The OPEC meeting, over the weekend, came and went with little issue. Oil had traded a little weakly into the meeting, suggesting that at least some thought it plausible that OPEC would do something unexpected, however, they didn’t.

As a quick recap, why are energy prices (everything from oil to natural gas to coal) high?

Well, over the past decade, there’s been:

  • minimal capex (ESG shunning, pressure on boards to divest and decrease assets & production, the rise of lower cost climate friendly renewables)
  • reserve depletions (fields decline, and there are insufficient replacements and almost no greenfield developments)
  • geopolitics (Russia, OPEC)
  • demand surge (COVID-reopening, travel, cars and cold winters

The capex graphs are truly striking, from over to underinvested in the space of 10 years (I’ve not included the major’s names, but BP, Total, Chevron, all the Australian LNG players are there).


In our view, there remains a large and compelling performance and price differential between listed international players, and domestic, and more broadly, we continue to view the entire sector as cheap.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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