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james22

By james22
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Spekulatius
Spekulatius

I guess it may be time for another flush: I do not think the Saudi's will play this over again like in 2015, as it cost them dearly.

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SharperDingaan Veteran

SharperDingaan

Posted
Posted
21 hours ago, Ulti said:

https://www.reuters.com/sustainability/climate-energy/canada-oil-gas-emissions-cap-likely-curtail-production-report-says-2024-06-18/
 

I’m curious…. Does this really have a chance to pass with elections coming up next year? And how much damage will this legislation do? I plead ignorance of Canadian politics 

 

Even if it passes, it may well be repealed later or just not enforced. Should the oil-sands have to take write-downs it will not just be less economic activity overall, it will be a less tax revenue as well; and Ottawa making multi-billion transfer payments to the western provinces versus the other way around. Most would expect new political faces well before then.

 

SD

Ulti Community Regular

Ulti

Posted
Posted
53 minutes ago, SharperDingaan said:

 

Even if it passes, it may well be repealed later or just not enforced. Should the oil-sands have to take write-downs it will not just be less economic activity overall, it will be a less tax revenue as well; and Ottawa making multi-billion transfer payments to the western provinces versus the other way around. Most would expect new political faces well before then.

 

SD

Thanks SD … I was thinking along those lines in addition with the massive expense of the new pipeline thrown in.. all the parties would be unhappy with less revenue 

SharperDingaan Veteran

SharperDingaan

Posted
Posted (edited)
5 hours ago, Ulti said:

.. all the parties would be unhappy with less revenue 

 

There will also be enough very unhappy newly unemployed oil workers all over BC/Alberta/Saskatchewan, to make it very difficult for whichever political party is ruling Canada at the time. More rounds of protest in Ottawa, and everybody singing/pushing for more CCS and higher tar-sand production, or they are out of a job tomorrow. 

 

SD 

Edited by SharperDingaan
SharperDingaan Veteran

SharperDingaan

Posted
Posted (edited)

The actual details are quite a bit different ....

Pathways has not made the final decision yet as they are still awaiting tax credit finalisation; less than two weeks ago it was apparently almost-in-place. Play nice, take down the content today and cite why (Bill C-59); replace with new content in a month after the tax credit is law, and the investment decision has been made.

 

https://boereport.com/2024/06/20/pathways-alliance-oilsands-group-removes-all-website-social-media-content/

 

"..... Pathways has removed its content due to uncertainty around an anti-greenwashing provision in federal Bill C-59. The omnibus bill,....., contains a truth-in-advertising amendment that would require corporations to provide evidence to support their environmental claims. Some environmental groups have said these ads are misleading, as the Pathways Alliance has not yet made a final investment decision on its proposed $16.5-billion carbon capture and storage network."

 

https://pipelineonline.ca/freeland-to-oilsands-tax-credit-nearly-law-time-to-start-building-carbon-capture/#/?playlistId=0&videoId=0

 

" Finance Minister Chrystia Freeland says a major federal tax credit to help build carbon capture projects is almost in place and she wants to see quick progress on the project promised by Canada’s biggest oilsands firms." 

 

... This isn't just a tax-credit; it will also enable low-rate financing on the typical federal/provincial/municipal formula, with the federal portion delivered via the Canada Infrastructure Bank. 

https://cib-bic.ca/en/

 

SD

 

Edited by SharperDingaan
Ulti Community Regular

Ulti

Posted
Posted

Thanks SD.

Is it true as stated in the article below that carbon capture will extend the life of wells for many more years ?

https://oilprice.com/Energy/Energy-General/Carbon-Capture-Technology-Called-a-Boondoggle-for-Oil-Industry.html

https://oilprice.com/Energy/Crude-Oil/80-More-Years-of-Oil-The-Big-Attraction-of-Carbon-Capture.html

 

Full disclosure .. I purchased shares in SU May ' 23 because of the Richard Kruger hire..Thus my interest.

sholland Collaborator

sholland

Posted
Posted

Yes, flooding a depleted conventional oil field with CO2 will extend the life of the oil field. Before Denbury was acquired by Exxon they had a nice long presentation about the mechanics of CO2 flooding which stated that primary recovery usually recovers ~20% of the oil in place, secondary recovery (waterflooding) usually recovers ~18% of the oil, and CO2 flooding (tertiary recovery) usually recovers about ~17% of the oil.  At injection pressures of ~1400 psi the CO2 and the oil become miscible. The reservoir rocks in the depleted reservoir are still covered in a film of oil.  The CO2 thickens the film and the flooding can push off some of that thicker film. 

Longnose Proficient

Longnose

Posted
Posted
On 1/9/2020 at 6:34 AM, james22 said:

You've recently been writing some very bullish thoughts on the oil and energy sector. What's your case there?

 

When people get excited about this ongoing cyclical trade, they should look at oil as the ultimate distressed value asset out there. To me, oil stocks are incredibly cheap.

 

There are technical reasons for that, because of the large passive investment flows, and oil is a smaller and smaller part of the index. Also, there are more and more institutional investors who can’t buy oil stocks anymore because of ESG limitations.

 

On the other side, there is no sign that oil demand is weakening. Consumption in emerging markets continues to grow, while conventional oil investments have been reduced significantly, precisely because of all this talk that the fossil fuel era is ending.

 

So in your view, energy the one remaining cheap sector out there?

 

Yes, without a doubt. But I will freely admit that there are all sorts of technical issues because as I said many investors can’t buy oil stocks anymore. We have this bizarre situation where people can’t buy oil stocks, but people continue to consume oil.

 

https://themarket.ch/interview/oil-stocks-are-incredibly-cheap-ld.1384

 

Anyone else see an opportunity?

 

I'm thinking of making Energy (VGELX) a 5% position.

 

TBH i haven't been following this thread actively. But jumping back to the original thought and premise of the thread and energy as a sector. 

 

I had a few energy stocks i picked up back in 2020 that made quick recoveries and I exited. Ive been looking at some recent macro and feeling like energy has some interesting tailwinds coming for the next few years. Im not really sure I want to be in the VGELX index. For those of you that follow the energy sector regularly. What are some of your top names in the sector? gonna be running some screens this weekend in the sector but would be interested to hear your opinions. 

SharperDingaan Veteran

SharperDingaan

Posted
Posted (edited)
10 hours ago, Longnose said:

What are some of your top names in the sector? gonna be running some screens this weekend in the sector but would be interested to hear your opinions. 

 

Look at the cdn small-mid caps, but screen only against periods when the netbacks were similar. Today's differentials and costs are a lot lower; today's usd 80 wti is the 100+ wti back in the day. Names aside, you will also see just how undervalued everything currently is relative to the underlying economics. There is a reason why WEB is looking at the WCSB.

 

SD

 

Edited by SharperDingaan
lnofeisone Veteran

lnofeisone

Posted
Posted
On 6/28/2024 at 10:53 PM, SharperDingaan said:

 

Look at the cdn small-mid caps, but screen only against periods when the netbacks were similar. Today's differentials and costs are a lot lower; today's usd 80 wti is the 100+ wti back in the day. Names aside, you will also see just how undervalued everything currently is relative to the underlying economics. There is a reason why WEB is looking at the WCSB.

 

SD

 

I agree. I have a few of cdn small/mid-caps (Peyto, MEG). I still hold VET but that position is down for me from where I bought and just decreased in overall portfolio %. The position where I've started building up a position is NEP. I think renewables are currently very hated (and some are for the right reason). NEP has some interesting things happening, and there are a lot of parallels with O&G MLPs. ENPH is another name where I have been trading in and out with the intent of building a more meaningful position. Just some ideas. 

SharperDingaan Veteran

SharperDingaan

Posted
Posted

A lot of this is also risk management and time horizon; long-term vs short-term looks very different.

Our newer vintages are all 5-10 year holdings, and include BNE.TO, GXE.TO, CET.TO, and a BTC-ETF. All large share counts, and each a life-changing position should it work out as we hope; BTC-ETF held as the other side of swing trades as we go through the holding period. BNE has ridiculous share count, GXE a ridiculous dividend, CET is a 'forever' call on drilling eventually returning, BTC-ETF as the high-return/low-correlation diversifier.

 

Why a BTC-ETF?

BTC is currently USD 61K; if you expect around USD 85K by year-end, you anticipate a 39% return. However, if you also have the discipline to trade the volatility, you can expect an additional 12-15% per swing-trade round trip. The ETF is much more liquid and cost effective, and pretty hard to argue against.

 

SD

 

 

 

 

 

 

   

   

Saluki Grand Master

Saluki

Posted
Posted
1 hour ago, mjm said:

https://www.reuters.com/markets/commodities/anglo-american-battles-underground-fire-australian-coal-mine-2024-06-30/       fire here also

 

The other coal stocks are up double digits today, I'm assuming that this is why. 

 

In addition to OXY, I also own some VTS which I got in the spinoff from Jeffries, and have been trimming a little lately.  Both mid size positions. 

 

I also have some ENPH, which I believe will benefit both from clean energy and the need for more residential housing.  They are hurting a bit now, but moving their production to the US entitles them to a lot of subsidies from the Inflation reduction act and they appear to have best-in-class tech for residential solar.

 

I don't know if shipping counts as energy, but I have a 5% position in STNG, which is a product tanker company, and have been trimming it a bit and adding to TNP.

 

I own a tiny bit of NEP, which I cloned from @lnofeisone .  I'm not crazy about the debt but I don't mind buying some at these prices while I continue to study it. 

CorpRaider Mentor

CorpRaider

Posted
Posted (edited)

Currently listening to Brad Jacobs interview on Odd Lots podcast.  He says the runner up industry for his new venture was E&P production properties.  Said they are selling for ~3x cash flow and you get an annuity for ~15 years; no one wanted to invest; even the oil state sovereign wealth funds are sellers not buyers.  

 

Edited by CorpRaider
SharperDingaan Veteran

SharperDingaan

Posted
Posted (edited)
On 6/30/2024 at 11:17 AM, SharperDingaan said:

Our newer vintages ...  CET.TO.  CET ...  a 'forever' call on drilling eventually returning.   

 

Now with a 7:1 consolidation, a ridiculous share count, and a trading opportunity.  

www.cathedralenergyservices.com/_files/ugd/b8bab0_244f29c1d5694e80b1ed6b998900a6a7.pdf

 

SD

 

 

Edited by SharperDingaan
Longnose Proficient

Longnose

Posted
Posted
On 6/28/2024 at 8:53 PM, SharperDingaan said:

 

Look at the cdn small-mid caps, but screen only against periods when the netbacks were similar. Today's differentials and costs are a lot lower; today's usd 80 wti is the 100+ wti back in the day. Names aside, you will also see just how undervalued everything currently is relative to the underlying economics. There is a reason why WEB is looking at the WCSB.

 

SD

 

Helpful, Thanks for the direction.

SafetyinNumbers Veteran

SafetyinNumbers

Posted
Posted
23 minutes ago, Longnose said:

Helpful, Thanks for the direction.


I have built a 6% position in Strathacona Resources (SCR.TO) ahead of their expected capital return policy to be provided with Q2 results on August 14. The company is guiding to C$1b in free cash flow or ~C$4.50/share to be returned to shareholders at $80 WTI. They say they will have a base dividend that is sustainable if prices dip. My bet is that will be using $60 WTI which should support more than a 5% yield. They also have discussed variable dividends, SIB or NCIB. 

 

I’m a big fan of the management team. They certainly have skin in the game with Waterous fund owning 91% and have no dilutive securities (options etc..). They have a history of growing accretively through acquisition but want to use their stock now that they are public but the stock is too cheap. I think that makes them very motivated to close the NAV discount (~30-40%) as quickly as possible. 

SharperDingaan Veteran

SharperDingaan

Posted
Posted (edited)
1 hour ago, SafetyinNumbers said:

They have a history of growing accretively through acquisition but want to use their stock now that they are public but the stock is too cheap. 

 

Just keep in mind that it's only Q2; many a company will announce direction but doesn't actually declare until January. SCR also have incentive to buy back some of their own stock (using dividend funds) and do tuck-in acquisitions paid for with stock and cash from the drilling budget. 

 

Drilling companies are all forecasting 'no change in activity' for the rest of the year, and the industry has been paying down debt for quite some time. Most would expect that post TMP expansion, newly found cash will be aggressively going into M&A consolidation.  

 

SD

Edited by SharperDingaan

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