BRUSSELS, Sept 27 (Reuters) - European Union countries are considering an option to delay by a year a levy on the windfall profits of fossil fuel companies, as they hunt for a deal on emergency measures to help consumers facing soaring energy bills.
This strikes me as bullish for those still in oil and natural gas plays.
Think of EU policy as having two impacts going forward.
1) Policies that have no direct impact on Russia or the conflict in Ukraine but negatively impact EU economies and energy supplies, and
2) Policies that attempt to pressure Russia and in doing so act to constrict supply so energy prices remain relatively high.
1) is risky to the extent that pushes in the direction of a deeper, longer global economic recession which will inevitably reduce demand for energy and push energy prices lower.
2) may or may not actually be politically or strategically effective but should help to keep energy prices and E&P netbacks high.
NA and European natural gas prices in particular should continue to generously benefit WCSB natural gas-weighted producers for the foreseeable future.
Naturally, I am expecting/hoping/praying that all this benefits European market-levered Vermilion Energy. Sold down VET.to hard earlier this year but bought back a few in the past while. VET is not a slam dunk, no-brainer play; it comes with risk.
Nevertheless, VET.to is currently the largest portfolio position. I do hope that is not a cue for the rest of you to sell out as fast as you can.