Eric Nuttall, Senior Portfolio Manager, Ninepoint Partners
Focus: Energy stocks
Top picks: Expand Energy, EQT Energy, Antero Resources
MARKET OUTLOOK:
The oil market stands on the cusp of a powerful, multi-year bull market.
While anxiety remains about short-term inventory builds as the market digests incremental barrels released by Organization of the Petroleum Exporting Countries (OPEC) in mid September 2025, this year is forecasted to witness both the peak in U.S. shale and in non-OPEC production (approximately two-thirds of global oil supply).
The rise of shale successfully lulled the world into a false sense of energy abundance, leading to a collapse in exploration drilling, offshore development, and inventory growth. With global oil reserves sitting at record lows relative to demand and OPEC having only 1.5MM barrels per day (Bbl/d) of spare capacity, once we get past the inventory build hysteria, we expect the world will wake up to the reality that we have now lost the single largest source of incremental supply of the past 13 years (U.S. shale = 117 per cent of non-OPEC growth between 201 to -2025), leading to price discovery, as a “post shale world” is not one that exists in a US$50, US$60, or even US$70 West Texas Intermediate (WTI) price range.
Natural gas violently sold off early in January on extremely warm weather, though that has quickly changed with historic cold now forecast for large swaths of the United States. We are bullish on natural gas not on weather, but due to the meaningful increase in liquefied natural gas (LNG) demand in the U.S. Gulf Coast, which is forecasted to be net short gas by 2030. With the increase in LNG demand, a meaningful increase in power demand due to data centres, and an overall increase in electrification, we think US$4 is the marginal cost of supply and prices below that will discourage drilling placing the market into an even steeper deficit.
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TOP PICKS:
Expand Energy (EXE NASDAQ)
Expand is the largest natural gas producer in North America (approximately 6.3 per cent of U.S. production) and is greatly benefiting from the new bull market in natural gas. With over 20 years of stay-flat inventory in areas closest to the largest areas of demand growth (AI centres in Texas and LNG on the Gulf Coast) the company receives premium pricing. We believe the marginal cost of supply is US$4 per thousand cubic feet (mcf) and at that price the stock is trading at a 14 per cent free cashflow yield. At US$4/mcf we think fair value is eight times 2027 CF = US$209 target price = 100 per cent potential upside.
EQT Energy (EQT NYSE)
EQT is the second largest natural gas producer in the United States, with operations in the Marcellus Shale. They own their own gas infrastructure giving them a cost advantage while also a member of the S&P 500 making them more relevant/investable to the generalist US investor. With 20 plus years of high quality inventory, the company is well exposed to increasing power demand around their production base. Trading at 6.0X EV/CF and a 12 per cent free cashflow yield at US$4 gas the stock is mispriced, both on an absolute and relative basis. Our target is eight times 2027 CF = US$75 = 46 per cent potential upside.
Antero Resources (AR NYSE)
Antero is a large natural gas producer in the Marcellus Shale and recently acquired a private gas producer to further expand their inventory base. While the acquisition temporarily deferred meaningful shareholder returns to 2H/26, the stock offers high leverage to a rising natural gas price. Trading at 4.0 times 2027 cashflow and a 15 per cent free cashflow yield at US$4 New York Mercantile Exchange, we think fair value is seven times 2027 cashflow = $62 target price = 88 per cent potential upside.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| EXE NYSE | Y | N | Y |
| EQ NYSE | N | N | Y |
| AR NYSE | N | N | Y |
PAST PICKS: MARCH 11, 2025
Meg Energy (MEG TSX) - Acquired by Cenovus on Nov. 17, 2025
Then: $22.87
Now: $30.89
Return: 35%
Total Return: 36%
Athabasca Oil (ATH TSX)
Then: $4.82
Now: $7.09
Return: 47%
Total Return: 47%
Arc Resources (ARX TSX)
Then: $25.65
Now: $25.37
Return: -1%
Total Return: 2%
Total Return Average: 28%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MEG TSX | N | N | N |
| ATH TSX | N | N | Y |
| ARX TSX | Y | N | N |
