special guests discuss the oil and gas markets - is …
TRANSCRIPT
SPECIAL GUESTS DISCUSS THE OIL AND GAS
MARKETS - IS YOUR PORTFOLIO PREPARED? WEBINAR PROGRAM – WEDNESDAY AUGUST 5, 2020 - #103
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MARKETS - IS YOUR PORTFOLIO PREPARED?
Let’s review data and analysis on a variety topics involving the energy markets.
*These are not specific recommendations for you but are ideas for you to consider and discuss with your Financial Planner.
Get Your Notebook Ready and Take Notes!
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Located in Frisco, Texas
CEO – Mike Kurz, CFP®, CIMA®, CAIA, CPWA®
Financial Planner
Enjoy all kinds of biking – anything with two wheels
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OverShare Advice and Planning, LLC is a Registered Investment Adviser providing Financial Planning and Investment Advisory services to a select group of Client Families. This communication is not
intended as an offer or solicitation to buy, hold or sell any financial instrument, financial planning services or investment advisory services.
OverShare Advice and Planning, LLC is an Investment Advisor registered with the State of Texas. All views, expressions, and opinions included in this communication are subject to change. This
communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered
reliable, but we do not guarantee the accuracy, or the completeness of, any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities
mentioned and may execute transactions that may not be consistent with this communication's conclusions.
Please contact us at (469) 777-6559 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify
existing restrictions. Additionally, we recommend you compare any account reports with the account statements from your Custodian. Please notify us if you do not receive statements from your
Custodian on at least a quarterly basis. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on our website, OverShareAdvice.com. This disclosure brochure,
or a summary of material changes made, is also provided to our clients on an annual basis.
Confidentiality Notice: Messages sent to or from this contact are archived and monitored by OverShare Advice and Planning, LLC. This message and any attached document contains information which
may be confidential. If you are not the intended recipient of this transmission, please notify the sender immediately and delete/destroy this message from your system.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is
not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any
transaction or matter addressed herein.
OverShare Advice and Planning, LLC
OverShareAdvice.com
469-777-6559
6136 Frisco Square Blvd, Suite 400 #1099, Frisco, Texas 75034
DISCLOSURES FOR PRESENTATION DATED AUGUST 5, 2020
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DISCLOSURES FOR PRESENTATION DATED AUGUST 5, 2020 This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for
specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of
any security.
This webinar contains content that is not suitable for everyone and is limited to the dissemination of general information pertaining to our investment and financial planning services. Nothing presented
should be interpreted as legal, tax or accounting advice, nor should it be construed as personalized investment, financial planning, legal or tax planning advice. For legal, tax and accounting-related
matters, we recommend that you seek the advice of a qualified lawyer or accountant. Past performance is no guarantee of future results, and there is no guarantee that the views and opinions expressed
will come to pass. Investing in the stock and other markets involves gains and losses and may not be suitable for all investors. This presentation is not a substitute for personalized financial or tax
planning. The content is current only as of the date on which the presentation was given. The statements and opinions expressed are subject to change without notice based on changes in the law and
other conditions.
OverShare Advice and Planning, LLC is a registered investment adviser in the State of Texas. Registration does not imply any level of skill or training. The opinions and views expressed by the speakers
who are not OverShare Advice and Planning, LLC employees do not necessarily represent those of OverShare Advice and Planning, LLC . While such third parties are deemed to be reliable, OverShare
Advice and Planning, LLC makes no representations as to the accuracy of any information presented by a third party. Any views and opinions expressed at the event do not, and are not intended to
constitute, personalized advice on investing, legal or other matters. For information pertaining to our registration status, fees and services, please contact us using the contact information above or refer
to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov) for a copy of our disclosure statement set forth our on Form ADV. Please read the disclosure statement carefully before you
invest or send money.
DISCLOSURES FOR PRESENTATION DATED AUGUST 5, 2020
This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific
investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from OverShare Advice and Planning, LLC or any parties included in this presentation to
participate in any of the transactions mentioned herein.
Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied
upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting
implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that
they obtain all available relevant information before making any investment.
Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to
change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or
omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation
agreements and investors may not get back the full amount invested.
Both past performance and yields are not reliable indicators of current and future results.
Unless otherwise stated, all data are as of June 30, 2020 or most recently available.
Investors should consider this presentation as only a single factor in making their investment decision and not make any final decisions without first completing their own research to make their
own investment decisions.
Host - Mike Kurz
About 15 minutes on Financial Markets, Equity Markets and Energy Markets.
Special Guest – Brad Olsen
About 15 Minutes on his and his firm’s view of the Energy Markets.
Special Guest – Brett Creeser
About 25 Minutes on his perspective from operating an Energy Company.
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U.S. LARGE CAP INDEX – S&P 500 COMPOSITE INDEX 1900-2020
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“Following a year of unprecedented shocks,
uncertainties over oil fundamentals has never been
higher.”
“…leads us to forecast that the pace of monthly
demand gains is set to slow to below 1 mb/d from
August through December.”
“This slowdown is driven by a sharp stalling in the
US due to the resurgence of the virus, an only small
increase in global jet demand and finally the
headwinds to normalizing activity even in countries
where the virus remains under control.”
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“Global economic developments and numerous
uncertainties surrounding the ongoing COVID-19
pandemic in the coming months could push oil prices
higher or lower than the current STEO [Short Term Energy
Outlook] price forecast. Uncertainty also remains
regarding the duration of, and adherence to, the current
OPEC+ production cuts. Lastly, the U.S. tight oil sector
continues to be dynamic, and the ability of producers to
adjust to an especially volatile pricing environment in the
face of significant reductions in drilling activity in recent
months could affect both current crude oil prices and
expectations for future prices.”
WORLD OIL DEMAND GROWTH FORECASTS, MB/D
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Upstream companies
Exploration and Production (E&P) companies, find reservoirs and drill oil and gas wells.
Midstream companies
Downstream companies
Services
Drilling companies contract their services to E&P companies to extract oil and gas.
Well-servicing companies conduct related construction and maintenance activities on well sites.
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Financial Markets are naturally cyclical.
Be careful to not see patterns or trends where they don’t exist.
S&P 500 Index has allocation to Energy.
Seeing opportunities to find energy investments for a long-term position in a portfolio.
I believe it will be bumpy, and uncertainties remain but unfortunately the upside will quickly fade away once better
results are expected.
OverShare Advice and Planning, LLC only provides recommendations to existing Clients. This information is for
educational purposes only.
Talk with your Financial Planner about your long-term investment portfolio together with your risk tolerance to
determine if your portfolio matches the objectives of your financial plan.
Is your Portfolio Prepared so that Opportunities are not Lost, Forgotten or Left to Chance?
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Recurrent Energy/Midstream Update For OverShare Advice and Planning, August 2020
www.recurrentadvisors.com
Investing Outlook in a post-Covid World • After the worst 2 months in energy history, we believe that a commodity-agnostic
investment case for midstream remains, thanks to lower growth and more cash flow
• We evaluate progress made since the “energy credit crisis” of 2015-16
• Valuations today vs. history, and impacts of leveraged forced selling
• What will drive midstream returns in a post-shale world?
FOR INTENDED RECIPIENT ONLY / FINANCIAL PROFESSIONAL USE 24
Disclosures
The enclosed material is confidential and not to be reproduced or redistributed in whole or in part without the prior written consent of Recurrent Investment Advisors. Any statements of opinion constitute only current opinions of Mr. Laskin and Mr. Olsen, which are subject to change and which we do not undertake to update. Due to, among other things, the volatile nature of the markets and the investment strategies discussed herein, they may only be suitable for certain investors. Nothing herein constitutes an offer to sell, or solicitation of an offer to purchase, any securities, nor does it constitute an endorsement with respect to any investment strategy or vehicle. Past performance is not indicative of future results. Returns are presented gross and net of management fees and include the reinvestment of all income. Actual investment advisory fees incurred by clients may vary. Please reference Recurrent Investment Advisors Brochure, Item 5 Fees and Compensation of Part 2.A of the Form ADV.
The information is not intended and should not be construed as legal or tax advice. Parties should independently investigate any investment strategy or manager, and should consult with qualified investment, legal, and tax professionals before making any investment.
There is no guarantee that any investment process described herein will be successful or profitable. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Clients and investors may lose all of their investments.
Without limiting any of the foregoing, in no event shall Recurrent Investment Advisors, any of its affiliates or any third party have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
Some information contained herein has been obtained from third-party sources and has not been independently verified and we make no representations as to the accuracy or the completeness of any of the information herein. The information herein is subject to change, without notice, and the authors do not undertake to revise or update this information in any way.
Many factors affect performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. Information about rankings in this material are available upon request.
Returns and Indices Disclaimer: Comparison to benchmarks are provided for illustrative purposes only. Comparisons to benchmarks have limitations because benchmarks have volatility and other material characteristics that may differ from the fund(s). Because of these differences, benchmarks should not be relied upon as an accurate measure of comparison.
The following benchmarks are used: “SPGINRTR” = S&P Select North American Natural Resources Index “AMZ” = Alerian MLP Index - Capped, Float Adjusted, capitalization weighted index of energy infrastructure Master Limited Partnerships (MLP)
These benchmarks are broad-based indices which are used for comparative purposes only and have been selected as they are well known and are easily recognizable by investors. However, the investment activities and performance discussed herein may be considerably more volatile than the performance of any of the referenced indices. Unlike these benchmarks, the investments portrayed herein are actively managed. Also, the indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types of expenses. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Unlike these benchmarks, the investments portrayed herein are actively managed. Furthermore, Recurrent Investment Advisors invests in substantially fewer investments than the number of investments of the portfolios compiled each of these benchmarks. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance.
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Natural Resources Equities Historically Cheap Compared to Broader Equity Market
Founded in 2017 by 2 PMs from Boone Pickens’ BP Capital, we focus on hard assets with strong returns on capital, trading at or below fair value
STRICTLY FINANCIAL PROFESSIONAL USE ONLY
Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
About Recurrent Investment Advisors An employee-owned emerging real assets manager
Recurrent strategies (November 2017-Current)
• Recurrent MLP & Infra Fund (RMLPX) – “I” Class shares only, 1.25% expense ratio
• RMLPX – Top 23% in 2018 / 32% in 2019 out of 100+ public MLP funds, per Morningstar
• RMLPX has raised >$100mm in assets ITD while 90%+ of Midstream Funds have shrunk
Predecessor BP Capital strategies (full years 2014-16)1
• BP Capital TwinLine MLP Strategy - Top 10% in Morningstar over 3 years
• CIO / BP Capital Fund Advisors • PM / #1 energy fund (Morningstar 3-yr) • Energy PM / Invesco, Van Kampen Funds • Director of Research / Morgan Stanley
Investment Management • 20 years of finance/energy experience • BA Swarthmore, MBA Wharton School
MARK LASKIN, CFA – CO-FOUNDER / PORTFOLIO MANAGERBRAD OLSEN – CO-FOUNDER / PORTFOLIO MANAGER
• MLP PM / BP Capital Fund Advisors • PM / top 10% MLP fund (Morningstar 3-yr) • Head of MLP Research / TPH & Co. • #1 energy analyst in US / 2013-14
(FT/Starmine) • 12 years of finance/energy experience • BA Rice University
JAMES “JIM” GILLIGAN – SENIOR ADVISOR
• Former CIO/PM / Invesco, responsible for $40 bn in AUM • PM / Van Kampen Funds, Morgan Stanley Investment Mgmt
OLIVER DOOLIN – ENERGY SPECIALIST
• Client Portfolio Manager / Series 7, 63 • Institutional E&P and Midstream background • Previously Sales and Trading / Heikkinen Energy Advisors • 6 years Research, Sales and Trading / TPH & Co. • Began career in Research / Howard Weil • 11 years of total energy finance and investment experience
- Contrary to consensus wisdom that “growth is good” for energy stocks, shale growth has been bad for performance – why?
- Counterintuitively, growth requires more spending, which means less cash is left over for debt service and shareholders.
- Energy stocks are cheap today. We believe energy subsectors that can maintain cash flow without more spending are most attractive – this brings us to midstream.
- With spending falling faster than cash flow, midstream sector FCF is poised to grow even in a sustained $30-40/bbl environment.
- Midstream valuations (EV vs book) sit at 20-year lows. A return to “average” could imply 50-100% upside for equities.
- A variety of sectors, such as Tobacco, have demonstrated that lower growth and high cash returns can drive market-leading returns.
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Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Recurrent Market Update and Outlook What you’ll hear from us today
The investment case for midstream In an (increasingly) post-shale world
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EV/IC discounts have historically indicated attractive MLP entry points
Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Contrary to consensus wisdom, shale was very bad for the midstream sector
8.0% 7.9%
8.1%
8.6%
6.5%
7.4%
7.7%
8.2%
0%
5%
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45%
50%
5.0%
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8.5%
9.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
% o
OCF ROIC % of "Fallow" Capital Tied up in Construction, Integration
Assets in progress reached 45% of total assets in 2012-13
12.7% 14.3%
-0.3% -2.0%
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50%
60%
70%
80%
90%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
D iv
id en
3.0x
3.5x
4.0x
4.5x
5.0x
5.5x
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
D eb
0%
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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
B o
o k
A ss
e t
G ro
w th
Y /Y
Midstream/MLP Y/Y Asset Growth, 2005-19
The MLP “Balance Sheet Recession”: When will we see a sustained recovery?
MLP performance since early 2016 has been restrained by reduced cash flows to equityholders, following the accumulation of high debt – akin to a sector-level “balance sheet recession.”
Balance Sheet Recession Phases:
1. Debt accumulation in anticipation of future returns (from capex, M&A) while increasing payouts to support valuations
2. reduction in capital spending and payouts to equity
3. 2-3 years for debt loads to return to “normal”
4. Market satisfied with debt loads, rapid recovery ensues
The BSR began for MLPs and midstream in late 2015 – when efforts to reduce equity payouts and cut debt loads began.
Assuming continued capital discipline, a recovery generally follows 2 to 3 years thereafter.
NOW: Deleveraging process is accelerating on back of payout reductions
Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC discounts have historically indicated attractive MLP entry points EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Shale left midstream inefficient and in debt – by early 2020, it was largely fixed
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As of 6/30/2020 Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Due to capex cuts, Covid and low oil prices will not stop FCF growth
A dramatically more capital-efficient midstream sector is in better position to manage balance sheets, shareholder returns
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2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E
N A
m e
ri ca
n M
id st
re am
C ap
( $b
n )
2020 FCF has actually grown as Covid crushes capex; FCF per share to double by 2023E
FCF "Wedge" / Year FCF Deficit / Year New Capex Estimate New CF Estimate
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Despite opposition to new pipeline construction, midstream valuations imply a discount to book value, which understates construction costs
EV/IC discounts have historically indicated attractive MLP entry points
2019 represents total returns through “Current” reflects 6/30 EV with 3/31 financial statement data for IC Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Valuations lower than 2008, below book value (which is below construction cost)
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Historical Enterprise Value vs. Invested Capital (EV/IC) of Midstream
Midstream Observed EVIC EVIC Avg, 2004-08 "Pre-Shale" EVIC Avg, 2009-14 "Shale Era"
MLP Balance Sheet Recession: Cheap valuations in tension with painful debt reduction
Shale era: bullish investor sentiment, revenue growth, rapid debt
accumulation
Pre-shale: low debt, selective M&A, some "tight gas" infrastructure growth -33%
+5%+28% +5%
-7%
+18%
+7%
-36%
(6/30)
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Prosperity without growth: How other sectors have driven strong investor returns even with slowing revenues
Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
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Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Dreaming of when midstream is loved and respected, like tobacco (and refining)
0%
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2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
A n
n u
Capital Allocation vs. Performance: Tobacco Industry
Reinvestment as % of OCF (Left Axis) Net Equity/Dividends as % of OCF (Left)
Avg CF Growth, 2001-18 (Right Axis) Cumulative vs. S&P 500 (Right)
2009-2016: shrinking industry? With almost no reinvestment, divs/buybacks soared and so did share
prices
High cash returns (in orange) and low capex (in blue) in tobacco show a pathway for a low-growth industry to thrive
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As of 3/25/20. Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Midstream is poised to follow the path tread by tobacco, refining… and tech
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2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
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Capital Allocation vs. Performance: Midstream Industry
Reinvestment as % of OCF (Left Axis) Net Equity/Dividends as % of OCF (Left)
Avg CF Growth, 2001-18 (Right Axis) Cumulative vs. S&P 500 (Right)
2015-19: construction projects are finally rolling off
Incredibly, in the “shale era,” midstream cash returns were neutralized by aggressive equity issuance. Capex is rolling as net cash returns increase
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Energy / Midstream Underperformance: A parallel perspective from the late 1990s
Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
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Natural Resources Equities Historically Cheap Compared to Broader Equity Market A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
A Final Thought: “History doesn’t repeat, but it often rhymes” – Mark Twain
• Mature bull markets in equities, led by tech…
• Strong dollar, volatile/lagging commodities and EM…
• Energy and MLPs lag due to reputation for aggressive financial policies, negative sentiment…
Sound familiar?
-60%
-50%
-40%
-30%
-20%
-10%
0%
MLPs vs. NASDAQ Energy vs. NASDAQ MLPs vs. S&P Energy vs. S&P
En er
gy /M
LP A
n n
u al
U n
d er
p er
fo rm
an ce
Late 1990s Today
Natural Resources Equities Historically Cheap Compared to Broader Equity Market A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
A Final Thought: “History doesn’t repeat, but it often rhymes” – Mark Twain
• In the late 1990s, MLP financial strength was improving as the broad market overheated…
• … and underinvestment by the oil and gas industry created a counter-cyclical setup for energy investment.
Source: Bloomberg, Recurrent research
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MLPs vs. NASDAQ Energy vs. NASDAQ MLPs vs. S&P Energy vs. S&P
En er
gy /M
LP A
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u al
O u
tp er
fo rm
an ce
RMLPX Disclaimers and Other Information
Important Fund Information:
1. Dividends are subject to change and there is no assurance that they will continue to be paid.
2. The Fund's advisor has contractually agreed to reduce its fees to 1.25% until March 1, 2021. Without the waiver, total annual operating expenses would be 1.75% for RMLPX per the initial prospectus filing.
This presentation makes use of a variety of financial terms, defined below:
Enterprise Value: The market value of a company’s equity, debt (net of cash) and preferred/mezzanine claims.
Book Value: The stated book value of a company’s shareholders’ equity and total debt outstanding, net of cash and equivalents, as found in the balance sheet shown in the financial statements in their public filings.
Alerian MLP Index - is a composite of the 50 most prominent energy master limited partnerships calculated by Standard & Poor's using a float-adjusted market capitalization methodology. Investments cannot be made in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Recurrent Funds. This and other important information about the Funds is contained in the prospectus, which can be obtained by calling 833-RECURRENT. The prospectus should be read carefully before investing. The Recurrent Funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC.
Recurrent Investment Advisors is not affiliated with Northern Lights Distributors, LLC.
Risk Disclosure (RMLPX)
Mutual Funds involve risk including the potential loss of principal. Higher turnover and frequent trading may result in higher costs. Cash available for distribution by MLPs may vary and could be affected by the entity’s operations, including capital expenditures, operating, acquisition, construction, exploration and borrowing costs, reducing the amount of cash and MLP has available for distribution. The Fund may focus on one or more industries, sectors or geographic regions of the economy and the value of an investment may fluctuate more widely than if it were diversified. Tax risks associated with the Fund include fund structure risk, MLP tax risk, and tax estimation/NAV risk. Cyber-attacks or failures affecting the Fund or service providers may adversely impact the Fund or its shareholders.
The Fund invests primarily in the energy sector and infrastructure industry and is susceptible to adverse economic, environmental, and regulatory concerns. Additional risks include acquisition, catastrophic event, commodity price, depletion, natural resource, supply/demand and weather risk. The purchase of IPO shares may involve high transaction cost, market and liquidity risks. The investment strategies employed by the Advisor may not result in an increase in value or performance. Overall equity market risk may affect the value of individual instruments in which the Fund invests. Holders of MLPs have limited control and voting rights, additionally, there are certain tax risks and conflicts of interest between holders of MLPs and the general partner. The Fund is newly-formed and may not grow to or maintain economically viable size, not be successful implementing its investment strategy, which could result in the Fund being liquidated. (3457-NLD-4/13/2020)
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• Joined Guidon in April of 2016 with the intent of building a significant independent shale
development company focused on the Midland Basin
• 2013, Brett joined Laredo Petroleum as the Director of Laredo’s Midstream Services and was
instrumental in developing a cradle to grave water management program
• Two year assignment to Ghana, West Africa as Drilling Manager for Kosmos Energy
• London trading crude and propane
• 2000 independent contractor for Pioneer Natural Resources with various assignments in the
GOM and South Africa
• Pioneer to manage field operations North Texas
• 1981 with Mobil Oil working in Production and Drilling in Texas, Gulf of Mexico (GOM) and
Norway
• Brett earned a B.S. in Petroleum Engineering from Texas A&M University
INTERVIEW WITH BRETT CREESER
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OverShareAdvice.com
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THE END.
MARKETS - IS YOUR PORTFOLIO PREPARED? WEBINAR PROGRAM – WEDNESDAY AUGUST 5, 2020 - #103
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MARKETS - IS YOUR PORTFOLIO PREPARED?
Let’s review data and analysis on a variety topics involving the energy markets.
*These are not specific recommendations for you but are ideas for you to consider and discuss with your Financial Planner.
Get Your Notebook Ready and Take Notes!
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Located in Frisco, Texas
CEO – Mike Kurz, CFP®, CIMA®, CAIA, CPWA®
Financial Planner
Enjoy all kinds of biking – anything with two wheels
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OverShare Advice and Planning, LLC is a Registered Investment Adviser providing Financial Planning and Investment Advisory services to a select group of Client Families. This communication is not
intended as an offer or solicitation to buy, hold or sell any financial instrument, financial planning services or investment advisory services.
OverShare Advice and Planning, LLC is an Investment Advisor registered with the State of Texas. All views, expressions, and opinions included in this communication are subject to change. This
communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered
reliable, but we do not guarantee the accuracy, or the completeness of, any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities
mentioned and may execute transactions that may not be consistent with this communication's conclusions.
Please contact us at (469) 777-6559 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify
existing restrictions. Additionally, we recommend you compare any account reports with the account statements from your Custodian. Please notify us if you do not receive statements from your
Custodian on at least a quarterly basis. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on our website, OverShareAdvice.com. This disclosure brochure,
or a summary of material changes made, is also provided to our clients on an annual basis.
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transaction or matter addressed herein.
OverShare Advice and Planning, LLC
OverShareAdvice.com
469-777-6559
6136 Frisco Square Blvd, Suite 400 #1099, Frisco, Texas 75034
DISCLOSURES FOR PRESENTATION DATED AUGUST 5, 2020
5
DISCLOSURES FOR PRESENTATION DATED AUGUST 5, 2020 This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for
specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of
any security.
This webinar contains content that is not suitable for everyone and is limited to the dissemination of general information pertaining to our investment and financial planning services. Nothing presented
should be interpreted as legal, tax or accounting advice, nor should it be construed as personalized investment, financial planning, legal or tax planning advice. For legal, tax and accounting-related
matters, we recommend that you seek the advice of a qualified lawyer or accountant. Past performance is no guarantee of future results, and there is no guarantee that the views and opinions expressed
will come to pass. Investing in the stock and other markets involves gains and losses and may not be suitable for all investors. This presentation is not a substitute for personalized financial or tax
planning. The content is current only as of the date on which the presentation was given. The statements and opinions expressed are subject to change without notice based on changes in the law and
other conditions.
OverShare Advice and Planning, LLC is a registered investment adviser in the State of Texas. Registration does not imply any level of skill or training. The opinions and views expressed by the speakers
who are not OverShare Advice and Planning, LLC employees do not necessarily represent those of OverShare Advice and Planning, LLC . While such third parties are deemed to be reliable, OverShare
Advice and Planning, LLC makes no representations as to the accuracy of any information presented by a third party. Any views and opinions expressed at the event do not, and are not intended to
constitute, personalized advice on investing, legal or other matters. For information pertaining to our registration status, fees and services, please contact us using the contact information above or refer
to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov) for a copy of our disclosure statement set forth our on Form ADV. Please read the disclosure statement carefully before you
invest or send money.
DISCLOSURES FOR PRESENTATION DATED AUGUST 5, 2020
This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific
investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from OverShare Advice and Planning, LLC or any parties included in this presentation to
participate in any of the transactions mentioned herein.
Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied
upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting
implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that
they obtain all available relevant information before making any investment.
Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to
change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or
omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation
agreements and investors may not get back the full amount invested.
Both past performance and yields are not reliable indicators of current and future results.
Unless otherwise stated, all data are as of June 30, 2020 or most recently available.
Investors should consider this presentation as only a single factor in making their investment decision and not make any final decisions without first completing their own research to make their
own investment decisions.
Host - Mike Kurz
About 15 minutes on Financial Markets, Equity Markets and Energy Markets.
Special Guest – Brad Olsen
About 15 Minutes on his and his firm’s view of the Energy Markets.
Special Guest – Brett Creeser
About 25 Minutes on his perspective from operating an Energy Company.
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U.S. LARGE CAP INDEX – S&P 500 COMPOSITE INDEX 1900-2020
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“Following a year of unprecedented shocks,
uncertainties over oil fundamentals has never been
higher.”
“…leads us to forecast that the pace of monthly
demand gains is set to slow to below 1 mb/d from
August through December.”
“This slowdown is driven by a sharp stalling in the
US due to the resurgence of the virus, an only small
increase in global jet demand and finally the
headwinds to normalizing activity even in countries
where the virus remains under control.”
15
“Global economic developments and numerous
uncertainties surrounding the ongoing COVID-19
pandemic in the coming months could push oil prices
higher or lower than the current STEO [Short Term Energy
Outlook] price forecast. Uncertainty also remains
regarding the duration of, and adherence to, the current
OPEC+ production cuts. Lastly, the U.S. tight oil sector
continues to be dynamic, and the ability of producers to
adjust to an especially volatile pricing environment in the
face of significant reductions in drilling activity in recent
months could affect both current crude oil prices and
expectations for future prices.”
WORLD OIL DEMAND GROWTH FORECASTS, MB/D
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Upstream companies
Exploration and Production (E&P) companies, find reservoirs and drill oil and gas wells.
Midstream companies
Downstream companies
Services
Drilling companies contract their services to E&P companies to extract oil and gas.
Well-servicing companies conduct related construction and maintenance activities on well sites.
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Financial Markets are naturally cyclical.
Be careful to not see patterns or trends where they don’t exist.
S&P 500 Index has allocation to Energy.
Seeing opportunities to find energy investments for a long-term position in a portfolio.
I believe it will be bumpy, and uncertainties remain but unfortunately the upside will quickly fade away once better
results are expected.
OverShare Advice and Planning, LLC only provides recommendations to existing Clients. This information is for
educational purposes only.
Talk with your Financial Planner about your long-term investment portfolio together with your risk tolerance to
determine if your portfolio matches the objectives of your financial plan.
Is your Portfolio Prepared so that Opportunities are not Lost, Forgotten or Left to Chance?
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Recurrent Energy/Midstream Update For OverShare Advice and Planning, August 2020
www.recurrentadvisors.com
Investing Outlook in a post-Covid World • After the worst 2 months in energy history, we believe that a commodity-agnostic
investment case for midstream remains, thanks to lower growth and more cash flow
• We evaluate progress made since the “energy credit crisis” of 2015-16
• Valuations today vs. history, and impacts of leveraged forced selling
• What will drive midstream returns in a post-shale world?
FOR INTENDED RECIPIENT ONLY / FINANCIAL PROFESSIONAL USE 24
Disclosures
The enclosed material is confidential and not to be reproduced or redistributed in whole or in part without the prior written consent of Recurrent Investment Advisors. Any statements of opinion constitute only current opinions of Mr. Laskin and Mr. Olsen, which are subject to change and which we do not undertake to update. Due to, among other things, the volatile nature of the markets and the investment strategies discussed herein, they may only be suitable for certain investors. Nothing herein constitutes an offer to sell, or solicitation of an offer to purchase, any securities, nor does it constitute an endorsement with respect to any investment strategy or vehicle. Past performance is not indicative of future results. Returns are presented gross and net of management fees and include the reinvestment of all income. Actual investment advisory fees incurred by clients may vary. Please reference Recurrent Investment Advisors Brochure, Item 5 Fees and Compensation of Part 2.A of the Form ADV.
The information is not intended and should not be construed as legal or tax advice. Parties should independently investigate any investment strategy or manager, and should consult with qualified investment, legal, and tax professionals before making any investment.
There is no guarantee that any investment process described herein will be successful or profitable. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Clients and investors may lose all of their investments.
Without limiting any of the foregoing, in no event shall Recurrent Investment Advisors, any of its affiliates or any third party have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
Some information contained herein has been obtained from third-party sources and has not been independently verified and we make no representations as to the accuracy or the completeness of any of the information herein. The information herein is subject to change, without notice, and the authors do not undertake to revise or update this information in any way.
Many factors affect performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. Information about rankings in this material are available upon request.
Returns and Indices Disclaimer: Comparison to benchmarks are provided for illustrative purposes only. Comparisons to benchmarks have limitations because benchmarks have volatility and other material characteristics that may differ from the fund(s). Because of these differences, benchmarks should not be relied upon as an accurate measure of comparison.
The following benchmarks are used: “SPGINRTR” = S&P Select North American Natural Resources Index “AMZ” = Alerian MLP Index - Capped, Float Adjusted, capitalization weighted index of energy infrastructure Master Limited Partnerships (MLP)
These benchmarks are broad-based indices which are used for comparative purposes only and have been selected as they are well known and are easily recognizable by investors. However, the investment activities and performance discussed herein may be considerably more volatile than the performance of any of the referenced indices. Unlike these benchmarks, the investments portrayed herein are actively managed. Also, the indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types of expenses. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Unlike these benchmarks, the investments portrayed herein are actively managed. Furthermore, Recurrent Investment Advisors invests in substantially fewer investments than the number of investments of the portfolios compiled each of these benchmarks. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance.
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Natural Resources Equities Historically Cheap Compared to Broader Equity Market
Founded in 2017 by 2 PMs from Boone Pickens’ BP Capital, we focus on hard assets with strong returns on capital, trading at or below fair value
STRICTLY FINANCIAL PROFESSIONAL USE ONLY
Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
About Recurrent Investment Advisors An employee-owned emerging real assets manager
Recurrent strategies (November 2017-Current)
• Recurrent MLP & Infra Fund (RMLPX) – “I” Class shares only, 1.25% expense ratio
• RMLPX – Top 23% in 2018 / 32% in 2019 out of 100+ public MLP funds, per Morningstar
• RMLPX has raised >$100mm in assets ITD while 90%+ of Midstream Funds have shrunk
Predecessor BP Capital strategies (full years 2014-16)1
• BP Capital TwinLine MLP Strategy - Top 10% in Morningstar over 3 years
• CIO / BP Capital Fund Advisors • PM / #1 energy fund (Morningstar 3-yr) • Energy PM / Invesco, Van Kampen Funds • Director of Research / Morgan Stanley
Investment Management • 20 years of finance/energy experience • BA Swarthmore, MBA Wharton School
MARK LASKIN, CFA – CO-FOUNDER / PORTFOLIO MANAGERBRAD OLSEN – CO-FOUNDER / PORTFOLIO MANAGER
• MLP PM / BP Capital Fund Advisors • PM / top 10% MLP fund (Morningstar 3-yr) • Head of MLP Research / TPH & Co. • #1 energy analyst in US / 2013-14
(FT/Starmine) • 12 years of finance/energy experience • BA Rice University
JAMES “JIM” GILLIGAN – SENIOR ADVISOR
• Former CIO/PM / Invesco, responsible for $40 bn in AUM • PM / Van Kampen Funds, Morgan Stanley Investment Mgmt
OLIVER DOOLIN – ENERGY SPECIALIST
• Client Portfolio Manager / Series 7, 63 • Institutional E&P and Midstream background • Previously Sales and Trading / Heikkinen Energy Advisors • 6 years Research, Sales and Trading / TPH & Co. • Began career in Research / Howard Weil • 11 years of total energy finance and investment experience
- Contrary to consensus wisdom that “growth is good” for energy stocks, shale growth has been bad for performance – why?
- Counterintuitively, growth requires more spending, which means less cash is left over for debt service and shareholders.
- Energy stocks are cheap today. We believe energy subsectors that can maintain cash flow without more spending are most attractive – this brings us to midstream.
- With spending falling faster than cash flow, midstream sector FCF is poised to grow even in a sustained $30-40/bbl environment.
- Midstream valuations (EV vs book) sit at 20-year lows. A return to “average” could imply 50-100% upside for equities.
- A variety of sectors, such as Tobacco, have demonstrated that lower growth and high cash returns can drive market-leading returns.
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Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Recurrent Market Update and Outlook What you’ll hear from us today
The investment case for midstream In an (increasingly) post-shale world
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EV/IC discounts have historically indicated attractive MLP entry points
Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Contrary to consensus wisdom, shale was very bad for the midstream sector
8.0% 7.9%
8.1%
8.6%
6.5%
7.4%
7.7%
8.2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
% o
OCF ROIC % of "Fallow" Capital Tied up in Construction, Integration
Assets in progress reached 45% of total assets in 2012-13
12.7% 14.3%
-0.3% -2.0%
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50%
60%
70%
80%
90%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
D iv
id en
3.0x
3.5x
4.0x
4.5x
5.0x
5.5x
6.0x
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
D eb
0%
20%
40%
60%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
B o
o k
A ss
e t
G ro
w th
Y /Y
Midstream/MLP Y/Y Asset Growth, 2005-19
The MLP “Balance Sheet Recession”: When will we see a sustained recovery?
MLP performance since early 2016 has been restrained by reduced cash flows to equityholders, following the accumulation of high debt – akin to a sector-level “balance sheet recession.”
Balance Sheet Recession Phases:
1. Debt accumulation in anticipation of future returns (from capex, M&A) while increasing payouts to support valuations
2. reduction in capital spending and payouts to equity
3. 2-3 years for debt loads to return to “normal”
4. Market satisfied with debt loads, rapid recovery ensues
The BSR began for MLPs and midstream in late 2015 – when efforts to reduce equity payouts and cut debt loads began.
Assuming continued capital discipline, a recovery generally follows 2 to 3 years thereafter.
NOW: Deleveraging process is accelerating on back of payout reductions
Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC discounts have historically indicated attractive MLP entry points EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Shale left midstream inefficient and in debt – by early 2020, it was largely fixed
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As of 6/30/2020 Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Due to capex cuts, Covid and low oil prices will not stop FCF growth
A dramatically more capital-efficient midstream sector is in better position to manage balance sheets, shareholder returns
20
30
40
50
60
70
80
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E
N A
m e
ri ca
n M
id st
re am
C ap
( $b
n )
2020 FCF has actually grown as Covid crushes capex; FCF per share to double by 2023E
FCF "Wedge" / Year FCF Deficit / Year New Capex Estimate New CF Estimate
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Despite opposition to new pipeline construction, midstream valuations imply a discount to book value, which understates construction costs
EV/IC discounts have historically indicated attractive MLP entry points
2019 represents total returns through “Current” reflects 6/30 EV with 3/31 financial statement data for IC Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Valuations lower than 2008, below book value (which is below construction cost)
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Historical Enterprise Value vs. Invested Capital (EV/IC) of Midstream
Midstream Observed EVIC EVIC Avg, 2004-08 "Pre-Shale" EVIC Avg, 2009-14 "Shale Era"
MLP Balance Sheet Recession: Cheap valuations in tension with painful debt reduction
Shale era: bullish investor sentiment, revenue growth, rapid debt
accumulation
Pre-shale: low debt, selective M&A, some "tight gas" infrastructure growth -33%
+5%+28% +5%
-7%
+18%
+7%
-36%
(6/30)
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Prosperity without growth: How other sectors have driven strong investor returns even with slowing revenues
Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
33
Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Dreaming of when midstream is loved and respected, like tobacco (and refining)
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
1000%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
A n
n u
Capital Allocation vs. Performance: Tobacco Industry
Reinvestment as % of OCF (Left Axis) Net Equity/Dividends as % of OCF (Left)
Avg CF Growth, 2001-18 (Right Axis) Cumulative vs. S&P 500 (Right)
2009-2016: shrinking industry? With almost no reinvestment, divs/buybacks soared and so did share
prices
High cash returns (in orange) and low capex (in blue) in tobacco show a pathway for a low-growth industry to thrive
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As of 3/25/20. Source: Bloomberg, Company public filings, Recurrent Investment Advisors.
EV/IC analysis offers historical valuation perspective across subsectors A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
Midstream is poised to follow the path tread by tobacco, refining… and tech
0%
50%
100%
150%
200%
250%
300%
350%
400%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
A n
n u
Capital Allocation vs. Performance: Midstream Industry
Reinvestment as % of OCF (Left Axis) Net Equity/Dividends as % of OCF (Left)
Avg CF Growth, 2001-18 (Right Axis) Cumulative vs. S&P 500 (Right)
2015-19: construction projects are finally rolling off
Incredibly, in the “shale era,” midstream cash returns were neutralized by aggressive equity issuance. Capex is rolling as net cash returns increase
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Energy / Midstream Underperformance: A parallel perspective from the late 1990s
Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
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Natural Resources Equities Historically Cheap Compared to Broader Equity Market A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
A Final Thought: “History doesn’t repeat, but it often rhymes” – Mark Twain
• Mature bull markets in equities, led by tech…
• Strong dollar, volatile/lagging commodities and EM…
• Energy and MLPs lag due to reputation for aggressive financial policies, negative sentiment…
Sound familiar?
-60%
-50%
-40%
-30%
-20%
-10%
0%
MLPs vs. NASDAQ Energy vs. NASDAQ MLPs vs. S&P Energy vs. S&P
En er
gy /M
LP A
n n
u al
U n
d er
p er
fo rm
an ce
Late 1990s Today
Natural Resources Equities Historically Cheap Compared to Broader Equity Market A differentiated process should produce more than an index Recurrent investment philosophyAbout Recurrent Investment AdvisorsRecurrent Investment Strategies Active management offers outsized benefits in specialized sectors of the economy
A Final Thought: “History doesn’t repeat, but it often rhymes” – Mark Twain
• In the late 1990s, MLP financial strength was improving as the broad market overheated…
• … and underinvestment by the oil and gas industry created a counter-cyclical setup for energy investment.
Source: Bloomberg, Recurrent research
0%
10%
20%
30%
40%
50%
60%
MLPs vs. NASDAQ Energy vs. NASDAQ MLPs vs. S&P Energy vs. S&P
En er
gy /M
LP A
n n
u al
O u
tp er
fo rm
an ce
RMLPX Disclaimers and Other Information
Important Fund Information:
1. Dividends are subject to change and there is no assurance that they will continue to be paid.
2. The Fund's advisor has contractually agreed to reduce its fees to 1.25% until March 1, 2021. Without the waiver, total annual operating expenses would be 1.75% for RMLPX per the initial prospectus filing.
This presentation makes use of a variety of financial terms, defined below:
Enterprise Value: The market value of a company’s equity, debt (net of cash) and preferred/mezzanine claims.
Book Value: The stated book value of a company’s shareholders’ equity and total debt outstanding, net of cash and equivalents, as found in the balance sheet shown in the financial statements in their public filings.
Alerian MLP Index - is a composite of the 50 most prominent energy master limited partnerships calculated by Standard & Poor's using a float-adjusted market capitalization methodology. Investments cannot be made in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Recurrent Funds. This and other important information about the Funds is contained in the prospectus, which can be obtained by calling 833-RECURRENT. The prospectus should be read carefully before investing. The Recurrent Funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC.
Recurrent Investment Advisors is not affiliated with Northern Lights Distributors, LLC.
Risk Disclosure (RMLPX)
Mutual Funds involve risk including the potential loss of principal. Higher turnover and frequent trading may result in higher costs. Cash available for distribution by MLPs may vary and could be affected by the entity’s operations, including capital expenditures, operating, acquisition, construction, exploration and borrowing costs, reducing the amount of cash and MLP has available for distribution. The Fund may focus on one or more industries, sectors or geographic regions of the economy and the value of an investment may fluctuate more widely than if it were diversified. Tax risks associated with the Fund include fund structure risk, MLP tax risk, and tax estimation/NAV risk. Cyber-attacks or failures affecting the Fund or service providers may adversely impact the Fund or its shareholders.
The Fund invests primarily in the energy sector and infrastructure industry and is susceptible to adverse economic, environmental, and regulatory concerns. Additional risks include acquisition, catastrophic event, commodity price, depletion, natural resource, supply/demand and weather risk. The purchase of IPO shares may involve high transaction cost, market and liquidity risks. The investment strategies employed by the Advisor may not result in an increase in value or performance. Overall equity market risk may affect the value of individual instruments in which the Fund invests. Holders of MLPs have limited control and voting rights, additionally, there are certain tax risks and conflicts of interest between holders of MLPs and the general partner. The Fund is newly-formed and may not grow to or maintain economically viable size, not be successful implementing its investment strategy, which could result in the Fund being liquidated. (3457-NLD-4/13/2020)
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• Joined Guidon in April of 2016 with the intent of building a significant independent shale
development company focused on the Midland Basin
• 2013, Brett joined Laredo Petroleum as the Director of Laredo’s Midstream Services and was
instrumental in developing a cradle to grave water management program
• Two year assignment to Ghana, West Africa as Drilling Manager for Kosmos Energy
• London trading crude and propane
• 2000 independent contractor for Pioneer Natural Resources with various assignments in the
GOM and South Africa
• Pioneer to manage field operations North Texas
• 1981 with Mobil Oil working in Production and Drilling in Texas, Gulf of Mexico (GOM) and
Norway
• Brett earned a B.S. in Petroleum Engineering from Texas A&M University
INTERVIEW WITH BRETT CREESER
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OverShareAdvice.com
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THE END.