Philip Juskowicz,
CFA is a managing director in the research department at Casimir
Capital, a boutique investment bank specializing in the Natural Resource
industry. Juskowicz began his career at Standard & Poor's in 1998,
where he was one of the first analysts to recommend Mitchell Energy,
credited with discovering the Barnett Shale. From 2001-2005, He worked
with a former geologist in equity research at both First Albany Corp.
and Buckingham Research. At Buckingham, Juskowicz was promoted to a
senior oilfield service analyst position, leveraging his extensive
knowledge of the E&P space. From 2006-2010, he was an insider to the
oil and gas industry, serving as a credit analyst at WestLB, a German
investment bank. In this capacity, Juskowicz was responsible for $500M
of loans to energy companies and projects. He earned a Master of Science
in finance from the University of Baltimore.
The Energy Report: With
oil prices firming up over the past couple of months and the spread
between West Texas Intermediate (WTI) and Brent Crude narrowing, what
are your price expectations for the remainder of 2013 and into next
year?
Phil Juskowicz: While I don't spend a lot
of time predicting commodity prices, I personally see relatively stable
short-term oil prices. Intermediate or long-term prices may weaken,
assuming no supply disruptions arise from political upheavals, while gas
prices may strengthen based on supply/demand fundamentals. We've seen
continued oil supply growth and the short term market seems to be pretty
range bound, having developed a good base around the $100 per barrel
($100/bbl) level.
TER: Where do you see some of the best investment opportunities in the oil and gas business?
PJ:
Micro-cap exploration and production (E&P) stocks have severely
underperformed the S&P Small Cap E&P Index since the second half
of 2011 (H2/11). However, the definition of "small cap" depends on who
you're talking to. The Small Cap E&P Index consists of companies
around the billion-dollar range like Approach Resources Inc. (AREX:NASDAQ) and Northern Oil & Gas Inc. (NOG:NYSE).
Casimir has a micro-cap E&P index, which is comprised of companies
with market caps up to $500 million ($500M) with some names under $100M.
That index level started to diverge in H2/11. Both of these groups
consist of relatively equal gas/oil weightings, so the performance
should not, in our opinion, be attributed to the relative strength of
oil prices over gas that commenced around that time. As a result, we
believe that there are attractive investment opportunities in the
micro-cap E&P universe.
Casimir Micro-Cap E&P Index (White) vs. S&P Small-Cap E&P Index (Yellow)