mattee2264 Posted June 10 Posted June 10 Inflation adjusted oil price is way below the $100 reached in the middle of last decade. Shale productivity is declining and ESG concerns are making it difficult to fund exploration and development spending. Oil demand shows no signs of declining and it is becoming increasingly clear that fossil fuels will play an important role in bridging the energy transition. There has been a lot of consolidation in the space and bigger players are more focused on paying dividends/buying back shares and producing FCF rather than growth at all costs. Near term there could be some weakness if we go into recession and China continues to struggle economically. But low prices will discourage production and investment and provide a setup for a big rebound in the future. And you are being paid to wait because dividends are very generous in the sector and buybacks at lower prices are more accretive to value.
SharperDingaan Posted June 10 Posted June 10 (edited) Inflation is ya friend. Today's new field &/or pipeline will either be economic, or written down to today's economic value; but if there is an economic write-down ... no other competing field/pipeline will be developed, and the existing build will have a monopoly for the rest of its economic life. A moat that will generally get stronger every year as inflation continually does its thing. It's a cyclical industry. From time-to-time, at the depths of the cycle, liquidity demands will often force a sale of these assets at cents in the dollar; as they are deeply uneconomic at the time, and cash-flow negative. That now 30-40 year life asset becomes available at 30c on the dollar, plus the negative carry until the cycle turns. Thereafter it's a new day; and you're a monopolist with no competitors, minimal upkeep, deep tax pools, and no taxes ... for quite some time; hallelujah! Ya dance with the one that brung ya, and ideally hedge her near the top of the cycle. Then ya dance with her all the way down; keeping the 'funny money' along the way. Treat her right, and she'll buy you a dream retirement. SD Edited June 20 by SharperDingaan
Ulti Posted June 18 Posted June 18 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
Dalal.Holdings Posted June 18 Posted June 18 3 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 Trudeau gonna Trudeau
SharperDingaan Posted June 19 Posted June 19 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 Posted June 19 Posted June 19 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 Posted June 20 Posted June 20 (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 June 20 by SharperDingaan
Ulti Posted June 20 Posted June 20 https://finance.yahoo.com/news/oil-sands-group-scrubs-website-174702907.html
SharperDingaan Posted June 20 Posted June 20 (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 June 20 by SharperDingaan
Ulti Posted June 20 Posted June 20 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 Posted June 21 Posted June 21 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 Posted June 28 Posted June 28 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 Posted June 29 Posted June 29 (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 June 29 by SharperDingaan
lnofeisone Posted June 30 Posted June 30 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 Posted June 30 Posted June 30 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
KPO Posted July 1 Posted July 1 For anyone interested in the history of the oil industry, and specifically Royal Dutch Shell & Standard Oil, this is worth a read. Just finished it. https://www.amazon.com/Breaking-Rockefeller-Incredible-Ambitious-Toppled/dp/0143130005
Ulti Posted July 1 Posted July 1 https://www.reuters.com/business/energy/trans-mountain-oil-pipeline-just-shy-target-first-month-loadings-2024-07-01/
mjm Posted July 1 Posted July 1 2 hours ago, Malmqky said: Nice little jump in met coal stocks today https://www.reuters.com/markets/commodities/anglo-american-battles-underground-fire-australian-coal-mine-2024-06-30/ fire here also
Saluki Posted July 1 Posted July 1 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 Posted July 2 Posted July 2 (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 July 3 by CorpRaider
SharperDingaan Posted July 3 Posted July 3 (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 July 3 by SharperDingaan
CorpRaider Posted July 3 Posted July 3 (edited) Can you guys remember Buffett buying anything like he has $OXY? Maybe $KO and $AXP are all I can come up with. Edited July 3 by CorpRaider
Longnose Posted July 8 Posted July 8 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.
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