Rising Natural Resource Spending: Which Companies Stand to Benefit Most?

Overview

This report answers investors' questions about rising natural resource spending in a Q&A format. Based on a bottom-up coverage model, Goldman Sachs forecasts that North American natural resource spending will grow at a compound annual growth rate of about 9% from 2025 to 2027. The report covers sub-sectors including oil & gas services, utilities, specialty contractors, upstream and midstream oil & gas, clean technology, and metals & mining, and identifies companies best positioned to benefit from this trend, such as HAL, SRE, PWR, MTZ, VG, COP, NUE, and CCJ. Overall, the outlook is constructive, suggesting that the capital expenditure cycle will drive earnings and cash flow growth for these companies.

Core views

The oil & gas services sector is seen as a beneficiary of increased operator spending, especially following Middle East supply disruptions and increased activity in North America. Halliburton (HAL) is favored due to its significant exposure both internationally and in North America, and is expected to benefit from increased completion activities and the recovery of Middle East production. The utilities sector faces upward risks in capital investment plans, driven by an inflection point in electricity demand and aging infrastructure. Over the next five years (through 2030), utilities companies covered in the report are expected to increase their spending by about 60% compared to the previous five years. Sempra (SRE) is recommended because it owns Oncor (the Texas grid) and benefits from high load growth in Texas (projected CAGR of 8% through 2030). The company plans to spend $65 billion over the next five years. Specialty contractors are major beneficiaries of increased utility spending. Quanta Services (PWR) and MasTec (MTZ), as the largest specialty contractors in U.S. grid construction, continue to win projects from utilities and independent power producers, offering high visibility for earnings. In the upstream oil & gas sector, ConocoPhillips (COP) signals a modest increase in Permian activity in the second half of 2026, with capital expenditure guidance raised to $12–12.5 billion. Investor interest is growing in companies with deep inventory positions. In the midstream sector, Venture Global (VG) benefits from the LNG export capacity build-out cycle; total export capacity is expected to reach 85 mtpa by mid-2029, and the economics of brownfield projects are underestimated. In the clean technology space, the nuclear energy sector is expected to see the highest growth in capital expenditure, covering uranium production, fuel cycles, and new reactor deployments. Cameco (CCJ) is a key beneficiary due to its position in the uranium business, fuel services, and Westinghouse stake. Supply-demand imbalances and SMR deployment will support uranium prices and conversion costs. In metals & mining, Nucor (NUE) sees a turning point in free cash flow as investments in its West Virginia plate mill near completion. Capital expenditure is expected to decline by about 28% in 2026, and free cash flow is projected to reach $10.6 billion from 2026 to 2028, up 93% from the previous three years.

Analysis framework

The report uses a bottom-up coverage model to aggregate capital expenditure forecasts across sub-sectors, adjusting them based on macro trends such as data center demand and geopolitical factors in the Middle East. The analysis unfolds by sub-sector, focusing on specific companies’ positioning and catalysts through a Q&A investor format. For valuation, different metrics such as EV/EBITDA, P/E, DCF, and free cash flow yield are used to set target prices for various sectors. The logic chain is clear: spending growth → increased project orders/activity → revenue/profit growth → improved cash flow → shareholder returns.

Methodology notes

• Industry/sector analysis frameworkSupply-demand framework

  Analyzing capital expenditure drivers using the supply-demand framework

  The report derives the necessity and sustainability of capital expenditure growth by analyzing supply-demand factors such as electricity demand (data centers) and geopolitical supply disruptions (Middle East), helping to understand the sources of industry prosperity.

• Valuation methodEV/EBITDA valuation

  Using the EV/EBITDA multiple to set target prices

  For companies like HAL, NUE, and CCJ, the report uses the enterprise value multiple (EV/EBITDA) combined with earnings forecasts to estimate target prices—a common relative valuation approach for heavy asset or cyclical industries.

• Valuation methodDCF Cash Flow Discounting

  Using the DCF model to evaluate the value of companies like VG

  For growth-oriented infrastructure companies like Venture Global, the report employs a discounted cash flow model, considering discount rates and terminal growth rates to reflect the present value of long-term project cash flows.

• Cycle and Prosperity FrameworkProsperity Turning Point Analysis

  Identifying free cash flow and capital expenditure turning points

  When analyzing NUE, the report focuses on the free cash flow turning point after peak capital expenditure—the release of cash flow as investments decline and output/prices rise. This is a key logic for investing in cyclical stocks.

• Company fundamentals and financial frameworkFree cash flow analysis

  Analyzing free cash flow generation capability and shareholder returns

  The report emphasizes free cash flow (FCF) as a key metric for measuring a company’s financial health and return potential—for example, NUE is expected to see a substantial FCF growth to support shareholder returns.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Halliburton Co. (HAL)

  Benefiting from increased operator capital expenditure, especially Middle East repair work and North American completion activities

  Strengths

  Approximately 60/40 revenue exposure to international and North American markets, positioned for workovers and intervention

  Comparison

  Compared to other oil service companies, it has greater exposure to both Middle East and North American activities

  Risks

  Weakening pricing power in North America, declining North American activity, slower-than-expected growth in international margins

• Sempra (SRE)

  Benefiting from high load growth in Texas and grid investment demand

  Strengths

  Owns 80% stake in Oncor, with Texas load growth forecast at 8% CAGR

  Comparison

  Stronger capital deployment capability among utilities, no need for equity financing

  Risks

  Management execution and communication challenges, balance sheet deterioration, regulatory outcomes below expectations

• Quanta Services (PWR) / MasTec Inc. (MTZ)

  Directly benefiting as specialty contractors from increased utility capital expenditure

  Strengths

  Largest contractor in U.S. grid construction, differentiated earnings across multiple end markets

  Comparison

  PWR and MTZ are the largest in the group, benefiting from transmission and distribution construction

  Risks

  Loss of project momentum, supply chain challenges leading to delivery delays, cost inflation

• ConocoPhillips (COP)

  Benefiting from increased Permian activity and deep inventory positions

  Strengths

  Permian is the main growth engine, and investor interest in companies with deep inventory positions is increasing

  Comparison

  Compared to XOM/CVX’s maintenance plan, COP signals increased activity

  Risks

  Commodity price volatility, capital expenditure execution, operational execution risks

• Venture Global (VG)

  Benefiting from the LNG export capacity build-out cycle

  Strengths

  Good economics of brownfield projects (~$700/ton vs peer $1100+/ton)

  Comparison

  Clearer growth prospects and funding path compared to some peers

  Risks

  Arbitration unresolved, contract execution risks, global gas price declines, project funding needs

• Cameco Corp. (CCJ)

  Benefiting from rising nuclear energy capital expenditure and uranium supply-demand imbalance

  Strengths

  Exposure across the entire uranium value chain through uranium business, fuel services, and Westinghouse stake

  Comparison

  Has the broadest exposure in the nuclear energy sector

  Risks

  Commodity price declines, mine production accidents, timing of sales deliveries, reactor construction delays

• Nucor Corp. (NUE)

  Benefiting from the free cash flow turning point brought on by declining capital expenditure

  Strengths

  Capital expenditure declined by ~28% in 2026, with output growth at ~6.8% CAGR

  Comparison

  Compared to CMC, NUE performs better in an environment of rising HRC prices

  Risks

  Rising scrap steel costs, reduced tariffs, increased domestic capacity putting downward pressure on prices, slowing economic growth

Key data

• Natural Resource Spending Growth Forecast~9% CAGRCompound annual growth rate of North American natural resource spending from 2025 to 2027
• Utilities Capital Expenditure Increase~60%Percentage increase in spending over the next five years compared to the previous five
• SRE Five-Year Capital Plan$65 bnSempra’s projected total spending over the next five years, of which $47.5 bn is allocated to Texas
• NUE Free Cash Flow Forecast~$10.6 bnProjected FCF from 2026 to 2028, up 93% from the previous three years
• VG Export Capacity Target~85 mtpaTotal LNG export capacity expected by mid-2029
• Texas Electricity Demand Growth Rate~8% CAGRProjected through 2030, higher than the U.S. average of 3.2%

Impact & implications

The report believes that the rising natural resource spending cycle will benefit companies with project execution capabilities and asset exposure aligned with demand growth. For investors, this means looking for stocks with earnings visibility and cash flow improvement potential in oil & gas services, grid construction, LNG infrastructure, and nuclear fuel chains. Meanwhile, the release of free cash flow after peak capital expenditure (such as in the steel sector) could lead to enhanced shareholder returns.

Risks

• Commodity price volatility (oil, gas, uranium, steel prices, etc.)
• Project execution risks and construction delays
• Changes in regulatory policies and election uncertainties (e.g., California wildfire legislation, Georgia PSC elections)
• Funding needs may lead to dilution through equity/debt financing
• Geopolitical events impacting supply (e.g., Middle East supply disruptions)
• Macroeconomic slowdown leading to lower demand

What to watch

• Quarterly earnings and capital expenditure guidance updates for each company
• Progress on Middle East supply disruption repairs and operator activity signals
• LNG project FID progress and contract signings
• Nuclear reactor construction and SMR deployment progress
• Utilities load growth data (especially related to data centers)
• Steel import and price trends