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Posted

Here is how the Suncor CEO is thinking about the drop in oil prices. I thought this was very interesting. No plans to curtail cap-ex until oil drops below 40$. They have a 50 year time frame in mind. They positioned their balance sheet in such a manner as to not have to incessantly start and stop new developments based on the flux of oil price movements. Cash production costs of 30$/bbl.

 

http://seekingalpha.com/article/2627865-suncor-energys-su-ceo-steve-williams-on-q3-2014-results-earnings-call-transcript?part=single

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Posted

oil sand cost should be quite high

how could they achieve $30?

 

Here is how the Suncor CEO is thinking about the drop in oil prices. I thought this was very interesting. No plans to curtail cap-ex until oil drops below 40$. They have a 50 year time frame in mind. They positioned their balance sheet in such a manner as to not have to incessantly start and stop new developments based on the flux of oil price movements. Cash production costs of 30$/bbl.

 

http://seekingalpha.com/article/2627865-suncor-energys-su-ceo-steve-williams-on-q3-2014-results-earnings-call-transcript?part=single

Posted

oil sand cost should be quite high

how could they achieve $30?

 

Here is how the Suncor CEO is thinking about the drop in oil prices. I thought this was very interesting. No plans to curtail cap-ex until oil drops below 40$. They have a 50 year time frame in mind. They positioned their balance sheet in such a manner as to not have to incessantly start and stop new developments based on the flux of oil price movements. Cash production costs of 30$/bbl.

 

http://seekingalpha.com/article/2627865-suncor-energys-su-ceo-steve-williams-on-q3-2014-results-earnings-call-transcript?part=single

 

Op cost not all in cost.

Posted

I's about how ppl see the future, back then, ppl have high expectation of China and Euro demand, Iran just got its sanction and some worry that it will cause bigger trouble. Syria was blowing up.

 

 

Now, many of those are either ignored or reversed.

 

 

But with China and Euro gov doing all they can to stimulate their econ and current low oil price, hopefully, the glut will get balance out soon.

 

Middle East is big wildcard. None of the conflicts there seems to cause production to drop much.

Posted

Which glut?

 

http://www.marketwatch.com/Organizations/American_Petroleum_Institute

 

U.S. oil inventories down 6.5 million barrels in the last week... Can't be much impact yet from Canadian and U.S. producers who are all and I repeat all looking at their current capex plans.

 

Any new spending plan will be towards low cost production. With the way cost curves are, it will lead to a decline in production in NA. There is just no way around it. And it will last for a while since bankers and producers will remember for more than just a few months the kind of Fall that we are living.

 

Cardboard

Posted

This price might still stays for a while tho.

I still have hard time believing with the supply and demand we have and projected to have,  we will see such a dramatic drop in so short of time.

 

Posted

Which glut?

 

http://www.marketwatch.com/Organizations/American_Petroleum_Institute

 

U.S. oil inventories down 6.5 million barrels in the last week... Can't be much impact yet from Canadian and U.S. producers who are all and I repeat all looking at their current capex plans.

 

Any new spending plan will be towards low cost production. With the way cost curves are, it will lead to a decline in production in NA. There is just no way around it. And it will last for a while since bankers and producers will remember for more than just a few months the kind of Fall that we are living.

 

Cardboard

 

Remember that the inventory number is a bit misleading.  Because of the sharp drop in oil prices over the last fee months, many refiners delayed their turnarounds, and most refiners are literally running at 110% to produce as much finished product as possible while crude prices are so low.  Hard to tell what happens next though...if I had to guess, folks will run out of storage for their finished refined products, and so they will implement their turnaround schedule.  Unless crude supply drops off, we will likely see some more weakness in  North American crude prices at that time.

Posted

Your post is a lot more misleading than the inventory numbers!

 

http://www.platts.com/pressreleases/2014/120314c

 

"Analysts had expected a more modest, 0.50 percentage-point increase in the total refinery utilization rate. At 93.4% of operable capacity the week ended November 28, the total utilization rate matched a level last seen during the week ended September 19.

 

The utilization rate typically dips after the summer, as refineries enter maintenance, and then ramps up heading into the winter. That seasonal trend is evident in 2014, albeit at elevated levels. For the same reporting week one year ago, the refinery utilization rate was lower at 92.4% of operable capacity."

 

Most at 110% utilization? Refineries that turn months ahead planned maintenance on a dime to take advantage of low prices?

 

Is this your bear thesis?

 

Cardboard

 

Guest 50centdollars
Posted

COS cut their divy today by 45%

Posted

COS cut their divy today by 45%

 

And they have taken the entire oil patch down with them.  In addition, the LNG terminal news is bringing gas down. 

Posted

For the Canadian Oil Patch what are some if the best buys in terms of management; debt/equity; size, etc. 

 

Without much research I come up quickly with:

ARX, SU, CNQ, ECA, Husky?, MTL

 

I am getting ready for shooting the fish in the barrel time.  A couple of weeks ago I was looking at indexes but wasn't very impressed with their structure; so I figure an index of my own in the style of John Templeton makes the most sense.

 

Any other ideas?  I am thinking mid - large cap operations, only.  I would probably buy ten grand of each idea when the time comes. 

Posted
For the Canadian Oil Patch what are some if the best buys in terms of management; debt/equity; size, etc. 

 

Whitecap (WCP-t) is a very well managed company.

 

I'm looking closely (even bought some today) at Canadian Oil Sand(COS-t) as it is a leveraged pure play on the price of oil.

 

Posted

I figure an index of my own in the style of John Templeton makes the most sense.

 

Why bother with a basket if you are buying big, quality names?

 

If you are buying a basket, there are plenty of quality small caps that have 2x or 3x potential. If you are playing it safe, you can buy CNQ or similar and sleep well at night but with limited upside.

Posted

I figure an index of my own in the style of John Templeton makes the most sense.

 

Why bother with a basket if you are buying big, quality names?

 

If you are buying a basket, there are plenty of quality small caps that have 2x or 3x potential. If you are playing it safe, you can buy CNQ or similar and sleep well at night but with limited upside.

 

You have a point.  Okay, What about a list of "quality" small caps. 

Posted

I have been thinking about the price of oil and have looked at numerous charts, including inflation adjusted charts. 

 

Using about a 3% inflation, oil at $40, 6 years ago is $47 in todays dollars.  Thats no longer very far away and was a brief point in time.  From 1999 prices would be north of $62 in todays prices depending on real inflation.  I guess the addition of shale oil could keep the prices this low for a sustained period. 

 

But has anyone ever known oil to drop in price over time.  I just dont think this is a new paradigm, but rather a point in time. 

Posted

I think Vermillion Energy (VET-T) is a high quality mid-cap name.

 

They are well diversified outside Canada, with producing assets in Europe, the Caribbean, and a big NG project nearing completion in Ireland. Not a lot of debt. Excellent management, IMO.

Posted

You have a point.  Okay, What about a list of "quality" small caps.

 

 

Most of the quality small caps won't be E&P, they'll be energy-related products and services. I haven't done any work on most of these but here are a few Canadian small caps from gurus I follow:

 

CEU

DEE

POU

RRX

SES

SCL

TOT

HNL

HWO

 

 

 

 

 

 

Posted

so you no longer want to avg down on PWT ?

 

For the Canadian Oil Patch what are some if the best buys in terms of management; debt/equity; size, etc. 

 

Without much research I come up quickly with:

ARX, SU, CNQ, ECA, Husky?, MTL

 

I am getting ready for shooting the fish in the barrel time.  A couple of weeks ago I was looking at indexes but wasn't very impressed with their structure; so I figure an index of my own in the style of John Templeton makes the most sense.

 

Any other ideas?  I am thinking mid - large cap operations, only.  I would probably buy ten grand of each idea when the time comes.

Guest wellmont
Posted

What I don't get is why stocks tank after the divy are cut? What does the market think that a 20% divy is sustainable? Everyone knows that they will be cut so why is there such harsh reactions to it? Makes no sense.

 

everybody doesn't know it's going to get cut. read seekingalpha. read the boards of COs with high dividends. they all maintain the dividend will not get cut. there is always one or two naysayers who warn of a divvie cut and they are usually shouted down. novice investors are attracted to unsustainably high yields. they get caught. other issue is that managements will lie about it. they will say they are going to maintain the dividend and then down the road they cut it. this makes shareholders question their credibility. selling begets selling. if the cut is to zero some funds have to sell. a dividend cut tells investors things are not good.

 

most investors are not informed. a broker calls them and sells them an idea, they buy it, put it away, and then suddenly the dividend is cut. we think that obvious things are known out there. they aren't. people get surprised. it's why some get rich and others don't. one thing I've learned about stocks. it's not "real" until CNBC and bloomberg announce it.

Posted

so you no longer want to avg down on PWT ?

 

For the Canadian Oil Patch what are some if the best buys in terms of management; debt/equity; size, etc. 

 

Without much research I come up quickly with:

ARX, SU, CNQ, ECA, Husky?, MTL

 

I am getting ready for shooting the fish in the barrel time.  A couple of weeks ago I was looking at indexes but wasn't very impressed with their structure; so I figure an index of my own in the style of John Templeton makes the most sense.

 

Any other ideas?  I am thinking mid - large cap operations, only.  I would probably buy ten grand of each idea when the time comes.

 

As everything gets cheap I certainly would appreciate the ability to diversify, and maybe move up the quality curve, if thats how things unfold.  My PWt position is as large as I want it.  On the other hand it is trading at less than 30% nav - ex. goodwill. 

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