We serve hedge funds, high net worth individuals and family offices.
Our clients typically hold more than $100 million in E&P equities or oil futures and derivative products. They are often well known and some count as respected experts, indeed, market visionaries in their own right.
They turn to us for different, but related, reasons.
We remain the only consultancy capable of both demand- and supply-constrained forecasting. Our supply-constrained approach has led us to make dramatic and radical forecasts when other consultancies continued to make incremental adjustments to their outlooks. We historically have a knack for peering around corners. Our clients typically rely upon multiple sources of personal and published information, but they want our particular view to be represented in their portfolio of advisors.
Market Monitoring and Meta Analysis
Every day, commodity and equity analysts from investment banks, independent research houses, and consultancies produce a formidable volume of research and analysis covering macro oil markets and E&P shares. Much of it is excellent.
Nevertheless, tracking, reading and reviewing these documents represent a significant investment of time. As many of these reports cross our desk, we review them, capture key points and comment on analyst insights of interest. We assist clients in understanding analyst bias and underlying forecast assumptions as well as providing our views on the market. In this sense, we provide a kind of meta analysis, providing color commentary on the work of some of the industry's star analysts.
Market Expertise and Analysis
While our clients are typically accomplished in oil and gas investing, they frequently hold diversified portfolios which includes a variety of industries beyond oil. As a consequence, they have need of support in data gathering, analysis, and synthesis in the oil segment. In many cases, hedge funds and private investors have lean teams, or they do not a need a full time oil industry analysis. In such cases, we can bridge the gap by providing analysis of occasional matters which may appear, for example, evaluation of specific investment opportunities.
Parameter Research, Model Creation and Review
We are generally considered data-driven and technically sound. We may prepare models for clients or review spreadsheet models prepared by them. As part of our efforst, we assist clients in establishing or checking coefficients and functional relationships. We will assess these models using both supply- and demand-constrained approaches, as the case may be. In this capacity we act as an out-sourced analyst.
The Client Perspective and Communication
Most oil market analysts make their livings producing reports. Many of these are outstanding. Nevertheless, such a business approach remains product-oriented. If a forecast proves wrong, the consultancies adjust their forecast and move on. From the client perspective, if a forecast proves in error, the financial damage can be material. We spend much of our day questioning whether our advice of the previous day still holds. Our principal task is the protection of clients' financial positions. We do not always succeed, but we always try, and it is the fundamental perspective we bring to our work. If our investment thesis is coming under stress, we work hard to try to give early notice to our clients.
For this reason, our attitude with our clients is at times adversarial. We are known for holding radical opinions about the market from time to time, and we share these with our clients. At the same time, our clients also tend to hold firm opinions, and they will challenge our views when they feel we have missed the mark. We have enormous respect for our clients, but at the end of the day, our mission is to champion promising investment opportunities and, more importantly, to protect our client's financial position. We push our clients, and we expect them to push us in return.
We communicate extensively with our clients. At the low end, we will keep in touch by daily and field client inquiries as they arise. At the high end, we exchange thirty emails on an average day with a lead client. Many of these communications are short, a daily back and forth assessing market developments and commenting on industry analysis prepared by others.
These communications reflect our preferred work style with clients. We believe that an investment thesis develops over time. It not an event, but a process, which arises out of on-going discussions, the result of testing and exploration.
A Sounding Board
Making an investment is easy. Holding a position is hard. From the time an investment is made until it is harvested, an investor will have ample time to contemplate the wisdom of the decision. We find that we provide an important service in acting as a sounding board for some clients. This permits clients to review the investment thesis on an on-going basis and to consider it from various risk and return aspects over time.
In the Stream of Industry Chatter
While individual investors and family offices may have substantial oil industry holdings, they may nevertheless be poorly positioned to participate in industry chatter, the daily market gossip about industry news. Some clients draw comfort from our on-going communications with other clients and industry participants during the course of the day. They see value in knowing that we are in regular contract with some of the storied oil and gas investors in the country and have solid relationships with some of the best commodity and equity analysts in the world.
Confidentiality and Community
We respect our client confidences. Nevertheless, our goal is to facilitate communication and create a community to enable our clients to benefit from each others' expertise and knowledge to the extent practicable, consistent with our clients expectations of privacy, and complying with prevailing laws and regulations. Our clients will usually be aware of our other clients and often have a sense of their market views. We generally neither ask nor disclose specific markets positions unless our clients ask us to request opinions from other members of our client set.
We observe SEC regulations regarding disclosures and insider information, and we will maintain strict confidence about any pending client transaction.