Join Josh Young, Chief Investment Officer and Founder of Bison Interests, as he dives into the fascinating world of commodities. He discusses the bullish case for oil amidst a prevailing bearish sentiment, highlighting significant global underinvestment in exploration. Young predicts a supply crunch due to declining production investments and persistent 1% demand growth. He also shares insights on natural gas, driven by rising demand from LNG exports. Discover his top equity opportunities, including small-cap producers, and hear his thoughts on precious metals like gold and silver.
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insights INSIGHT
Contrarian Setup In Oil Markets
Market-wide bearishness on oil creates a contrarian buying opportunity.
Josh Young argues that extreme negative sentiment is often already priced in and favors mean reversion in commodities.
insights INSIGHT
Underinvestment Drives Future Supply Shortage
A decade-long collapse in exploration and delineation spending creates structural supply risk.
Insufficient exploration plus natural decline rates will make supply scarcer and more expensive over time.
insights INSIGHT
CapEx Collapse In Upstream And Services
Aggregate industry capex fell sharply from near $900B to roughly $500B annually.
Oil field services capex collapsed even more, amplifying capacity constraints and equipment retirements.
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Stijn Schmitz welcomes Josh Young to the show. Josh Young is Chief Investment Officer & Founder, Bison Interests. The podcast delves into a comprehensive discussion about 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.
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