alertmeipp
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Posts posted by alertmeipp
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If SA really doing this because they see the future pricing going much lower, why would they invest billions on new refinery capacity.
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Nice chart of the past 150 years of oil prices in constant dollars. Gives some perspective:
That's an awesome chart. I'm staying away from oil from this day forth :)
You might want to do one on S&P
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It seems to me that the obvious lesson is missing from your list, and it's called diversification and risk management.
How dare you mention those two things on this board. Don't you know only lousy investors diversify? Buffett only has 20 punches, Munger says 3 stocks are all anyone needs, how can that now work?
All Cardboard needs to do is put 100% of his portfolio into SD, someone above said it will double this year. There you go, all his losses back in a single gain.
In all seriousness, I appreciate the candid post Cardboard. Introspection into mistakes is where growth comes from.
You miss understanding my point about SD. I am not saying SD will double. All I was trying to say is being down big at a given time isn't really that important, it is the price you sell that counts. I used SD as an example because many of us were in. It was 4 bucks 2-3 months ago. And many said it's cheap. And pumped when management and the company buy back the shares at 3.
Now we are 1.23, will SD trades back up to 4 next 3 months? Who knows? If it does, what will the lesson be?
If Cardboard is right on his oil prediction, all this paper lost will reverse.
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This drop in oil stocks is comparable to the financial one we have had.
Brutal.
But if u only need a double, it will come along. SD double, will be 2.5. Tpg and prem will need another double from there to get to ur position.
Hope is a good thing as long as it is not the only thing.
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>>Now I understand that Al Awalaeed's statement that we may not see $100 oil.
Never says Never. I am surprised he said they.
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They key after losing money is to learn from your mistake.
I find it very hard. It's like a personality thing. I shall overcome. A checklist helps!
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Congrats on all those nice return.
I will report mine after after it looks nicer.
Lol.
Happy holidays. Give back some whether or not you make good money. After all, we all the lucky oil to have extra money to invest.
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a few months does not make a trend.
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Lightstream's press release on re-authorizing their share repurchase program was a little sketchy.
http://www.lightstreamresources.com/news/news-releases.cfm?newsReleaseAction=view&releaseId=167
QUOTE: As of November 6, 2014, no purchases have been made under Lightstream's previously announced NCIB.
On November 7, Lightstream bought back shares.
On November 10, Lightstream issued the press release.
Maybe insiders don't want other people to know that they are buying back a lot of shares?
2- In general, I think that management tries to mislead shareholders. I don't like sketchy management teams.
Not quite sure what you are saying here. That buying back shares now is a bad decision by management?
They omitted the fact that insiders and the company were buying back shares. They would have known those things when they issued their press release. Bad form.
Insiders were front running the NCIB. That strikes me as unethical.
The Nov 10 was mainly regarding issuer repurchase plan agreement, the NCIB is there since a year ago.
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They have been clear.
They will cut capex before dividend.
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This price might still stays for a while tho.
I still have hard time believing with the supply and demand we have and projected to have, we will see such a dramatic drop in so short of time.
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I's about how ppl see the future, back then, ppl have high expectation of China and Euro demand, Iran just got its sanction and some worry that it will cause bigger trouble. Syria was blowing up.
Now, many of those are either ignored or reversed.
But with China and Euro gov doing all they can to stimulate their econ and current low oil price, hopefully, the glut will get balance out soon.
Middle East is big wildcard. None of the conflicts there seems to cause production to drop much.
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oil sand cost should be quite high
how could they achieve $30?
Here is how the Suncor CEO is thinking about the drop in oil prices. I thought this was very interesting. No plans to curtail cap-ex until oil drops below 40$. They have a 50 year time frame in mind. They positioned their balance sheet in such a manner as to not have to incessantly start and stop new developments based on the flux of oil price movements. Cash production costs of 30$/bbl.
Op cost not all in cost.
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This whole debacle looks to me like hedge funds piling on each other while many exit the trade.
While there are real factors explaining the oil price decline such as: QE end, USD strength since June, European and Chinese economic weakness, new strong production from the U.S. and the desire from Saudi Arabia to take down U.S. shale, the speed and depth of the decline just does not seem to add up with data from inventories.
When one looks at forward pricing for WTI, they are clearly in the $80 range despite current spot at around $65. So any company can hedge forward its future production at $80 if need be. It is only current, unhedged production that is delivered at $65 or below depending on the region. Is your company capable to survive oil at $65 for a quarter or two?
The picture looks even better for Canada, considering that you need to add about 13% to these prices accounting for the exchange rate.
So IMO, the people who are gonna suffer the most are the ones who are panicking now and dumping cheap equities. And the ones who are facing margin calls on equities and oil futures being forced to get out. Things are now priced like 2008/2009 with oil at $30 and there is no visible economic crisis. At least yet. If there is a global depression then all bets are off, but many stocks are pricing that already.
Cardboard
All 2015 CL futures trades below 70s. Forward pricing is useless forecaster.
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he said expect big volatility. but the good news is he expects prices to stabilize somewhat above the level we are at now. this is good if you are a trader. an investor will have to tolerate big fluctuations that could be mentally draining.
Well,
If he see big volatility, shouldn't he put more hedge in. Oil can go anywhere. All I am pointing out is there is a disconnect in his comments and cnq strategy
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u know what's funny... CNQ itself is using 80 bucks WTI assumption for 2015.
And their 2015 hedge is very light.
If he really believes what he said, wouldn't you expect a very different picture.
And the fact he used 2008 as an example tells you something, maybe he wanted some lawsuit.. LOL.
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Depends on how u look. You can make a case that Pennwest is not leveraged. They have assets to sell, they have dividend to cut. Top notch gassy assets are still in demand and probably more so now.
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It's interesting to review old posts.
Well, the reality is, we are not looking into $70 oil, we are looking into $60 in fact
PWT's 5 year plan uses $90 oil.
And i think 1.03 exchange rate. So 85 wti will still look good for them at current exchange rate.
But asset sale will be difficult.
For 2014, budget for 92.5
So things are ok.
But if one thinks wti is heading to 70, no reason to be in this sector.
Stock price was 50 percent higher than today.
If I were to believe oil will be 70, I would have sold and short many of the real higher cost ones..
I thought it will stabilize in the 80s.
It was wrong and paid dearly.
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My current favourite speculative potential multi-bagger is STP.DB (trading in Toronto). The company is an oil producer with a 2 producing assets. One that they bought at a bargain price a few years ago and have started starving of capital due to their extremely distressed balance sheet/cashflow position. The other is an oilsands project that has been continually having performance issues. The company is not likely to be able to repay the debt they took on to build the oilsands project without a material improvement in its productivity.
I think the company is almost certain to require CCAA/restructuring, but I think the debentures are a potential multi-bagger anyway at their current price of $2.50 per $100 of par value. The company recently sold a non-core asset for $19.5 million, which gives them enough liquidity to meet their December debt payments and operate for a few more months after that (probably 3-6, depending on various factors). The debentures are owed $3 per $100 of par value this december, so a speculation could return all its capital in a short time if they make the payment.
If they don't, they would convert the debentures to shares at Par, at a 5% discount to the recent share price. This would be my preferred option, as although that would immediately tank the stock even further, I'd probably be able to sell the shares for more than the current debenture prices indicate, and likely for a 3-5 bagger.
The hugely speculative upside option is that they make the payments in december, and their production turns around from ICD installations (inflow control devices have been installed at the oilsands project, and scuttlebutt is they're starting to work). If they do, the debt could be worth 30-40 cents on the dollar easily.
say they convert the debt to equity... how would their balance sheet look like?
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The author of that page may be very good at collecting data, but he doesn't seem to have much in the way of analytical skills or critical thinking. The production per well is only half of the equation, the other half is number of wells drilled. Sure, the best spots are disappearing because many of them have already been drilled. It is pretty obvious that companies are going to drill them first, so they can get quicker and faster returns and reinvest those returns into more capex. However, if a well today produces 40% less on average than before, but you drill two wells instead of one, you are obviously still going to get more production out of those two wells than just one. /quote]
I think there is a bit more depth in his "beliefs". if you take conventional production, it has peaked following the path that you exactly described. As the more productive wells from giant/big oil fields die out, there are replaced by many more wells on less lucrative spots with more tech and so on. Eventually though you get declining total production. I think he believes the same is happening with this too... I do not know if he is right and I am not taking sides. I just know that his analysis on conventional production peaking was right years ago. I feel like we will probably never run out of oil but whatever remains will get more and more costly to extract as we will need new generations of extraction tech every time. But what do I know?
+1
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I hope he is right that marginal cost is 90 usd.
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all the low cost stuff will be drilled out though at this pace within a few years. Meanwhile demand steadily goes up. Only need a very small shortage and you get a price spike. And unlike most other commodities, demand is pretty stable for oil, and you cannot recycle the stuff.
Indeed, many producers with great acres in eagle Ford and Permian are shifting more drilling there.
The immediate effects is they keep their growth promise with lesser capex.
The longer term effects is higher marginal cost for new production.
This will take some time under Russia or OPEC cut or something blow up in middle east.
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It is very complex. Looks at all those deals that closed in the first 9 months. Look at those multiple people were willing to pay. Those involved know better than many of us and yet they didn't see this coming.
All government, OPEC didn't see this coming.
And somehow, now, everybody and their dogs said it was obvious.
Depletion is real, ever increase production and efficiency is real. But so are tons of borrowing and equity financing used to fund the drilling.
Not many companies can continue their growth without dipping more into debt.
I agree, we careless about what the budget needs. Their citizens do.
The sentiment is terrible and likely to get worse. Those who bet the right side will make a killing. The bet is on what is the price to balance supply and demand? Forget about what each gov needs.
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It is weird the market ignore news like that.
I guess the whole sell off is difficult to explain to begin with.
Some lessons from a value investor
in General Discussion
Posted
If they think some techs will make oil price much lower, they should diversity away from oil completely.