Stuart D

Yeah, the land angle could make sense. He did keep talking about oxy’s ‘position’ in the Permian. He’s probably also selling CVX to buy some sweet PBR - lol jokes.

I just re-listened to Buffett discussing OXY. I understand the part about 5mm bbl's going offline supporting the price of oil, but (like other's) I don't understand why that would entice him to invest in the Permian. Perhaps he'll explain the investment in e.g. 5-yrs from now, or perhaps by then the answer will be self-evident. edit: The other point I didn’t understand was him “not liking” the preferred’s being redeemed. What’s not to like? In a world of 5.9% T-bills, an 8% pref with zero upside isn’t that appealing. He’s receiving a 10% premium as they’re being redeemed. And most importantly, if he really didn’t like it, I’m sure he could negotiate terms and increase the mandatory pay back threshold from $4/share/yr to say $8/sh/yr.

Anyone looking at the Beetaloo basin in the Northern Territory, Australia? Just approved for fracking and the gas reserve estimates are very, very large. I’m reading 500T cubic feet vs the Permian’s 300T. Seems too big to be true.

Thank you!

If Biden wants to refill the SPR in the future at lower prices, could he just buy futures, which, due to backwardadtion are priced lower?

Yes, I think the same (would we know Munger's name?) if the below merger-arb fell through. From the Snowball: "Munger did enormous trades like British Columbia Power, which was selling at around $19 and being taken over by the Canadian government at a little more than $22. Munger put not just his whole partnership, but all the money he had, and all that he could borrow into an arbitrage on this single stock."

Yeah, I think it will come down from a 60% payout ratio. The minimum is 25%. My guess would be somewhere in the 35-40% range.

How long do you have to wait?

yeah, my brokerage won’t support it either. I agree the trade (buying the warrants and selling the calls) is interesting.

Russia to cut oil output by 500,000 bpd in March https://www.reuters.com/business/energy/russia-cut-oil-output-by-500000-bpd-march-2023-02-10/

Going long Glencore would be another.

The oil bull thesis is attractive. Buffett made a similar thesis in 2008 at the BRK AGM. After his statements oil declined for a year, during the GFC but then bounced and stayed north of $100/bbl for almost 5-years straight. He was talking in May 2008, with Oil north of $150/bbl. 2008 Morning session WARREN BUFFETT: "...we’re producing in the world, 86 or 87 million barrels a day of oil, which is more than we’ve ever produced before. We are closer — by at least my calculations — we are very much closer to producing almost as much as our productive ability is in the world, with fields in their current stage of development, than we’ve ever been. I mean, our surplus capacity, I think, is less than, well, any time I can remember. And it’s quite a bit less than most periods. So we don’t have the ability to crank up, in any short period of time, the 86 or 7 to a hundred million barrels a day. But whatever that peak will be, and whether we hit it five years from now or 50 years from now, and then it will just gradually taper down, and the world will adjust to it, and hopefully we’ll be thinking about it, you know, well before it happens, and various adjustments will be made in the world that will cause the demand to somewhat taper down as the available supply. But we will be producing oil far beyond this century. It’s just — the question is whether we’re producing 50 million barrels a day, or 75 million, or 25 million barrels a day. I don’t know the answer to that. WARREN BUFFETT: [Charlie] What’s your over-under figure for 25 years from now, world production oil per day? CHARLIE MUNGER: Down. WARREN BUFFETT: Yeah. (Laughter).That’s not an insignificant prediction. I mean, it — believe me. If oil production is down 25 years from now [2033], it will be a different world. I mean, you — China’s going to sell over 10 million cars this year. I mean, the demand is going to keep [going up]— even at these prices [$150/bbl] — it’s hard for me to imagine demand falling off a lot. So if production falls off, you’ll have some interesting consequences." However..... He expressed this view by buying ConocoPhillips, which didn't work out so well (article below). This is a tough game! https://www.cnbc.com/2009/05/08/berkshire-hathaway-reports-15b-net-loss-for-q1-as-it-sells-conocophillips-shares.html

Yeah, that makes sense. But does this assume the debt ceiling is raised?

Nice! I’m surprised this name doesn’t get more airtime. If the deal closes won’t they have more cash than market cap? Plus management previously said they would use the proceeds to buyback stock.

Nice trade. Another option to selling is selling a slightly further out of the money call. This has the advantage of getting most of the premium up front with the possibility of delaying the transaction close to e.g. 2024.

Thank you for explaining. That helps a lot.

AGO would be up there. Halving their share count in the last 5yrs.

So if the call you sold is exercised in the money, will that automatically trigger the exercise of your warrants? Or Does it being a ‘naked’ call mean you’d need to buy shares at current market price with cash and then sell them to the owner of the call at the strike price? Cheers,

That sounds good too!

Imagine a $75b buyback at PBR A similar cash flow statement to CVX, but a sub $100b market cap. I know, I know. We should be grateful for the monster dividend. One mustn’t be too greedy, lol.

That’s a good question. I’m assuming there is zero liquidity to sell them for any amount, e.g. $0.01?

Thanks for posting.

PBR out of the Money calls. The Brazilian index trades at a 5-10% dividend yield. If PBR trades at a 10% yield, every OTM option is in the money. At a 5% yield, all options are 10-100+ baggers. If oil rips…. the numbers get silly.

Best analogy ever

The November iea report just came out, always an interesting read. https://www.iea.org/reports/oil-market-report-november-2022 Global observed inventories fell by 14.2 mb in September as OECD and non-OECD stocks plunged by 45.5 mb and 19.3 mb, respectively, but were partially offset by a surge in oil on the water of 50.6 mb. OECD industry oil stocks declined by 8 mb, while government stocks drew by 37.4 mb. OECD total oil stocks fell below 4 000 mb for the first time since 2004.