Simon Lack Blog | Talkmarkets | Page 1
Managing Partner, SL Advisors, LLC
Contributor's Links: SL Advisors, LLC

Following 23 years with JPMorgan, in 2009 Simon Lack founded SL Advisors, LLC, an SEC Registered Investment Adviser. SL Advisors manages investments in energy infrastructure, including the Catalyst MLP & Infrastructure Fund (MLXIX), the American Energy Independence Fund (USAI), and ... more

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Pipeline Earnings Offer Helpful Insights
Earnings season for pipeline companies is drawing to a close, with just a few more names left to report. Results have been mostly as expected with a couple of surprises.
Planting A Cooler Climate
A little noticed sentence in President Trump’s State of the Union speech was that the U.S. would join the Trillion Trees Initiative. t's so seductively simple so we looked at the plausibility of harnessing nature to consume the excess CO2..
HH U.S. Natural Gas Helps Lower Emissions Again
Increased use of natural gas was an important contributor, because it’s substituting for far dirtier coal. In 2018, using the most recent figures available, natural gas produced 35% of America’s electricity, versus 27.5% for coal.
Today’s Pipelines Leave MLPs Behind
Midstream energy infrastructure and MLPs used to be synonymous, but widespread distribution cuts and investor abuse have left the old, rich Americans who used to be the investor base betrayed.
EC Crude Catches A Virus
We’re in one of those times when everything is a macro call. Stocks and sectors are, for now, more highly correlated, since Coronavirus developments are dominant.
Kinder Morgan’s Slick Numeracy
A Chief Financial Officer needs to know her way around a financial statement. Presenting operating performance in the best possible light is a highly valuable skill.
Why Oil Production May Disappoint
E&P companies routinely drill wells but hold off completing them until a later date. Drilled but Uncompleted wells (DUCs) are a form of production inventory in that they represent future output once completed. Fewer wells completed means less output.
Pipelines Slowly Returning Cash
2020 should be the year in which pipeline companies deliver on the promised increase in Free Cash Flow (FCF). The Coming Pipeline Cash Gusher remains the strongest bull case for midstream energy infrastructure.
EnLink Aims For Positive Free Cash Flow
It’s a sign of the market’s evolving view of pipeline stocks that EnLink Midstream’s distribution cut was followed by a modest bounce in the stock.
Clean Fossil Fuels May Be Coming
80% of the world’s primary energy comes from fossil fuels. Only around 20% of global energy use is for electricity, that’s still substantial and initiatives to combat climate change generally contemplate increased electrification of transportation.
Energy Strengthens U.S. Foreign Policy
In November, the U.S. was a net exporter of crude oil and petroleum products for the first time in decades, a development made possible by the Shale Revolution. Increased freedom of action is one of the many benefits, as Iran is finding out.
Gulf Tensions Back In Play
The Shale Revolution affords the U.S. far more foreign policy flexibility, now that OPEC can’t cause gas lines. Substantially higher domestic production of hydrocarbons made America a net exporter of crude oil and petroleum products late last year.
Stocks Have Been Cheaper
Stocks remain a good investment, although they have been substantially more attractive at different points over the past decade. Bonds continue to be an extremely poor long term bet. But it wouldn’t take much for equity valuations to be mundane.
Looking Back On 2019
Reviewing the past year’s stats provides a useful perspective on what pipeline investors are thinking about.
Pipeline Bond Investors Are More Bullish Than Equity Buyers
Today’s bond investors are willingly locking in low and negative real yields – in many cases even negative nominal yields. Two compelling explanations are inflexible investment mandates, and fear of another 2008 financial crisis.
Private Equity, Private Valuations
There’s plenty of evidence that PE firms assess more value in publicly traded energy sector equities than the public markets themselves. PE investments in midstream energy infrastructure have slowed down, although it’s still been an active year.
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