Canadian oil patch for sale!

[Viking]

I like companies/sectors that are out of favour. Most oil stocks are in a bear market. When I look at supply/demand dynamics it looks like supply definitely has the upper hand (market is oversupplied), world demand is weak and the oil price is falling. What I am trying to understand is if we are in a multi year bear market for oil with the shale/oversupply driving prices low for a multi year period. Or is this current sell off short term in nature and giving people a wonderful buying opportunity?

[Fat Pitch]

I like companies/sectors that are out of favour. Most oil stocks are in a bear market. When I look at supply/demand dynamics it looks like supply definitely has the upper hand (market is oversupplied), world demand is weak and the oil price is falling. What I am trying to understand is if we are in a multi year bear market for oil with the shale/oversupply driving prices low for a multi year period. Or is this current sell off short term in nature and giving people a wonderful buying opportunity?

 

I think I read somewhere that the world needs to bring online another Saudi Arabia every 3 years just to offset the decline rates from the world’s mature oil fields. The cost of new oil is increasing each year due to lower energy yields.

 

On the flip side, the main use of oil is transportation. How much demand can be displaced by natural gas via battery powered vehicles? I find it easier to bet on an energy renaissance with the emergence of LNG.

 

[alertmeipp]

Once in a lifetime opportunity to lose lots of money in really short amount of time for sure.

[no_free_lunch]

Will the recent surge in US domestic oil supply really continue at present prices?  If nobody is making money then that should have some impact on production.  There was already concern that with the high decline rates that shale would peak in the next couple of years, this should accelerate that process.

[Uccmal]

Once in a lifetime opportunity to lose lots of money in really short amount of time for sure.

 

Sure has been.  Kind of like shoving a hot poker up my **s!

 

Pwe/pwt is worth 30% of its alleged BV.  Of course if oil prices stay low the book value will shrink to match the stock price eventually. 

[plato1976]

Had a small position in SD and later switched to PWE

found it's better not to switch

now the question is when to add - waiting for OIL=70

 

Once in a lifetime opportunity to lose lots of money in really short amount of time for sure.

[bizaro86]

Once in a lifetime opportunity to lose lots of money in really short amount of time for sure.

 

I'm sure the market will provide lots of those in every industry on a regular basis. (GTAT was another recent one in a pretty different sector).

 

I'm pretty levered to the sector via my job/stock options/real estate interests in an oil city, so I try not to overdo it on the O&G investments, but some of this stuff is very cheap. I have a full position in LTS now, and can't help but thinking the board should be frustrated enough to sell the entire SK operations to Crescent Point any day now...

 

I also have a decent size position in Touchstone, which I inherited from the old Petrobank which was a net-net when I bought it. I have a hard time figuring out the Trinidad assets there, but I really like their SK heavy assets now that they've finally given up on THAI. Slap a modular (Propak or Oak Point) SAGD facility down (or just modify the existing THAI one) and those lands would make a material amount of free cash flow.

 

If CNQ gets too much cheaper I'll load up on it. They're the lowest cost operator in the basin, and if there are big distressed assets on the market they're the guaranteed buyer.

 

 

[kevin4u2]

Numerous companies started fracking at $50 oil. If it was economic then, why isn't it now, especially given the improved efficiency? You will be amazed how quickly the marginal cost drops when prices fall. The industry is naturally very loose with cash when it doesn't matter.

 

Bull markets die hard. I see absolutely no reason for oil prices to rise given the huge supply glut.

 

The same argument about high decline rates was also made with respect to NG shale production a few years back. That obviously wasn't true.

 

Will the recent surge in US domestic oil supply really continue at present prices?  If nobody is making money then that should have some impact on production.  There was already concern that with the high decline rates that shale would peak in the next couple of years, this should accelerate that process.

[alertmeipp]

LTS - Insider just bought 66900 shares

 

http://www.tmxmoney.com/TMX/HttpController?GetPage=SearchInsiderTrade&Language=en&Submit=Submit&QuerySymbol=lts&x=0&y=0

 

 

[no_free_lunch]

Numerous companies started fracking at $50 oil. If it was economic then, why isn't it now, especially given the improved efficiency? You will be amazed how quickly the marginal cost drops when prices fall. The industry is naturally very loose with cash when it doesn't matter.

 

Bull markets die hard. I see absolutely no reason for oil prices to rise given the huge supply glut.

 

The same argument about high decline rates was also made with respect to NG shale production a few years back. That obviously wasn't true.

 

Will the recent surge in US domestic oil supply really continue at present prices?  If nobody is making money then that should have some impact on production.  There was already concern that with the high decline rates that shale would peak in the next couple of years, this should accelerate that process.

 

I hear you, I have a tendency to oversimplify.  What I am suggesting could take several years to play out if I'm even right.  Still just look at the companies in the oil patch that you are familiar with.  What do you think will be happening to their capex next year?  In general how easy will it be to raise funds next year?  I just don't see drilling going up from here and this is in spite of the issues with the decline rates.

 

The natural gas price was a result of the fracking boom from what I understand.  There is just more natgas as a by-product than people know what to do with and they generally aren't even drilling for it.  I think it just shows how wildly unpredictable commodity prices can be and how many variables there are.  The thing is, those variables can go either way.

 

[alertmeipp]

Kevin,

 

re: huge supply glut. - what are your #s? I see we are over-supplied about about 1% (~92 vs ~93).. you call that huge? or u have different #s?

[fareastwarriors]

Saudi Flexing Met With Crickets by U.S. Shale Frackers

 

 

http://www.bloomberg.com/news/2014-11-05/saudi-flexing-met-with-crickets-by-u-s-shale-frackers.html

[kevin4u2]

Skate to where the puck is going, not where it is today.  I just look at the big picture and think about what has happened in such a short time.  I have attached some pictures graphs of US and Texas oil production. 

 

Texas has added a million barrels of oil in 2 years.  It has added 1.6 million barrels a day in 34 months.  Most people have absolutely no appreciation of the magnitude of that increase over such a short time period.  Since 2011, Texas has had 40 consecutive quarters of over 20% growth in oil production.  This has completely reversed the decades old decline in production. 

 

These are the hockey stick graphs that the climate scientists dream about. 

 

What's going to happen when shale technology is taken elsewhere?  The US production has been coming from predominately Texas and North Dakota.  The technology is 4 years old.  If this isn't a paradigm shift I don't know what is. 

 

Kevin,

 

re: huge supply glut. - what are your #s? I see we are over-supplied about about 1% (~92 vs ~93).. you call that huge? or u have different #s?

[alertmeipp]

Thanks, Kevin. Just that the way u said it, I thought u mean there is a huge glut now. They tried shale gas in mexico and china few years ago.. didn't work out for some reasons.

 

 

[peter1234]

These are the hockey stick graphs that the climate scientists dream about. 

 

Thanks for these graphs, they are great.

;)

[goldfinger]

Thanks, Kevin. Just that the way u said it, I thought u mean there is a huge glut now. They tried shale gas in mexico and china few years ago.. didn't work out for some reasons.

 

Well at least Hamm doesn't seem to believe in any kind of glut: http://www.reuters.com/article/2014/11/06/us-contl-resources-ceo-hedging-idUSKBN0IQ18R20141106?feedType=RSS&feedName=topNews

[alertmeipp]

Saw that, he sure puts the money where his mouth is.

 

But i think there is glut, but if the glut is 1-2% (about 1m boe/d), how much WTI needs to go down to balance it?

 

Is 20-30 bucks enough?

[alertmeipp]

LTS - Insider just bought 66900 shares

 

http://www.tmxmoney.com/TMX/HttpController?GetPage=SearchInsiderTrade&Language=en&Submit=Submit&QuerySymbol=lts&x=0&y=0

 

Another 30100 shares yesterday.

 

Hope it's from management.

[Guest notorious546]

I'm not sure if your source for LTS insider trades is correct. i don't see any transactions over the past few months other than rights/warrants being exercised.

 

https://canadianinsider.com/node/7?menu_tickersearch=LTS+%7C+Lightstream+Resources

 

[gordoffh]

If you check cdn insider now 3 individuals bought LTS in the mid 2's  if i read it right

d. Themig purchased 192 k shares  if its his money i would say he sees value

[Uccmal]

Pennwest also has insider buying, reported yesterday.

 

CEO and Chairman, and others.

 

Rick George added 30000 shares - 140,000 dollars - to add to his 7 million spent so far. 

[gordoffh]

2 more buys for LTS  wright himself for 200,000 shares and another at 40,000    i take any positive i can at this point

[alertmeipp]

management has bought 500k shares last week. they again didn't operate well.

 

unreal that this was at 6 when they close the last deal and now trade less than half.

 

Insiders will get a double before many other break even.

 

 

 

 

 

 

[gordoffh]

Insider buying and now buybacks    right now I hope we can all make money even if it is the money we used to have  this fall was painstaking

 

 

Lightstream Announces Renewal of Normal Course Issuer Bid and Entering Into of an Issuer Repurchase Plan Agreement

CALGARY, ALBERTA--(Marketwired - Nov. 10, 2014) - Lightstream Resources Ltd. ("Lightstream" or the "Corporation") (TSX:LTS), is pleased to announce that the Board of Directors of Lightstream has approved a renewal to our normal course issuer bid (the "NCIB") and we have entered into an issuer repurchase plan agreement (the "Plan") with a designated broker to allow for the repurchase of our common shares (the "Shares").

 

The Toronto Stock Exchange ("TSX") has accepted the Corporation's notice to make a NCIB to purchase outstanding Shares on the open market, in accordance with the rules of the TSX. As approved by the TSX, Lightstream is authorized to purchase up to 19,182,776 Shares, representing approximately 10% of the public float of Lightstream, being 191,827,757 Shares as of November 6, 2014. On any trading day, Lightstream will not purchase more than its average daily trading volume over the previous six months, being 234,384 Shares (other than under a block purchase). As of November 6, 2014 Lightstream has 200,636,311 Shares outstanding.

 

Lightstream is authorized to make purchases during the period from November 12, 2014 to November 11, 2015, or until such earlier time as the NCIB is completed or terminated at the option of Lightstream. Any Shares purchased by Lightstream under the NCIB will be purchased on the open market through the facilities of the TSX and other markets including ALPHA, OMEGA, PURE, Chi-X and Match Now, at the prevailing market price at the time of the transaction. All Shares acquired under the NCIB will be cancelled.

 

As of November 6, 2014, no purchases have been made under Lightstream's previously announced NCIB.

[aws]

I hope they kill the dividend at the same time they are doing the buyback, unless this announcement is just for show.  I can't imagine they can support both a buyback and a 15%+ dividend yield at the same time.

 

On a good note I'm now green in this stock.  I bought in a month ago, quickly lost 40%, and then doubled down near the bottom (doubling my cost, which bought considerably more than double the shares).  This lowered my cost basis to $2.65 USD and with this bump today I sold back half for a small profit.  In a week I went from down 40% to up a bit.