Energess Premium: The Interactive Dashboard I Built for Energy Investing

What is Energess Premium?

As I became more serious about energy analysis and with the advent of AI LLMs, I expected analysis of individual companies over time and comparative analysis between companies to be easy and accurate. It wasn’t (at least not yet).

Differences in how individual companies report, combined with varying requirements between North American E&Ps, meant that “apples-to-apples” data was impossible to get without time-intensive manual scrubbing.

I designed this database and dynamic visualization tool to normalize data across North American E&Ps so I could easily access the valuations and metrics that I use for decision-making.

The inputs are public filings from the SEC’s EDGAR and CSA’s SEDAR+. While the raw data is not proprietary, the service provides the convenience of normalized key metrics, valuation models, and dynamic visualizations.

Key Features:

Standardized Dataset: Normalized data for North American E&P and royalty companies.
Valuation Scenarios: Multiple discounted cash flow (DCF) scenarios for North American E&P and royalty companies
Dynamic Visualizations: Interactive charts for production, reserves, valuation, capital, debt, cash flows, and corporate breakevens.
Comparison Tool: Dynamic company comparison table for screening.

Full Disclosure: The database and dynamic visualization tool described below were designed for my personal use. However, I decided to make this publicly available due to the gap in affordable offerings for this data. Generalist investing services do not report on sector-specific metrics, and industry offerings are not priced to be accessible to retail investors.

There is a cost associated with the service ($6/month). This pricing is set to cover the costs of running the platform (Azure usage costs, Power BI licensing, and site maintenance).

How I Use the Service

The investment framework for my energy sleeve is boring, but effective. My strategy is to buy companies with specific traits (low cost of supply, long reserve life, consistent cash flow growth) and take gains when valuations become overextended.

Here are some examples of how I use the dashboard to execute that strategy:

1. Tracking Valuation Scenarios

My main day-to-day use of the tool is tracking share price against four specific valuation scenarios:

Strip Case: Uses the 12-month average futures curves for commodity benchmarking along with neutral WACC (Weighted Average Cost of Capital) and terminal multiple assumptions.
Low Case: Assumes persistently weak average commodity prices for the next five years along with a higher WACC and lower terminal multiple.
Base Case: Reflects my own five-year average mid-cycle commodity price assumptions with neutral WACC and terminal multiple.
High Case: Assumes strong commodity price assumptions for the next five years along with a lower WACC and higher terminal multiple

These scenarios are used along with guidance (with consideration of historic data) on production, operating costs, and capital expenditures to determine fair values.

Note: Valuation updates are weekly for the Strip Case and quarterly for the others (barring major events such as M&A).

My Workflow:

Buy/Add Scenario: If a company that I have screened for other important criteria is trading below the Strip Case and Base Case, it may indicate a margin of safety as a potentially good entry point or opportunity to sell cash-secured puts.
Sell/Trim Scenario: If a company’s valuation in my portfolio is stretched compared to the Strip and is above the Base Case or High Case, it may indicate an opportunity to trim or sell covered calls.

Note: Valuation alone does not drive my investment activity as I indicated in my investment framework. Some companies under coverage have high volatility and company-specific price sensitivity that may indicate significant discounted cash flow undervaluation. This does not indicate an investment recommendation, as there are other criteria besides valuation worthy of consideration.

2. Shareholder Alignment Metrics

Growth means nothing if it dilutes the shareholder. This is the importance of per-share metrics, such as cash flows or production, that show which companies are dilutive and potentially not adding value with that dilution.

Example: Take Company A and Company B. Both are large cap natural gas stocks.

Company A has historically grown production per share.
Company B has historically declined in production per share.

While this doesn’t inherently mean Company B is a “bad” company (they might be increasing margins or high-grading inventory), continual per-share metric declines are a flag for further investigation.

3. Breakeven Pricing and Dividend Sustainability

Understanding an E&P’s corporate breakeven pricing is helpful to determine the durability of future cash flows and the sustainability of the dividend in low commodity price environments.

The Corporate Breakeven visual stacks up all costs (LOE, GP&T, G&A, FD&A, Taxes, Other Expenses, Base Dividend) on a per BOE basis to show the price required to sustain the company without leaning on the balance sheet.

Example: Canadian Natural Resources has an average corporate breakeven of US$42/BOE. However, for this to be useful to us as investors, it needs to be put in the context of benchmark pricing.

The Price Regression visual can be used to predict the company-specific price for certain benchmark conditions. I can iterate on the WTI and Henry Hub inputs to solve for US$42/BOE. Using a fixed strip price of US$3.70/MMBTU for natural gas provides a corporate breakeven of approximately US$50/bbl for Canadian Natural Resources.

Note: West Texas Intermediate (WTI) and Henry Hub are the oil and natural gas benchmarks respectively used to predict company-specific pricing. While there may be more accurate benchmarks for different companies, WTI and Henry Hub still produce reliable matches unless there are significant basis swings over time.

4. Screening

I use the Company Comparison table as a high-level screener to sort by valuation, balance sheet, production, and reserves.

Example: Company Comparison table sorted from lowest to highest EV/Production for two selections, Canadian Natural Resources and ConocoPhillips.

Feedback

This service is currently optimized for my workflows, but I realize others may have different priorities.

I offer a one-week free trial for anyone interested in testing the service.

If you do try it, please provide any feedback that you have regardless of whether it is negative or positive. If there is a visualization, metric, or specific company you need to see added, please let me know.