Our Approach

Our approach is to analyze what we can measure (free cash flow NPV). U.S. public companies submit quarterly financial statements and therefore the market has access to actual quarterly all-in capital spending and production data from which to determine full-cycle capital intensity. Further, actual quarterly results can be compared to expectations to assess capital and economic performance.

The conventional approach uses a type curve assumption (NAV). A necessity of any analysis is actual measurable data. Every well generates a unique production profile affected by literally hundreds of subtle factors, while individual well costs often vary remarkably and are externally unknowable. Further, individual well costs are, by definition, an incomplete depiction of full-cycle capital costs. There is no such thing as an average type-curve; every well is unique. Thus, it’s not possible to determine with any reasonable accuracy the NPV of an energy company using an individual well NPV buildup.

John’s industry engineering experience provides an understanding of an energy company’s real-world operational challenges. His knowledge of reservoir attributes (rock properties, pressure, stress regimes) provide a comprehension of formation productivity. John’s regular dialogue with company personnel, including technical staff, is informed by his technical background and analysis construct.

At its core, our analytical framework quantifies the actual relationship between all-in capital spending and production. Capital intensity is overwhelmingly important though often misunderstood or miscomputed in determining value creation (individual well NAV buildups). Our analytical construct reverse engineers the relationship between capital spending and production using a consistent resource deliverability profile. Given the analytical consistency across business models, the framework permits objective comparison of capital intensity and therefore full-cycle returns.

Our free cash flow NPV is premised on a Benjamin Graham’s sound theoretical framework. Our economic model, developed while attending the University of Chicago, includes a five-year integrated financial outlook terminated to perpetuity using a market supportable WACC (capital asset pricing model). Five-years is generally the optimal timeframe for determining the compounding investment return of an energy business model. Our production outlook is based on actual full-cycle capital performance. Company production guidance is a guide not a reality.

Our research publications are intended to address relevant investor questions across a myriad of parameters. The centerpiece is a weekly forced rank of equity investment attractiveness. Additional publications include weekly trading multiple comparisons, bi-monthly company short interest and numerous quarterly thought pieces along with earnings preview and recap compendiums. Further, our global crude oil and U.S. natural gas market outlooks are updated continuously and published at least quarterly. Naturally, the evolution of the global LNG, renewable power and BEV markets is integral to our energy commodity price outlook.

Energy research premised on analyzing measurable reality. We analyze what we can measure.

Energy research premised on analyzing measurable reality.

Real-world energy industry experience and analytical framework.

The Standard in Robust, Objective Energy Economic Analysis.