Get ready for a seismic shift in the energy market! While many are still fretting about temporary oil gluts, a powerful, multi-year bull market is brewing, and it's poised to reshape your investment landscape. Eric Nuttall, Senior Portfolio Manager at Ninepoint Partners, is sounding the alarm, and his insights into the energy sector are crucial for anyone looking to navigate the coming years.
The Illusion of Abundance and the Coming Reality
The global oil market has been lulled into a false sense of security by the surge in U.S. shale production. This era of apparent plenty has unfortunately led to a significant decline in exploration, offshore development, and overall inventory growth. But here's where it gets controversial: this year is expected to mark the peak of U.S. shale and non-OPEC production, which together account for roughly two-thirds of the world's oil supply.
Think about it: global oil reserves are at historic lows relative to demand, and OPEC's spare capacity is a mere 1.5 million barrels per day. Once the current anxieties about short-term inventory builds (due to OPEC's September 2025 output adjustments) fade, the world will likely face a stark reality. We've lost the primary engine of incremental supply over the past 13 years – U.S. shale, which contributed a staggering 117% of non-OPEC growth between 2010 and 2025. This deficit will inevitably lead to a significant price discovery, as a "post-shale world" simply cannot sustain prices in the US$50, US$60, or even US$70 range for West Texas Intermediate (WTI).
Natural Gas: A Cold Front and a Hot Opportunity
Natural gas experienced a sharp downturn in early January, largely due to unusually warm weather. However, the script has dramatically flipped, with historic cold fronts now sweeping across large parts of the United States. While weather plays a role, our bullish stance on natural gas is driven by a more fundamental factor: the substantial increase in liquefied natural gas (LNG) demand along the U.S. Gulf Coast. Projections indicate that this region will be net short on gas by 2030.
Combined with rising power demand from burgeoning data centers and the broader trend of electrification, the marginal cost of supply is estimated to be around US$4 per thousand cubic feet (mcf). Prices below this level will likely discourage essential drilling, pushing the market into an even more pronounced deficit. And this is the part most people miss: the infrastructure is being built to meet this demand, and if supply doesn't keep pace, prices are bound to climb.
Eric Nuttall's Top Energy Picks:
Given this outlook, Eric Nuttall has identified three key companies poised to benefit:
Expand Energy (EXE NASDAQ): As North America's largest natural gas producer (representing about 6.3% of U.S. production), Expand Energy is perfectly positioned to capitalize on the natural gas bull market. With over 20 years of proven reserves situated close to major demand centers like Texas's AI hubs and the Gulf Coast LNG facilities, the company enjoys premium pricing. At a marginal cost of supply of US$4/mcf, the stock currently offers a 14% free cashflow yield. Nuttall believes a fair valuation is eight times 2027 cashflow, translating to a target price of US$209, representing a 100% potential upside.
EQT Energy (EQT NYSE): The second-largest natural gas producer in the U.S., EQT boasts operations in the Marcellus Shale. Owning its own gas infrastructure provides a significant cost advantage, and its inclusion in the S&P 500 makes it more appealing to generalist investors. With over two decades of high-quality reserves, EQT is well-positioned to meet the increasing power demand in its operational areas. Trading at 6.0X EV/CF with a 12% free cashflow yield at US$4 gas, Nuttall sees it as significantly mispriced, both absolutely and relatively. His target price of US$75 (based on eight times 2027 cashflow) suggests a 46% potential upside.
Antero Resources (AR NYSE): Antero is another substantial natural gas producer in the Marcellus Shale. A recent acquisition has bolstered its inventory, though it temporarily deferred shareholder returns to the second half of 2026. This stock offers high leverage to rising natural gas prices. Currently trading at 4.0 times 2027 cashflow with a 15% free cashflow yield at US$4 NYMEX, Nuttall's target price of US$62 (based on seven times 2027 cashflow) implies an 88% potential upside.
A Look Back at Past Successes:
Nuttall's track record is worth noting. His past picks from March 11, 2025, demonstrated impressive returns:
- Meg Energy (MEG TSX): Acquired by Cenovus on November 17, 2025, this stock delivered a 35% return (36% total return) from its previous price of $22.87 to $30.89.
- Athabasca Oil (ATH TSX): Showed a strong 47% return (47% total return) from $4.82 to $7.09.
- Arc Resources (ARX TSX): While slightly down in price (-1%), it still provided a 2% total return from $25.65 to $25.37.
The average total return for these past picks was a remarkable 28%.
A Word on Disclosure:
It's important to note the disclosure regarding personal and family portfolios. Nuttall's personal/family portfolio holds Expand Energy (EXE NYSE) and EQT Energy (EQT NYSE), while Antero Resources (AR NYSE) is held by the fund. For past picks, Athabasca Oil (ATH TSX) is held by the fund, and Arc Resources (ARX TSX) is held personally/by family.
Now, let's open the floor for discussion: Do you agree with Eric Nuttall's bullish outlook on energy, or do you see potential headwinds that he might be overlooking? What are your thoughts on the impact of U.S. shale peaking? Share your opinions in the comments below – I'd love to hear your perspective!
