Elm Ridge Capital Management presentation on energy investments, hit hard by oil prices but they think the opportunity is compelling.
H/T a reader
What We Think
- Oil is unlike other commodities because it depletes and requires constant reinvestment
- Depressed prices will hit future supply. US production has begun to fall and will leave the world undersupplied by mid-2016
- Higher oil prices are needed to incentivize enough new production to meet demand
- Price, not economic growth, has a greater impact on trend demand
- Our holdings have enormous upside
How Did We Get Here?
Elm Ridge Capital Management: Oil Prices – Lower For Longer?
U.S. Shale – Quicker Payback, Faster Declines
Quicker payback periods and easy credit drove the shale boom
The U.S. Would Have Eclipsed Saudi Arabia By 2016
That Did Not Sit Well With The Saudis
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