May. 29 at 11:31 PM
$SM The Strait of Hormuz ceasefire doesn’t mean oil normalizes quickly. SM positioned to benefit from extended high prices.
Gulf infrastructure damage:
$46-58B. Qatar, Kuwait, Saudi refineries hit. Pentagon says 6 months to clear mines. 14M barrels/day offline, 2,000 ships backed up.
Analysts expect quick return to
$70-80 oil. Fantasy. War-risk insurance jumped
$250K to
$5M per transit. Supply shock continues.
SM as pure-play US producer captures every dollar above baseline in cash flow. 54% oil exposure, zero Middle East risk, full price benefit.
Petrodollar erosion accelerating - 20% of oil trade now in yuan. Weaker dollar = higher dollar oil prices = more SM revenue.
Trades
$31, consensus
$37-40. But targets assume fast normalization. If damage keeps oil elevated into 2027, SM significantly undervalued.
Longer oil stays high, more excess cash SM generates. Market underestimating this.
