Natural Gas & LNG
Liquefied Natural Gas (LNG) as a critical energy source has maintained an upward trajectory. Demand for LNG continues to increase year-over-year. Market prices for LNG remain elevated in Europe and Asia as compared to the cost of producing natural gas, giving opportunity for Export liquefaction projects.
Our key investment in this area is Golar LNG (GLNG), a company in which we recently published our thesis and have high expectations of future returns given the early-mover and competitive advantage we believe they hold in the Floating LNG market. Our closed position in carrier Teekay LP (TGP) gained more than 60% after we first published our thesis.
Essential Metals
Other areas look promising as well. Demand for lithium, an essential metal for EV batteries, is expected to increase by an almost unfathomable 40-times today’s demand before 2040. We are evaluating several lithium technology providers, an area which is developing rapidly.
Similarly, demand for steel, an established metal used throughout modern infrastructure networks, is expected to rise in the coming years. As one of the few energy sources used in the production of steel, metallurgical coal is expected to see strong demand as well. We believe Alpha Metallurgical Resources (AMR) is positioned well in this respect as it supplies the global market with met coal at a competitive cost.
Maritime Shipping
We have holdings in maritime shipping, an area which is in high demand as the world rushes to keep their store shelves replenished. Our primary holding is Danaos Corp. (DAC). Danaos is a containership owner/operator with many vessels tied into long-term charters at attractive rates. And we have initiated a position in CoolCo (CLCO) which is an LNG shipper with exposure to Spot rates, an area we think will be profitable given the projected increase in ton-mile demand for the next few years.
Carbon Capture
Bringing us to our last focus area, which is carbon capture sequestration and utilization (CCSU). There have been technological breakthroughs in the subsurface sequestration, which will allow energy producers to reinject the CO2 for permanent geological storage in underground formations. From a technical perspective, the missing link is currently separating the CO2 from the main gas emission stream, either in a pre- or post-combustion process. There are many ongoing test programs involving CO2 separation from post-combustion exhaust gas, most notably, the use of chemical solvents.
It is something we keep a close eye on for future investment.
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All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
