Keeping this in mind, the company has today launched Ninepoint Energy Income Fund. Nuttall’s second energy strategy, the new fund is now available in mutual funds and the ETF version trading on the NEO exchange under the NRGI ticker.
“We believe there is a tremendous lack of appreciation for how much free cash energy companies are producing,” he says. “The environment we’re in now is a golden age of free cash flow, and there are some components to that.”
According to Nuttall, the years following the 2014 collapse in commodity prices forced energy companies to drastically reduce costs, and that cost discipline is etched into the cost structures of today’s industry. Simultaneously, investors are demanding that instead of pursuing aggressive growth, energy companies should allow capital to flow back to their shareholders in the form of dividends and buybacks.
“There is a belief that the sins of the past — namely chasing growth for the sake of growth, which led to the oil price crash and nearly a trillion dollars in shareholder equity — should not be repeated,” Nuttall said.
According to Nuttall, Canadian oil and gas companies are moderating their growth plans and spending less on drilling operations than they have historically. With the extra cash they saw in 2021, firms strengthened their balance sheets by paying bondholders, which Nuttall says will continue into 2022. By next year, he predicted that Canada’s oil and gas sector would become debt-free.