Is geopolitical risk likely to disrupt supply again?

Stijn Schmitz welcomes Josh Young to the show. Josh Young is Chief Investment Officer & Founder, Bison Interests. The comprehensive discussion focuses on the oil and gas markets, commodity cycles, and investment opportunities. Young provides a compelling thesis for oil and natural gas, centered on significant global underinvestment in exploration and production over the past decade. He argues that the current market sentiment is overwhelmingly bearish, which paradoxically creates an attractive investment opportunity. The fundamental driver of his bullish stance is the persistent 1% annual demand growth for oil, which has remained consistent despite predictions of decline due to electric vehicles and alternative energy.

Regarding supply dynamics, Young highlights the dramatic reduction in exploration and capital expenditures in the oil and gas sector. He notes that global oil production investments have dropped from around $900 billion annually to approximately $500 billion, with exploration expenditures becoming a tiny fraction of previous levels. This underinvestment, combined with natural field decline rates, suggests a potential supply crunch in the coming years. Young is equally optimistic about natural gas, citing growing demand from data centers and liquefied natural gas (LNG) export facilities. He sees potential for significant price appreciation driven by increasing demand and limited new production capacity.

In the equity markets, Young finds the most attractive opportunities in small-cap oil producers and, particularly, oil services companies. He emphasizes that surviving services companies are exceptionally well-managed and can be purchased at significant discounts to replacement cost, often with attractive free cash flow yields.

Drawing parallels with the precious metals sector, Young sees similar market dynamics emerging in oil and other commodities. He believes the current market setup resembles previous commodity cycles, where intense pessimism precedes substantial price appreciation. To share his insights, Young has launched a newsletter called Bison Insights, where he provides structured investment ideas and analysis in the energy and commodities space.

Timestamps:
00:00:00 – Introduction
00:01:36 – Oil Bull Case Overview
00:03:30 – Bearish Sentiment Analysis
00:08:24 – Underinvestment in Exploration
00:11:40 – Supply Demand Balances
00:16:45 – Shale Production Decline Debate
00:20:50 – Global Oil Demand Growth
00:25:40 – Natural Gas Bull Thesis
00:31:35 – NatGas Discounts & Demand
00:38:03 – Geopolitical Supply Risks
00:42:09 – Fair Oil Price Assessment
00:44:46 – Oil Gas Equity Opportunities
00:51:19 – Commodity Complex Parallels
00:57:50 – Precious Metals Outlook
01:03:50 – Concluding Thoughts

Guest Links:
Substack: https://bisoninsights.info
X: https://x.com/BisonInsights
Website: https://bisoninterests.com

Joshua Young has been professionally investing in publicly traded oil and gas securities for nearly two decades, achieving benchmark outperformance as Bison’s CIO. Josh possesses a deep understanding of the E&P business model and operating environment, with notable experience as Chairman of Canadian E&P company RMP Energy (rebranded as Ironbridge Resources). Under Josh’s leadership, the company achieved a successful turnaround, outperforming peers and ultimately being acquired at a 78% premium. Josh is the author of numerous articles on oil & gas investments and is a frequent guest speaker at various energy industry conferences.

Prior to Bison, Josh began his career as a management consultant for Fortune 500 companies and private equity firms. He later worked as an investment analyst for a private equity fund and served as an energy investment analyst at a multi-billion-dollar single-family office, which was nominated as Institutional Investor’s Single Family Office of the Year in 2008. Josh holds a B.S. in Economics with honors from the University of Chicago.