Alejandro Yela is the founder of Hermit Ventures and the author of The Hermit, a Substack focused on nano- and microcap companies. He began as a debt investor in Latin American oil and gas bonds, later worked in restructuring, project finance, and M&A.

This discussion took place live on October 2nd, 2026, on the MicroCapClub Community. Join MicroCapClub and unlock the ability to listen and participate live in these discussions - https://microcapclub.com/#join

In this episode, Alejandro explains how to value an oil producer on its proven (1P) reserves, and why a company's exposure to the oil price depends on whether it extracts, refines, or transports. He walks through his thesis on Computer Modelling Group, the reservoir simulation software company facing pressure from AI while it pursues acquisitions and buybacks. He also explains why he thinks Canadian oil stocks are fully priced after the run in oil, and why he sees more value in oilfield suppliers like OMS Energy.

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Chapters

00:00 Introduction

02:13 From Latin American Oil Bonds to Canadian Oil

04:50 Investing in Oil Without Exploration Risk

05:53 Why You Need to Be a Specialist to Build Conviction

07:45 How to Value an Oil Company: 1P, 2P and 3P Reserves

10:21 Are Oil Stocks Just a Bet on the Oil Price?

12:29 Why Refining Is Political: The California Example

14:18 Pipelines as Toll Booths

15:19 Canadian Companies With Assets Abroad and Expropriation Risk

17:16 How to Screen for Oil and Gas Ideas

19:55 The Computer Modelling Group Story

22:34 Is AI a Threat to CMG?

23:29 CMG's Organic Revenue Decline

25:04 Cash Flow, Buybacks and Capital Allocation at CMG

26:04 The 15% Free Cash Flow Yield Rule

29:56 What LNG Canada Phase 2 Means for Canadian Gas

34:56 Why He Wouldn't Buy Canadian Oil Right Now

36:53 What Cash-Rich Oilfield Suppliers Should Do With Their Money

37:27 Geopolitical Risk and Surviving the Oil Cycle

40:07 What If the War Lasts 10 Years?

43:10 His Fund, Mandate and Private Investments

46:19 Helping OMS Energy's CEO With Capital Allocation

47:24 Why Private Businesses Trade at a Premium

50:11 Open Questions: High-End Retail and Crocs

52:13 Information as a Moat: Red Violet and Pagaya

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A Decade of Oil and Gas Investing in One Hour | Alejandro Yela

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A Decade of Oil and Gas Investing in One Hour | Alejandro Yela