A new year in oil and gas investing (part I)

How we have positioned our portfolios for 2025

This is the first post of our series with our personal portfolios and why we hold these companies. This one is about my holdings, Name will soon publish the second post with his own commentary. We haven’t exchanged any ideas for writing them, so we aren’t biased by each other’s opinions. Subscribe if you still haven’t for receiving Name’s follow-up post:

This post is supposed to be short, I’ll provide a summary of my portfolio and how I see it behaving in 2025. It’s heavily energy-weighted, but it’s a sector I feel comfortable with and I have managed to achieve some good returns in recent years despite the bad performance of the sector in general.

These companies will do fine even if Brent falls to the $60/bbl level, something I don’t expect, to be honest. If I had to predict the average oil price for 2025, I expect it to stay in the current band of $70-75 a barrel for the remainder of the year. Some permabulls claim that low onshore inventories and the decline in some of the main US onshore formations will result in an oil deficit. I find this stance a perfect example of cherry-picking, ignoring the overall landscape: OPEC+ countries will quickly absorb any price hike.

Regarding natural gas, I prefer to have exposure to other regions than the US or Canadian, with European gas being my preferred choice for obvious reasons. Similar to what could happen to oil, if the US or Canadian natural gas price were to rise sharply, the upstream companies will enter into a drilling frenzy. In that case, the drilling and service companies will be the most benefited in the short-term. Enough with the preamble, here is my concentrated portfolio for 2025:

Valeura Energy ($VLE.TO)

I’m not going to lie, I have reduced my position above $7 on the 31st. The rally in the last weeks of the year has been too good to be ignored. Valeura has been a huge contributor to my performance in both 2023 and 2024 and despite owning fewer shares now, it’s still an important stake of my portfolio. For 2025, I expect them to continue with the buy-backs and optimize production and reserves. The Mist jack-up is under contract until 2026, so the company has all the tools to extend the current winning strategy on the operational side. I also expect Sean’s team to announce FID on the redevelopment of Wassana - replacing the MOPU and targeting new prospects in the area - and the expansion of Nong Yao with the D development. The future of Manora appears to have left behind former glories, but I’m sure Sean and his team will extract every drop of value left in that field. Jasmine continues to perform well, providing a stable production level with reasonable periodic CAPEX. The elephant in the room is more M&A, the free cash flow generation even at $70/bbl Brent continues to outpace any CAPEX and tax payments, which has resulted in a very strong balance sheet with no debt. The completion of the corporate reorganization will start to deliver results with higher FCF generation thanks to the use of the fiscal shield. I do hope Sean will continue delivering and we have more good news soon. Let’s see if he will make progress towards his bold goal that the company will reach 100,000 boe/d.

Sintana Energy ($SEI.v)

This is a core position of my portfolio. Mopane was proven to be a world-class discovery in 2024, and it still holds potential to deliver more value in 2025. n addition to this company-making licence, Chevron is currently drilling the Kapana-1X well at PEL90, with QatarEnergy joining as a partner prior to the well being spudded. This confirms the high hopes on this well. Recently, Woodside Energy has finally obtained the licence from the Namibian government to access the seismic data and is expected to confirm the farm-in at PEL87 soon. There is a possibility that Woodside may decide the Saturn Superfan isn't worth the investment, but I find this scenario very unlikely. Even in that case, Sintana would retain a fully-carried interest in Mopane and an initially-carried interest in PEL90. This does not include the additional licence in the Orange Basin (PEL79), which features very different geology, or the Walvis Basin licence (PEL82), where Chevron has also farmed in but no drilling plans have been announced yet. In addition to the work on Sintana’s licences, Rhino Energy is drilling the Sagittarius-1X well just south of Mopane, while TotalEnergies is drilling the Tamboti-1X well south of PEL90. While these wells will not directly increase the value of Sintana’s interests, they could indirectly impact the likelihood of discovering hydrocarbons within its acreage. In my opinion, the ongoing drilling activity alone justifies a strong performance in 2025.

BW Energy ($BWE.OL)

This could be one of my biggest mistakes as an investor. You've seen how many posts I’ve published here and my comments on Twitter about BWE, so it’s possible I’ve fallen in love with the company. Since discovering it, I’ve bought, sold, and bought again, but my returns so far haven’t been very positive. The company has a low free float after the tender completed in early 2024. Operationally, the problems with the electric pumps have penalized the company with lower production growth and higher CAPEX. Following the redesign of its drilling campaign, BWE has achieved very positive results in Hibiscus North and South and now plans to drill the Bourdon prospect in 2025. In the meantime, Golfinho’s OPEX has also skyrocketed, and plans to drill new wells that could increase production and lower OPEX have been postponed from 2026 to 2027. The company should soon break the 30,000 boe/d net production mark, even in the next update for Q4 2024. In Namibia, the company completed the Kudu 3D seismic analysis and has identified the Kharas prospect as the most promising one. The plan is to secure a drilling rig for H2 2025, but it still has to confirm it. Rumors suggest that more than one well could be drilled in Kudu, targeting oil in Kharas and appraising Kudu’s gas-charged formations. I’m excited about this opportunity, but it still feels far off, much like Maromba’s FID. This greenfield is subject to completing the financial package, but the company has already secured funding thanks to the issuance of 2 bonds and the sell and lease-back of the FPSO Adolo. DIn 2024, BWE acquired a stake in Reconnaissance Energy Africa ($RECO.v) and one of its licences, which I currently value at zero - any upside from that investment is purely optionality. In summary, despite the share’s underperformance in 2023-2024, the company has the tools to maintain production well above 30,000 boepd and progressively grow to 50,000 or even 70,000 boepd by the end of this decade.

Harbour Energy ($HBR.L)

I still believe in Linda. After acquiring Wintershall DEA, the company is on its way to becoming a major player with a presence in Europe, Asia, Africa, and America. The company will continue receiving cash flows from natural gas sales in Norway, providing a foundation to finance growth in the Gulf of Mexico, Argentina, and Indonesia. The company has been very active in Argentina, securing a stake in an LNG project and completing the Fenix project in partnership with TotalEnergies. Its presence in Mexico is promising, particularly with Zama and other exploration blocks. In Indonesia, the sale of the Russian partner’s interest in Tuna will unlock development, potentially followed by progress on the Natuna and Andaman discoveries. The company holds small interests in North Africa (Tunisia, Egypt, and Libya) that could be sold to focus on more promising areas. Remember, Carlos Slim is one of HBR’s largest shareholders, and he has taken an aggressive stance with Talos, signing an agreement with its board. Linda mentioned having several options when the Wintershall DEA deal came to her table, and I suspect Talos or Kosmos could be on the menu … Lastly, the UK assets appear likely to be sold sooner rather than later (currently, interests in five licences are up for sale). This operation would mark the end of an era and the beginning of a new chapter. In any case, I expect Harbour to transition from being the largest UK independent E&P company to an emerging international major with a presence across all continents.

Etablissements Maurel et Prom ($MAU.PA)

Remember, we wrote about this company in 2023, speculating on the outcome of the Assala acquisition. The transaction didn’t go through because the Gabonese government intervened. But that’s ancient history now. The company is recovering the debt accumulated from its Venezuelan investment while increasing production to 10,000 bbl/d net to MAU. Tanzania, Gabon, and Angola continue to perform as expected. Combining all assets, MAU’s net production could have likely reached or exceeded 40,000 boe/d by the end of 2024. The balance sheet has improved dramatically, and I believe management won’t hesitate to leverage this financial strength soon. MAU still holds c.20% of Seplat, providing limited exposure in case the MPNU acquisition turns out to be less disappointing than it seems. Therefore, I anticipate generous dividends or accretive M&A in 2025, as the company continues to perform well. I couldn’t resist buying some shares when it dropped below €5. If oil prices hold steady, I’m confident the share price will rise above €7.

Alphamin Resources ($AFM.TO)

This can be considered a “legacy” position. I like the company, its management, and its setup, with dividends and sufficient resources to sustain production for years. The tin market could surprise with a price spike similar to 2022. I’m more comfortable with a producer that has one of the lowest AISCs rather than higher-leverage plays like Metals X. Additionally, it could be acquired at any time, as rumors of a takeover have circulated countless times. I plan to hold it through 2025 unless tin prices tank.

(A small-cap to be published)

This is my last addition to my portfolio. It’s a Canadian oil company that has completed a turn-around with no incidents (or inchidents IYKYK) and has an interesting setup for 2025. I expect them to continue growing production while still generating positive FCF. The announcement of a dividend in H2 2025 could attract more investors. IIt’s the most speculative position in my portfolio and trades with very low daily volume, making it an option primarily for retail investors willing to dip their toes into Alberta’s oil industry. An unnecessary long write-up is coming soon.

Conclusion

As you can see, most of the companies I own are for different reasons other than the financial aspects, I find growth opportunities and superior quality of the leadership more appealing to other metrics. As I’ve said many times, I don’t frequently buy or sell, but there are other companies on my radar, such as Maha Energy (if only I could buy Brava Energy directly without the hassle of Brazilian brokers), Tenaz Energy, Pharos Energy, Logan Energy, and Serica Energy (which I sold after the anticipated acquisition failed to materialize), as well as some offshore drilling companies like Transocean, Seadrill, and Northern Ocean.

This is just my portfolio for 2025, and I’d love to hear about yours in the comments! Feel free to challenge some of my comments, I’d enjoy debating the pros and cons of each!