Oil & Gas Exploration and Production

At the bottom of the industry cycle, companies' capital reserves and cash flow potentials are often underestimated due to low oil prices; as oil prices recover, revenue improves rapidly. Meanwhile, the high fixed costs of upstream companies lead to significant nonlinear elasticity of profits in response to oil price changes. The strategy focuses on companies with high asset quality, low cost, efficient financial structure, and capable of achieving rapid improvements in free cash flow as the industry bottoms out.