By Avi Salzman

The past few months have ushered in enormous changes for the energy industry, from the resurgence of the Organization of the Petroleum Exporting Countries, or OPEC, to a sudden slowdown in U.S. shale-oil production. The politics of energy have shifted, too, upending fast-growing industries such as solar power. Nonetheless, some investors see opportunities, given the growing global interest in energy security and the rise of electricity-guzzling technologies such as artificial intelligence.

To understand the landscape for investors, Barron's convened a roundtable of industry experts that met on May 8 on Zoom. The group included Natasha Kaneva, head of global commodities strategy at J.P. Morgan; Paul Gooden, portfolio manager at London-based investment firm Ninety One; William Page, portfolio manager at Essex Global Environmental Opportunities Strategy; and Dan Pickering, founder and chief investment officer of Pickering Energy Partners.

An edited version of the roundtable, including a discussion of the panelists' favorite stocks, follows.

Barron's : Welcome to the 2025 Energy Roundtable. The energy market is more dynamic than ever, even if it has been a little less profitable, too. OPEC is suddenly getting much more aggressive with oil-production hikes, which has sent global oil prices sharply lower, to about a recent $60 a barrel. Natural gas, once an afterthought, has become perhaps the central molecule in the energy system. And clean energy is in upheaval, facing policy backlash and uncertainty.

Politics is back in a big way, as well. President Donald Trump wants to "drill, baby, drill," but it looks like oil producers are doing the opposite. Diamondback Energy CEO Travis Stice said shale production has peaked. He is planning to pull rigs out of the Permian Basin.

Dan, you have spent years in the shale patch. Is Stice right? Is it all downhill from here?

Dan Pickering: The statement from Diamondback was dramatic and eye-catching. I think it was intended to be.

Shale is maturing, as you would expect, given that we're 20 years into it at this point. His comment is about both shale maturity and price. I don't think U.S. production has peaked from shale if oil is $75 or $85 or $95. But there is no question the economics don't work when oil is in the $50s and $60s.

It is a bit early to call the end of U.S. shale. But it is definitely a shot across the bow. There isn't an unlimited resource -- and particularly not an unlimited resource at prices below $70 a barrel.

So far, some other U.S. companies have pulled back production, too, but it is mixed. Chevron and Exxon Mobil are still sticking to their production plans. In general, are most companies going to stick to their guns, or start pulling back?

Pickering: My expectation is this is going to be a slow-moving downturn. Why? We're sitting here with barely 30 days under our belt to understand the potential implications of tariffs, and the accelerated OPEC production. You're seeing smaller and more nimble companies react quickly. It will take some duration and some more information before you see the whole industry start to react.

Exxon and Chevron probably aren't going to drill through a $50 or $55 environment for the next two years. They may not announce it, it won't get as many headlines, but the economics simply aren't as good. The economics will dictate some moderation of spending. The industry is going to be focused on the capital discipline pledge it made and lived by for the past four or five years.

These companies will be protecting their balance sheets. They're going to be protecting their dividends. And they're going to hopefully be protecting their free cash. To do that in a $50 or $55 world, they're going to have to cut spending to deliver on those pledges. I don't think there is an existential crisis. Balance sheets are generally good across the board. Of course, Exxon and Chevron are fine, but even the smaller guys are in great shape. This isn't the Covid-19 pandemic, or the global financial crisis. This is -- I hate to use the term, but I will -- a run-of-the-mill downturn that the industry knows how to deal with. And it will.

Natasha, J.P. Morgan recently reduced its price targets for oil. Can you explain why, and where we go from here?

Natasha Kaneva: The reality is we hit our price targets eight months early. We had a Brent crude [the international oil benchmark] price target of $64 a barrel by the end of 2025. It just happened sooner than we had penciled in, so we pulled forward our price forecast for 2025. We have Brent at $58 by the end of 2025 now, and West Texas Intermediate [the U.S. benchmark] at $54.

The biggest move that happened was because of OPEC's announcements. OPEC is winding down its production cuts much faster and more aggressively than people were expecting. OPEC will increase production to maximize revenue. Producing nine million barrels a day at $80 makes sense [for Saudi Arabia]. But producing nine million barrels a day at $60 makes no sense. You maximize production to maximize your revenue.

We believe this will be the OPEC strategy in 2025, early 2026. In 2027, Saudi Arabia will be hosting the Asia Soccer Cup -- and then, in 2029, the Winter World Games, and the World Cup in 2034.

How do sporting events affect their energy decisions? Do they need more revenue as hosts?

Kaneva: First, they are building five stadiums [for the Asian Cup]. For [the World Cup], they are building 15. I'm really excited because the photos are unbelievable. These are the first major international sports events that Saudi Arabia is hosting. You can't have a $40 oil price at the same time that all these emerging market countries are coming to visit you. So, you need this done. The window for the Saudis to do this [increase production] is 2025 or early 2026.

What will low oil prices do to shale production? Will U.S. oil production be flat, or maybe even down this year?

Kaneva: This year, no. We'll still have growth. In 2026, shale production will be declining If we are correct on prices, between July of this year and July of next year, there will probably be about 100 fewer rigs in the U.S.

Paul, you're based in Europe, so maybe you have a different perspective. What will lower prices do to oil supply?

Paul Gooden: I agree that $55 WTI prices will result in flat U.S. oil production, with a lag. At $50 WTI, you're looking at production falling by a million barrels a day, again with a 12-month lag. So, in terms of the level at which you can lean in and get more oil exposure [as an investor], $50 WTI is a good base level where it looks interesting.

In the long term, the energy transition is getting pushed out. Views around when oil demand peaks are getting pushed out -- it's probably mid- to late-2030s now. Even in a $70 price environment, U.S. shale production is probably going to plateau in, let's say, 2027. What that means is there's almost a decade where shale is no longer acting as a deflationary force. Demand is still growing, albeit at a slowing pace. And that puts OPEC very much in the driver's seat.

So, [OPEC is] sweating the oil market at the moment. But if you look out on a three- to five-year view, it is possible to be a bit more constructive. I'm using $70 Brent long term as a midcycle estimate.

Shale has played a big role -- maybe the swing role -- in the oil market for years in determining where prices go. Is there now a change in the regime? Does OPEC control things? Are the offshore producers major players again, and is shale in decline or just not as important for the market?

Gooden: If shale will be plateauing over the next couple of years, that means you have to look elsewhere. That's what big oil companies are doing.

At the moment, there is much more activity offshore. There is a lot of activity in Guyana, offshore Brazil. The role of the marginal barrel of oil no longer is U.S. shale. It becomes something else.

If the U.S. is starting to think about pulling back, does that mean offshore projects and countries with more traditional resources start to grow?

Gooden: No. For the market to physically rebalance, you need shale production to come down, and you need other producers not to add supply. Even if they were to try to add, which I don't think they will do, the cycle times mean that production isn't going to turn up for three, four, five years anyway. So, I don't see folks outside the U.S. seeing this as an opportunity to step up activity. On the contrary, to the extent the oil price is going down, it squeezes everyone's free cash flow.

A lot of the European energy companies had been investing in renewables, and now are pulling back and getting more into oil and natural gas. Is the timing bad on that shift if oil is in a rut for the next 18 months or so?

Gooden: The history of the big European oil majors is that they sold out of oil and gas assets at the trough, and they bought renewable assets at the peak. So, they pivoted too quickly. Now you're seeing a reset.

I think they will pace things more appropriately. You need to have projects in the hopper that see you past 2030, given that extended life for oil. Is it mistimed? Maybe, maybe not. It looks mistimed at the moment, given where the oil price is. But that three-to- five-year view suggests we are going to need the oil.

Bill, you don't have to deal with pesky oil-price predictions. You just have to follow the easy-breezy world of renewables. But all kidding aside, does the drop in oil prices make clean energy a harder sell? People might not buy an electric vehicle if gas prices are $2.50 a gallon. Presumably, they won't transition to solar energy if low natural-gas prices make electricity cheap.

William Page: The correlation between oil prices and solar ended about 14 years ago. Clean tech now is standing up on its own fundamentals. There have been plenty of hurdles in the way, but right now they aren't related to oil. There is a significant correlation between renewables and natural gas, though.

Natural-gas prices seem to have held up well, despite the broader energy selloff. Liquefied natural gas, or LNG, seems particularly unstoppable. The U.S. and several other countries are quickly ramping up LNG production. Right now, U.S. natural gas trades for $3.50 to $4 per million British thermal units, twice as much as last year. The price is more like $11 per MMBtu overseas.

Yet, not everyone is bullish because there is a chance of oversupply within a year or two. Natasha, do you think an oversupply is coming, and if so, what might it do to prices and the companies ramping up to build LNG terminals?

Kaneva: If you look at the numbers, it appears that sometime by 2027 you will be looking at a significant oversupply in the market. On top of that, people don't know how to think about Russian gas.

For Russia, gas is strategic. It isn't just gas in the ground. Forty percent of Russia's fiscal budget comes from oil and gas, and one-third of that is gas. In my opinion, [Russian President Vladimir] Putin won't allow this gas to sit in the ground and not be developed and sold.

It appears this market will be massively oversupplied on paper. But one thing to keep in mind is that China has been expanding its gas storage aggressively. It increased six times between 2016 and now and will double by the end of 2030.

What that means is that China will become a natural-gas trader. Right now, China is just a consumer because it doesn't have storage capacity, but that will change. When I meet with my China clients, they tell me that anytime the price falls below $7 [per million British thermal units], they will buy there. So, on paper, the market looks like it will be oversupplied. In terms of pricing, though, we have China playing exactly the same role it plays right now in metals and oil. When the price gets to a particular level, the Chinese buy and they store.

Is U.S. natural gas going to trade around four bucks over the next couple of years?

Kaneva: We think it will be right there by the summer, and 2026 is still very supportive. That's the right price, maybe even higher. I think 2027 is when you will see substantially lower prices.

Should natural-gas investors be anxious that we're coming up to a price cliff? Should they get out at a certain time, or is this just a bit of fluctuation during a period of growing demand?

Kaneva: It is a fluctuation. There are a lot of question marks about exactly what could happen.

On to tariffs. Oil and gas are the quintessential global products. They move pretty freely across borders, and they trade based on global prices. But we are now in an era of geopolitical uncoupling, or maybe unraveling, and free trade seems to be a thing of the past. How does that affect the oil market? Let's start with Paul.

Gooden: On tariffs, the main impact is on the demand side. Most energy trade isn't impacted by tariffs themselves. But to the extent there are tariffs on other goods, it creates uncertainty and reduces trade. It can create an incremental downside, and that has an impact on overall global demand. There is another lens to look at it through, too.

Trump has talked about U.S. energy dominance, both on the oil side and on the gas side. He is pressuring Europe to sign free trade deals that lock out Russian gas and lock in U.S. LNG. Another geopolitical aspect is that Trump can take a fairly relaxed view of the Middle East because the U.S. isn't relying on Middle East oil now. That has a military implication, as well.

Natasha, do you agree? Are there other tariff implications?

Kaneva: Yes, energy is exempt from tariffs. From that perspective, the administration has been very careful in how they approach it. They want to make sure that supply is there and that prices are low. But there is a lot of angst about how future demand will shape up.

I want to put another side out there. Sixty-dollar oil is cheap oil historically, by any measure. This will start boosting demand, not just demand for energy but global gross domestic product. That is about 40 basis points of additional growth in global GDP. [A basis point is a hundredth of a percentage point.] That is another way to think about it. J.P. Morgan's baseline view is that there will be a recession in the U.S. starting sometime in the third quarter. Clearly, that isn't good for demand at all.

So, cheap oil might boost demand, but a recession could suppress it?

Kaneva: Exactly.

Dan, some of the oil companies have said tariffs are affecting the price of supplies such as steel casings. Is that notable, or are tariffs mostly causing generalized anxiety about demand?

Pickering: Energy companies are unclear at this point what tariffs are going to do to their cost structure. It certainly isn't positive. The question is, is this a meaningful negative or not? For the most part, folks have felt that it is absorbable or manageable. The bigger issue is the potential demand risk. It just makes an uncertain world more uncertain.

Bill, it seems like clean-energy companies are affected by tariffs. Is this something these companies can overcome?

Page: Power technology companies have enough inventory on hand. That includes companies like Primoris Services. That includes installers and developers like NextEra Energy. That includes combined-cycle gas turbines. GE Vernova is booked out for 36 months on turbines. They were very clear on their earnings call: The tariff impact on their revenue and profitability is a rounding error relative to their capex. NextEra upped its domestic supply chain after the Covid-19 pandemic. A lot of the companies in our arena have been negotiating more-diverse supply chains coming out of Covid. Many of them moved outside of China.

A lot of these companies have been safe-harboring [loading up on supplies in advance of tax changes] in anticipation of a rollback of tax incentives per the IRA [Inflation Reduction Act]. From my perspective, the power-tech sector has visibility for 24 months -- and in some cases, 36 months. The other thing is that this is critical infrastructure. Demand elasticity for power for the four major data-center players is high. They can push through development costs. And solar and battery storage are really gaining traction in those markets.

There could be a repeal or pruning of the Inflation Reduction Act, which earmarked $370 billion for clean energy. Do you expect a major impact on clean-energy stocks?

Page: My mantra has always been, watch what politicians do, not what they say. It is pretty apparent that offshore wind is in the crosshairs of the administration, as are electric vehicles. There could be a faster sunsetting of the tax credits for these industries. We don't expect the tax credits to fully go away. Many parts of the IRA stay intact.

More important, our position is, let's invest according to the companies' business models and profitability in the absence of any government legislation. We've pared our portfolio away from companies beholden to significant Department of Energy loans and so forth. There are plenty of companies out there that are commercially viable with good capital controls, good capital stewardship, good profitability, good growth.

The average investment fund manager has maybe 2% or 3% of their portfolio in energy, or at least in traditional oil and gas. Some managers have none. With low oil prices, how do you make the case that you need to be exposed to traditional energy? Paul, we'll check with you first.

Gooden: I manage a dedicated natural-resources fund, so I don't have to face that dilemma. But inflation is something generalist investors are fretting about at the moment. There is a growing sense that inflation is going to be sticky for many reasons: deglobalization, governments running deficits and wanting to inflate away their debt bills, shrinking working-age populations bidding up their wages.

If you're a traditional fund manager, how do you hedge yourself against that? There are a couple of ways. One way is to invest in companies that you believe have pricing power. But you always have to ask yourself, at some point, does that pricing power disappear? Another way to do it is through investing in companies leveraged to physical commodities. There is a finite amount of physical resources, and if there is more currency chasing that because of deficits, then those commodities should move higher.

Equities played to move toward this should be higher, as well. If you look at some of the big U.S. energy names year to date, they're performing OK, and outperforming the market. One of the reasons for that is that people are looking for inflation hedges. A second reason is that people are looking for fortress balance sheets, which a number of these companies have.

Look, technology has been such a big driver of the U.S. market for so long that people are conditioned to own the stocks. But people are increasingly asking questions about whether they need a bigger exposure to natural resources.

Natasha, has oil been a relatively good inflation hedge over the past few years?

Kaneva: It is the best. Just looking at asset classes, energy has performed as the best inflation hedge.

But the current moment seems unique. We have lower energy prices at the same time that we have anxiety about inflation. Can we make the argument that energy is an inflation hedge in this environment?

Kaneva: For 2025 and 2026, this isn't going to work out as an argument, because I take the Trump administration at face value. They are explicit. They need lower energy prices because this will offset inflation from other places. And so far, they have been successful in making sure that prices are low. Hence, I don't think this is the trade that will work out. Precious metals are the next-best-performing asset.

Dan, how do you deal with a skeptic who says, I haven't been invested in energy, and it has been OK for me. Why invest now?

Pickering: The best argument is the value argument. If we have $50 oil, these energy companies are still generally fine from a balance-sheet perspective. They will probably have free cash -- at least, the big, public companies will. On a net asset value basis, they're baking in something in the $55 to $60 a barrel range for WTI -- the implied commodity price in the stocks. I think midcycle pricing is 70 bucks and drifting higher.

The argument is, you can buy well below midcycle pricing, and we know we need hydrocarbons. That's something that the world has figured out over the past five years: Hydrocarbons aren't going away. So, you have a cyclical commodity trading below its midcycle pricing, with a view that it is probably unsustainable to be here at this price level for any meaningful length of time, notwithstanding that Trump says we need lower energy prices.

It isn't everyone's cup of tea. Value is out of favor. This has been a growth and momentum market. For energy, things may get worse before they get better. You have to be willing to be patient, and it's a diversifier for a portfolio.

Please jump in with some stocks that you think fit the bill.

Pickering: Diamondback Energy is a big player in the Permian Basin, and it has gotten much bigger. It has a very low cost structure and a significant amount of inventory. It is a $40 billion market-cap company that trades at well below the value of its assets. Oil at $80 a barrel would mean the stock could go to $190. It is trading closer to $140, give or take.

Also, at some point in the next five-plus years, I think Diamondback gets bought. It will be on the radar for further consolidation among the Chevrons and Exxons of the world.

I'm going to talk about another company along the lines that Paul discussed earlier. The market will begin to look outside of shale for ideas. One off-the-radar name that is pretty interesting is Vista Energy. It is based in Mexico but trades in the U.S. under the ticker symbol VIST. The company has a $5 billion market cap and produces 120,000 barrels a day in Argentina. Argentina has gotten easier to invest in, given political changes. Vista is going to be a growth company. It operates in the Vaca Muerta shale, which is going to get more attention. It has a good low-cost structure there.

The third name I'd choose is a gas name -- Expand Energy. It has a $25-billion market cap and is one of the biggest producers in gas. It trades for four times cash flow. Gas will continue to get better for a while. The company is well managed. There is a lot of volatility in stock prices these days, but we think the stock probably has 25% to 50% upside as gas moves into the $4 and $5 range.

Gas exposure makes sense for a portfolio. So Diamondback, Vista, and Expand would be my three oil and gas names.

Both Exxon and Chevron have said they want to build natural-gas power plants. Electricity is an area that a lot of oil companies seem to be more interested in. Is this a smart move, or just trend-following?

Pickering: As a group, we have done an amazing job not talking about data centers this whole time [ laughter]. You know, power is the new shale boom.

Kaneva: It is.

Pickering: If you're a believer in the whole AI story -- and I am -- it is going to have to be about power. The electricity story is essentially supply and demand. Supply has been constrained, and there is going to be a dramatic acceleration of growth in power demand. Speed means a lot for some of these data-center players, and gas-fired power plants are about as quick a newbuild as you can do.

Exxon and Chevron are big project-oriented companies. I'm a little nervous they're out over their skis, but supplying gas to power plants makes a ton of sense. My guess is they'll participate in the process and then sell down their interests.

I wouldn't view them as necessarily getting aggressive in the electricity-providing business, but it makes sense. It's energy. The one thing that you have to assume will happen is that the biggest players -- Shell, BP, TotalEnergies, Exxon, Chevron -- will be a part of whatever energy demand looks like in 50 years. They aren't going to be dinosaurs.

The conventional wisdom lately has been maybe the AI and power trade is stalled, if not over. Bill, what is your sense?

Page: Data centers are a marginal power-demand driver. They aren't the only driver; there are so many more. But data centers are one of them. Just think about the top four data-center players. Meta Platforms just upped by about a factor of two the amount of money they forecast will be going into data centers.

Data centers are about 4% of overall power demand now. We think they will be 10% of demand in five years. The bottom line is, this growth rate for electricity demand means we need a more resilient and robust grid.

My first idea is GE Vernova. The stock has a $110 billion market cap, and the company just had a really strong quarter. It is booked out through 2028 on gas turbines. It is a really diverse way to play power technology, from gas turbines to substations to renewables, nuclear, and electrification. It has a nuclear joint venture with Hitachi. GE Vernova has strong legacy nuclear technology, and small modular reactor technology that I believe is commercially viable, although still a ways out.

The stock looks expensive today. We think it can get more of a market multiple in 36 months, as earnings per share kick in. A call option on GEV is its renewables business. The battery storage business is strong. It is one of the largest wind turbine manufacturers and deployers in the world. We have an estimate of $15 in earnings per share in 2027, and we think the company will do well north of $20 in '28 when pricing firms for their turbine business. We have a price target of about $470.

My second idea is American Superconductor. It is based right outside of Boston, and has been around for 25-plus years. The company has an $820 million market cap. It is in power electronics for the grid. It improves power quality for the industrial economy and for utilities -- things like heavy industry, industrial manufacturing, chemical processing.

Large facilities using robotics increasingly use AMSC products. ASMC also has a new ship-protection system for the Navy. Revenue is growing by more than 50%.

What is AMSC's advantage over competitors?

Page: Their technology is cheaper, faster, and better.

Do you have another name?

Page: Primoris Services is a pick-and-shovel company that puts the infrastructure in the ground. It is based in Dallas and has a $3.6 billion market cap. It is among the leading contractors for natural gas, water, sewer, piping -- but most important, the energy grid, electrical grid, manufacturing, and construction. Primoris has a strong backlog. The knock on the company over the past several years is too much leverage, but it has geared down the leverage in the past 24 months.

Primoris is trading at parity with its peer, Quanta Services, with the same growth rate. Free-cash-flow generation has been strong. The driver for this is great infrastructure management, but also, Primoris sends folks out to the field when there is a brownout, or severe weather events such as the forest fires in Los Angeles. This is a good turnaround story. Our price target is $85, and these days the stock is around $75.

Basically, they're a go-to contractor you call when you have a major electricity-related project?

Page: Yes, and for infrastructure construction. Think about data centers: From greenfield to completion, it is a five-year project. If you're a semiconductor company looking for U.S. onshoring, you need significant resilience for a great connection, but also behind the meter for distributed power. This is where these guys come in, installing substations and electrical components. And, they install the lines to get the grid connection.

Would you bottom-fish in any of the more-traditional renewable companies, such as solar manufacturer First Solar or wind company Vestas Wind Systems?

Page: We're not believers in the wind cycle globally. We have a little bit of First Solar. So, if you had to buy one solar company, First Solar is one to own. On renewables development, we like NextEra.

Thanks. Those are interesting. Paul, what looks exciting to you?

Gooden: Per our compliance department, these aren't investment recommendations. I can talk about what we own.

There are three interesting buckets we own at the moment. The first one is natural gas, in particular U.S. natural gas. The U.S. is about a 105 billion-cubic-feet a day market. It could be 130 Bcf a day by 2030. There is a lot of volume growth there.

We're playing that all across the value chain. On the upstream side of things, we own EQT, the No. 2 U.S. gas producer; on the equipment side, Baker Hughes. It is a monopolist providing turbo compressors that go into LNG export facilities. And then, on the midstream side, there are a few pretty interesting ideas. One is Cheniere Energy, the No. 1 U.S. LNG exporter, and Williams Cos., the pipeline company. It touches about a third of U.S. natural-gas volumes. The third one is Targa Resources, the No. 1 Permian gas gatherer and natural-gas-liquids processor.

The second bucket is this theme around U.S. shale production plateauing. One stock on which I agree with Dan is Vista -- the No. 1 pure play in Vaca Muerta in Argentina. Another way you can play the same theme is through TechnipFMC, No. 1 in terms of offshore equipment and installation. That market is going through a lot of consolidation, so it is now a two-player market.

I call the third bucket the self-help bucket. The one I'd highlight there is Shell. Shell has had poor execution for a number of years. Wael Sawan was appointed CEO at the start of 2023, so he is two to 2 1/2 years into his tenure. You're beginning to see the improvements come through. He is improving operational execution. Cost-cutting is starting to come through. Some megaprojects are about to ramp up -- for example, LNG Canada. There are big chemical projects in Pennsylvania, as well. And there is more portfolio optimization to come.

Is there a chance that Shell could buy BP? That has been a rumor for a while and gained steam lately.

Gooden: Look, I think it's possible. It is unlikely over the next one to two years. Shell would say that they're in the first or second innings of unlocking value through the process I talked about. Shell trades at about a 40% discount to Exxon, and at a similar free-cash-flow yield to BP. So, I don't think Shell has the license to buy BP at the moment. They need to put their own house in order -- but two or three years down the line, possibly.

If you were given a chance, and you had to put your money in one of the five biggest majors -- Exxon, Chevron, Shell, BP, or TotalEnergies -- which one would you choose?

Gooden: I would pick Shell, just because of the big discounted valuation to U.S. peers and its fortress balance sheet. Shell is an idiosyncratic stand-alone self-help story.

OK. Dan, which would you choose?

Pickering: I tend to be more focused on the independents or smaller growth companies. Forced to pick among the majors, I think I'd pick Exxon. It's the biggest. It is a pretty good company inherently. Balance sheet's fabulous. They have some upside associated with the recent acquisition of Pioneer Natural Resources. And their ability to take advantage of dislocations in the market is going to be pretty good.

Dan, if you believe that oil will trade in this price range for a little while, that isn't super-profitable for these companies. Do you expect prices will rise? Or do you just like the fact that these are stable companies with good balance sheets that should do well even in a longer period of low oil?

Pickering: They will do OK in a longer period of weaker oil. But if oil is at $55 a barrel for the rest of time, these companies don't make enough money to be interesting. If you think that's the number on a sustainable basis, I don't think you need to invest in the sector. You always have to have a view of the midcycle price, and my view on the midcycle price is higher than here.

Thank you, everyone.

Write to Avi Salzman at avi.salzman@barrons.com

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