00:00 Brian
Jake, I think Keith brings up a good point here on on energy not doing much the past decade, which I do find surprising because Exon, Chevron, a lot of these companies have cleaned up their finances, whether they were under attack from activist investors, whatever it is. In in many respects, these are different companies compared to a decade ago. They’re generating more cash and I would say they’ve been a little more shareholder friendly, too.
00:20 Jake
Yeah, I think that’s right. These are highly stable long-term businesses. You think of energy as a defensive sector. You talk about Exon, you talk about Chevron. These are companies that are reliable. They have the model in place, they have the numbers to support that. And I think investors kind of took a backseat on energy thinking, these are stable stocks. Now, obviously, into 2026, the best performing sector in the S&P this year, as energy has become such a story.
00:54 Jake
You also have to remember for coming into this year, we thought the oil market was going to be deeply over supplied. We were expecting oil prices to moderate down throughout the year. Certainly not crossing 100, which has pumped a lot of energy back into these stocks. You and I, Brian were talking yesterday about Exon. Their global oil equivalent production is going to take a 6% hit on the first quarter, but they’re also getting the bonus of getting to sell their products that they do have at the higher price points that these elevated prices are allowing them. Chevron is also going to get that bump. Shell, BP, Conco Phillips, all these companies are going to benefit from these higher prices and probably keep at these more elevated valuations, keep moving forward, at least as long as these oil prices stay, you know, in the sector and in focus for investors.
01:53 Brian
Keith, I I I don’t have I really don’t agree with that Goldman call that oil is going to magically go back to $75 a barrel by the fourth quarter. Maybe it will, maybe it won’t, unclear. But I do think there is going to be some form of war premium that is going to stick around in oil prices for at least six months, if not longer.
02:20 Keith
Yeah, I agree with that. I also think if that’s the case, then the earning estimates are likely to move higher and therefore the valuations, which do look a bit rich right now, probably aren’t as rich because those earning estimates have upside room as well. So that’s another reason behind the the upgrade.
