Myth465

As am I, someone reads VIC.... Just saw it yesterday and now moving cash around to buy.

I have been a gas bear for 5 years. One day it will turn, but there is just too much of it in the US. Oily stocks with gas resources that can be exploited though give you the exposure without the major risk of prolonged subpar gas prices. I am finding that oil and gas is very cheap now. Oil is at $100 and the stocks are priced as if its at $75. Will look at TSO, though I like the 1 refiner, retail gas stations, and huge dividend payments.

I agree. I move in step with the market, but know the crap I hold will get killed and fall harder on a massive correction.

I am finding alot to buy, bought some. Lightstream Oil and Gas High Artic Energy - O&G Services company with a 6% yield paid monthly. Some growth there, and low PE. Northern Tier Energy LP - Havent bought yet, there is a VIC write up. First refinery I have really understood in terms of how they make money. Listening to calls. ROIC Warrants - I see an easy double. Have already made 4x my money prior to the pull back. I reloaded and am waiting for the next double. Extreme Drilling - Cheap driller which has turned, have 10% of portfolio in it, at prices 25% lower. AWILCO - High yield, may get lucky with day rates on this one. Small 2% holding RDI - Really like Management here, hold in a taxable account, will hold for the long term. Strategic Oil & Gas Ltd - Really like this idea, but a new holding, will scale up as play works out. I am starting to feel smart, and feel like I know what I am doing, which means we are a bit frothy and we are due for a correction. I can find things to buy, but am trying to get to 10% cash. My new strat is high yield with growth in a retirement account. Build a true Berkshire with companies which throw off cash, in good times and bad. That cash is then reinvested. Rinse and repeat. TX what refiners do you own, also why Nat gas heavy, oily E&Ps are cheap?

You definitely have a keeper there. Congrats with regard to the relationship, as well as the new fund. Feel free to share your best ideas :)

Very good video. Thanks.

Green I think you have to trust your gut. Oil and Gas is a very interesting space, as ItsAValueTrap pointed out, there are plenty of ways to lose money, and one of the main ways involves asset plays. I feel comfortable here, but I have been getting burned for years in various O&G holdings. Made a bit of money as well but it is a tough place to play.

Oil and gas is an interesting beast. Cash flow is not always king, though I am moving towards holdings like Strategic Oil and Gas which trade at low cash flow multiples and have paybacks within a year. Lightstream is fighting a decline rate that is very high, so they have to spend alot of capex to hold production flat, until the production matures. Lightstream is an assets play though, below is very good article inmo. http://seekingalpha.com/article/1740362-lightstream-reports-inline-production-and-gets-even-cheaper

They have assets that dont generate cash flow which have value. Some of the debt on the books is related to entering new plays, they need to stop expanding into new areas, sell existing areas down (especially undeveloped areas), and pay off the debt. Then when debt is reduced they can reduce the yield they are paying on the remaining debt. You are right they cant stop drilling due to decline rates, but once the platform is built they will make money via further drilling and enhanced recover options. Also recoverable resource will continue to grow from 15 percent as techniques get better. Its a buyers market, and inmo the CEO thinks like an Owner. He doesnt want to sell into the Canadian market, where everything is cheap. He also doesnt have the capital or share price to expand, and buy cheap assets. He is also being watched like a hawk and any bad news is amplified and good news ignored. Given the status queue they are fine on cash flow, but I dont like the DRIP situation, but it works because Management is buying new cheap shares at a 5% discount. They would prefer to muddle through, hedge a bit, and let high oil prices or a turn in the M&A market bell them out, while everyone enjoys a dividend. They want to pay you to wait. Its not going to happen, people are going to demand change with a share price in the $6 range. Just about everyone right now is sitting on some sort of capital loss.

I missed that. Makes sense. I am ok with every option but that one. All the other ones will create a bit of value and raise the share price. I hope thats boiler plate, and they arent considering issuing equity here. Better to sell assets at 80% of book value then issue equity at 50% of BV. I dont think the dividend is the issue, but Mr Market will not let them continue with their current strategy. I hope they sell the shares in stock they hold, and the Duvernay assets. They can play the M&A game, when they are trading at .8 - 1x BV. They could have bought Trioil with shares if they had a reasonable valuation, so its time for a change in course. Cut capex slightly, sell a decent chunck of assets, and term out the remaining debt at a much lower rate. Then perhaps look at the dividend policy. Our dividend should be cut if they want to keep the DRIP inmo. We should not be selling equity via DRIP or capital markets at 50% BV. At some point someone offers 75% of book, and will capture the upside in EOR, and undrilled land.

Yes they are in an interesting situation. I bought a more a few days ago. I like the strategy, but Mr Market will force a dividend cut or an asset sale. They will be punished severely for any bad news. Interesting to watch.

I dont predict dates, but this is what I see. Republicans fold, they look pretty bad now. The votes are there to pass both the CR and DC raise, and the Senate and the press will force the vote. Boehner puts both up for a vote, and retires or is defeated by Tea Party faction if Republicans hold the house. The Democrats have nothing to gain by negotiating, and there is talk of the Republicans losing the house in 2014, or Tea Party Republicans getting primaried. Thats what I see happening.

That was funny, I read it via RSS and was shocked...

One of the Petrobank kids is taken over. http://seekingalpha.com/article/1719332-lightstream-the-cheapest-oil-company-priced-at-half-nav-and-13-4-yield I will go against the grain and say I like Wright. He will get the share price up or be taken over. Win win either way if you are buying now.

Thanks quite a bit. Listening to the return episode, very good.

I like Price to CF, but it doesnt work well if they have new production ramping up very fast, or as ThanksAndYou.... pointed out, maintenance capex is very high. Price to reserves is good but they will need a good business model to bring out the reserves. I think its a tough questions depends on the stage of production they are in, and the business model. --- I hear Iona has the same founders as Itacha. I like what I see and am looking for time to really dig in. I am considering making it a 5% positions, and taking a basketof 5 or 6 other Canadian O&G companies for a full 10% position - perhaps 2% each. The whole patch is on sale.

Fair enough Gio. We just have different styles. A Manager runs the company, but I am always watching and analyzing the decisions and direction they go. If I question enough of the decisions I will eventually vote with my feet. We all have different styles though, and it will be interesting to watch things play out.

What do you see as the one foot bars? I think there is value (as a whole) in Ithaca, Pine Cliff, Crocotta, Long Run, Bellatrix, Zargon, Manitok, CNRL, Athabasca, Encana, TransGlobe, Legacy. I wouldn't want to just own one, but I think a group of them will work out fine over time. I agree on the group, a few will be taken over and you will win overtime vs owning one and holding. What do you think of Iona Energy Inc.

The bubble in my opinion is the inability to find fault in anything one of the Owner Manager does. People arent arguing about FFH's returns are history (well some are), INMO they are saying they simply dont believe in the current strategy as its being employed, and are voting with their feet. You probably do. I personally have never seen you critical of any decisions made by a Manager once you invest (well perhaps with the exception of BBRY). Perhaps you agree with everything down by Managers once you invest 95% of the time.

+1 7.5% or even 15% arent garenteed just because you have a business model, or are happy with lumpy returns. I think Al's message missed the mark....

Thats interesting, I stopped following Petrobank after the spinoff. http://www.timescolonist.com/business/petrobank-spinoff-of-petrobakken-stake-completed-1.38451 So basically they spinout Petrobakken which was the source of cash for Petrobank, then use $40 million to buy a mix of Petrobakken and notes yielding 8%. --- At June 30, 2013, Petrobank had cash and cash equivalents of $30.6 million, investments in marketable securities of $44.7 million and a net working capital surplus (including cash and marketable securities) of $71.0 million. Our focus in 2013 is to steward our capital to maintain financial flexibility to pursue future projects and acquisition opportunities while positioning the company to benefit from our strong capital base. We expect to fund our 2013 expenditures with cash on hand and sales revenue from production. ---- Previsously when Petrobakken was significantly owned by Petrobank it literally funded the operations of Petrobank. Now he has just put a portion of his cash in high yielding securities and has chosen Petrobakken. A bit convoluted, but post spinoff. I dont think its fair to say the high dividend yield is mainly to fund Petrobank. Petrobakken needs to fix up its capex / debt situation, but I agree with Wright, cutting the dividend wont really help much given how small it is relative to cash flow after the drip. It looks like they plan on waiting for higher oil prices, or selling assets.

Parsad I think you echo the comment as well. I think you have love and respect for the company and the employees, but not unconventional love for the investment. That's different then a few other posters here.

+1

Yes basically PWE is an asset play. I think they will sell the Duvernay, which has no production. A decent price could fix the balance sheet. I also like the cost cutting I have been hearing about on presentations, and the completion of the strategic review for Q3. http://www.bloomberg.com/news/2013-06-11/penn-west-breakup-seen-returning-3-7-billion-real-m-a.html I think People are a bit hard on Lightstream, they way they explain their business makes sense. I also believe they separated from Petrobank so dividends dont go to Petrobank to fund Thai. They will have to do something though, the business is just too cheap and shareholders are just about done. My cost basis is 7% higher or so, but many are sitting on 50% losses.

I own PWE and LTS. LTS you get paid to wait and wont be taken under its current price. PWE has a new team, new focus, which works as a great catalyst. I dont like the small players, they are being taken under on the cheap by foreign companies.