The accepted wisdom about energy has been that we will go 100% renewables, and oil and gas will be phased out entirely as quickly as possible. Politicians and activists have been screaming that from the rooftops for years now.

But the truth of the matter is, the so-called green energy “revolution” is a longer way off than those people are willing to admit, and there are some formidable obstacles in the way.

The current goals of activists are pretty much impossible to meet without lowering the standard of living of everyone on the planet. Some of the tech we need to use renewables rely on rare earth metals like lithium, which would create a dependency on China, which is way ahead of us in mining them. And there’s a real danger of even worse inflationary pressures from all the government spending required to implement the necessary infrastructure.

The global economic reopening and the war in Ukraine have driven home to the average American that we need to be drilling for more oil and gas here in the United States.

But thanks to the imposition of Environmental, Social, and Governance, or ESG, policies, which rank companies based on how much emphasis they put on green energy and social programs, banks are hesitant to lend money to the traditional energy industry for carbon-based projects.

This is creating a massive opportunity for companies with cash and access to financing to go on an energy-related buying spree at advantageous prices. When you are the buyer of last resort, you pretty much get to set your price.

I’m currently watching a new holdings company that has pivoted aggressively to scoop up assets in the U.S. traditional energy industry.

Given the upsurge in demand we’re about to see, and the increasing need to rely on domestic sources, I think this firm could easily see 10X returns or more in the coming years…

Crescent Energy Is Going Long on Oil and Gas

Most of the action on this front so far has been from private equity firms like KKR & Co Inc. (NYSE: KKR) and Apollo Global Management Inc. (NYSE: APO), which have cash and access to almost unlimited financing to roll up oil and gas assets at very attractive prices.

While that’s great news for large pension funds and the 1%, it doesn’t do much for those who can’t scrape up a spare $5 million to invest in a private equity fund, does it?

But there’s an option for the rest of us, too.

Late last year, a company owned by KKR, Independence Energy, bought a public company named Contango Oil and Gas. Contango was doing deals to take advantage of the low price of energy assets for a couple across the United States, and they caught the eye of the folks at KKR.

So KKR bought a majority stake in Contango, but 17% of the company remains in the hands of public shareholders. The company has been renamed Crescent Energy Co. (NYSE: CRGY), and KKR has made it known that they intend to use the company as their primary vehicle for buying up assets in the U.S. energy business.

Crescent has already made its first acquisition. They recently announced they were buying some Uinta Basin assets previously owned by EP Energy for $815 million in cash. These assets will add to cash flow from day one.

And this is the first of many more deals to come.

While it’s arguable that the eventual transition to renewables is a long-term necessity, right now, we’re in a crisis. And most people don’t care about where the energy that keeps their lights on comes from, as long as it’s available when they want and need it.

As soon as politicians figure out that higher prices at the pump will lose them votes at the polls, we’ll see the changes that need to be made to turn the energy sector into a cash flow machine for investors and create thousands of jobs that help keep the economy humming along.

I think Crescent Energy is a long-term ten-bagger or more. I would suggest buying as many shares as you can and adding to it during the inevitable bouts of volatility that will take place in the stock market and with oil prices.

— Tim Melvin

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Source: Money Morning