SL: Republic Risk: There's Money in This Midstream Pick

Let's dive into the midstream and discuss a great income opportunity for investors ready to take advantage of a pullback.

Dear  Fellow Expat: 

It’s Super Bowl weekend…

The only thing I’ll say about this weekend… is that I’m still upset that there isn’t a Pennsylvania football team called the 59ers…

For all the love and speculation around the 49ers - named in honor of the San Francisco gold rush in 1849 - there was a far more important “boom” that happened 10 years later.

Titusville, Pennsylvania, sits equidistant to the north and east of two great football cities - Pittsburgh and Cleveland, respectively.

Yet, in 1859, Titusville hosted one of the most important events in their development. 

That year, a retired railroad conductor stepped into the rather unproductive oil fields of Northwest Pennsylvania. The Seneca Oil Company had paid him to discover a new method of extracting oil from the ground since all previous efforts had failed. 

Edwin Drake had minimal experience drilling for oil. He lacked financial resources and technical know-how. Plus, the technology of that day relied on draining oil as it seeped through the surface. No one thought that drilling for oil would produce for them.

My man looks tired after a long day of oil-wildcatting

That’s where Drake got creative.

Using a steam-powered engine, he drilled through large layers of shale and rock.

He did this for months… with many failures.

But on August 27, 1859 - Drake hit oil at a level of 69 feet.

It was a revolutionary moment for the U.S. oil industry, bringing the “Drake Well” to the forefront of drilling technology. 

This sparked the Pennsylvania Oil Rush, which started in 1859. 

But this wasn’t the only achievement.

Drake had completely changed the upstream industry forever in oil-and-gas production. By sparking the oil boom of the 19th century across America with this drilling technique… he influenced another industry out of necessity. 

The midstream oil market.

With so much oil suddenly coming out of oil-rich Pennsylvania, producers needed a place to ship and store all that crude. 

Storage facilities became critical to the movement of oil toward refineries and shipping facilities in places like Cleveland, Ohio, and New York Harbor. 

Drake’s discovery gave way to the “Midstream” industry of pipelines, storage tanks, and more. This midstream sector would ultimately become extremely important to the rise of John Rockerfeller’s Standard Oil decades later, as they built ample storage facilities to ensure supply stability and control prices during their monopoly days.

In fact, Rockefeller gained his influence through the pipelines - which were only necessary because of Drake’s actions and the oil boom he unleashed.

So, when you watch the 49ers play this weekend, think of what could have been if the early NFL had moved a team to Titusville.

Who knows, maybe they would have drafted Pat Mahomes not too long ago, and we’d have the 49ers versus the 59ers… and we’d be teaching kids to add those two numbers together instead of talking about Taylor Swift.

Today, we’re talking about the midstream and an excellent income investment… 

But first…

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Equity Storm Watch Is GREEN on the S&P 500 and Green on the Russell 2000.

We hit the 5,000 figure I laid out a few weeks ago. It would be stunning if it weren’t for the fact that Global Liquidity - as measured by Howell - hit an all-time high this week as well. Since “Money moves markets” - as Solomon Brothers traders used to say - we’re seeing equity markets push higher and higher. The valuations make little sense in technology, but momentum traders are chasing anything higher and higher with AI. Trade the trend until it breaks.

There’s Always Money in the Midstream

Let’s get to a great midstream play that is entering an attractive price range with a near 7% yield.