Writing on a sector is new for us, however we recently bought XOM and RDS and wanted to document why we made this decision and share it.
Oil companies are not high quality hence we are not going to write them up. The only point we are trying to make is that there is a more than reasonable chance that oil prices remain high for much longer than futures or investors expect.
CAPEX is constrained, demand is increasing, supply is unlikely to be able to meet that demand.
We would note that the oil sector is cheap on FCF and probably under-owned, plus there is oil's role as an inflation hedge.
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