Been following oil and gas and noticed what looks like some nice opportunities. What’s the consensus? Is this sell off and drop in oil prices over done? Am I missing something?
I used to cover E&P and E&S companies and one thing ive come to respect is the uncertainity of these prices. Saudi Arabia is surely the biggest contributor to todays movement (made to help out the EU countries) but as Chavez and some cournties that rely on higher prices (90+) weigh in, perhaps this will change. I personally would start to add to XLE and made speculate on upstream E&S companies that tend to outperform when oil prices surge higher. Im interested in hearing other thoughts too
last hour was broooooootal 
I went long another nat gas MLP today. Time will tell if i should’ve held cash or not. But I think the BTU/price spread + dynamics in USA makes nat gas favorable.
Exclusive: Privately, Saudis tell oil market- get used to lower prices
But Saudi officials have given a different message in meetings with investors and analysts: the kingdom, OPEC’s largest producer, will accept oil prices below $90 per barrel, and perhaps down to $80, for as long as a year or two, according to people who have been briefed on the recent conversations.
The Saudis appear to be betting lower prices – which could strain the finances of some members of the Organization of the Petroleum Exporting Countries – will be necessary to pave the way for higher revenue in the medium term, by curbing new investment and further increases in supply from places like the U.S. shale patch or ultra-deepwater, according to the sources, who declined to be identified due to the private nature of the discussions.
McNally said he is not aware of any specific Saudi price or timing strategy, but told Reuters that Saudi Arabia "will accept a price decline necessary to sweat whatever supply cuts are needed to balance the market out of the U.S. shale oil sector.”
http://www.reuters.com/article/2014/10/13/us-oil-saudi-policy-idUSKCN0I201Y20141013
Yah, I got killed, been bleeding these last few weeks, a lot of my gains. Which makes me think, time to put some cash to work.
I think the pipeline business is interesting and I wish you luck rawraw. They are being dragged down too but they do not hold the same type of commodity risk an E&P or oil field service provider would.
I’m going to be buying this dip into bankruptcy. Oil has a factual floor. The price can’t drop below the cost of adding new reserves, which is increasingly expensive, over the long term. And demand is sticky. So if people want to drive cars, they’re going to need $85-90/bbl oil. End of story. So yeah, pricing now is concerning but the long run won’t be a problem. I’m not concerned. The internal combustion engine won’t disappear within the decade.
A lot of the companies I cover are getting absolutely clobbered. Some of them were down another nearly 10% today.
Load that baby up…haha
Going to grab some bp tomorrow.
Only have two energy stocks, one long that is flat despite all the noise and one that has gotten taken to the shed on the short side. Energy is not my sector, I wish I knew more about it in general. The short side has been epic win this year with many of my shorts down 50-90% YTD in an R2K market that is down ~9% YTD after today. I have made money on on about 97% of my shorts this year. One was break even, one lost money, but the rest have been significant gains in excess of the index.
I should probably figure out what to get long in energy soon since I agree with geo that oil has a factual floor with no immediate-term replacement. I prefer service or manufacturing companies and avoid speculative ventures like wildcatting. In general I really like out of favor commodity businesses. I’ve made a killing on aluminium this year and some of the ALU stocks are probably multi-baggers from here if you close your eyes for the next 2-3 years. Need to have a big brass set though, probably similar to energy right now.
Hmm…why ALU? I like KALU.
bromion, what do you think would be the best way to learn a sector for investment purposes? I’m new in big 4 valuation, specifically oil and gas, and have pretty much read every firm offered training and trying to visit clients/talk to management. There are still quite a few databases I need to really dig into. Any tips on how to build up my knowledge faster or where would be the best place to focus?
I’m taking a small position in an offshore servicer in the next few days. Down 50% YTD, trading below book with a relatively young fleet.
^Young fleet? Is this NFSHF or a major? The majors are the only ones with young fleets…
Looking at HOS. Feel free to let me know if I’m an idiot.
OH nvm, I thought you were in drillers like AWLCF.
^ One of the problems with the offshore vessel service industry (HOS, GLF and TDW) is supply of vessels (relative to demand). These offshore vessel operators have grown their fleet with the expectation of increased deepwater production for years now. If deepwater capex is cut by producers, there’s an oversupply of vessels and that can last for a long time (vessels have 25+ year lives) and it really constrains pricing power of the vessel operators.
I recommend reading TDW’s “macroeconomic outlook” in their 10-K for the last few years. They provide good info on the industry. They follow a “vessel-to-rig” ratio (if I remember correctly). It’s one of the better outlooks I’ve read in a 10-K in any industry.
I don’t really follow this industry too closely, but it’s a tough industry b/c it’s capital intensive and pricing power is really tough to get. Good luck with HOS.
Unfortunately, the “floor” on oil prices is meaningfully lower than where it is now.
That being said, there are definite situations where names, especially small caps, have gotten washed out. Granted there is a lot of crap out there, but there are also other companies that have good leadership and operators, activist involvement, a careful plan for capex, and the type of leverage (e.g. perpetual preferreds, etc.) that won’t actually force the company into bankruptcy if total sh!t hits the fan. Some of these companies will be at least doubles in a more favorable oil pricing environment over the next 12 months, but until then, buckle up for the ride…
i was not surprised this ipo was canceled, read up on their contract set ups
http://shippingwatch.com/carriers/Tanker/article6555041.ece
here is the pro: http://www.retailroadshow.com/shows/DSG120u_rr/DTCH3KG/prosp.pdf
Thanks for the insight. I’ll take a look.