comments.
Best,
Taylor Mann
Pine Capital
P: (903) 952-1010
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