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Credit Master

 
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  • Examining Offshore Drillers: Buy, Sell Or Hold (Part 1) [View article]
    There is definitely value in offshore, but most hedge funds are short given that the near term momentum is to the downside. These stocks are a little bit cheap, but could become quite cheap near term.

    I am keeping my powder dry. Shell just announced big capex cuts and they are a major player in deepwater markets (22% of deepwater rig backlog according to Simmons research). Some of the rigs they had under contract will be sublet back into the market at a time 72 brand new rigs are being delivered in the next 2 yrs.

    Petrobras is blowing up and we should expect big capex cuts from them. Brazil represents 75 out of a world wide total of 300 floating rigs (according to Morgan Stanley research).

    Good luck.
    Feb 1 12:48 PM | Likes Like |Link to Comment
  • CVR Energy - Time To Catch Up [View article]
    year end tax selling of CVRR and UAN, given the January rise in CVRR and UAN this seems like the reason
    Jan 14 10:34 AM | Likes Like |Link to Comment
  • CVR Energy - Time To Catch Up [View article]
    Broker upgrades this morning in the refining sector.
    Dec 2 09:13 AM | 1 Like Like |Link to Comment
  • CVR Energy - Time To Catch Up [View article]
    Fair point Chris.

    The simple Sum of the parts shows that at todays share prices, CVI is trading at a $2.61/shr discount to the cash and stakes in CVRR and UAN. But CVI owns the GP (control) interest in both, which should have some value given Icahn's tendency to create value.

    The point of the Valero slide is that even Valero thinks that mid con crude prices will be cheaper than LLS medium term, which means CVI should enjoy cheaper feedstock. I think the market is positioned in favor of Gulf coast refiners, with buyers of VLO and MPC and sellers of CVI. Furthermore, the impending start up of a pipeline has been hurting sentiment toward mid con refiners.

    The unwind of this positioning and the illiquidity of CVI should support a good rally in the shares from here. This coupled with the strong dividend yield and low valuation creates attractive risk reward in CVI here.
    Nov 29 11:55 AM | 1 Like Like |Link to Comment
  • Forest Oil: A Tale Of 2 Halves [View article]
    Looking to reestablish long position in FST, but for now $5 looks like a possibility, holding off.
    Oct 7 12:48 PM | Likes Like |Link to Comment
  • Forest Oil: A Tale Of 2 Halves [View article]
    FST is running a rig in E Tx, a rig in the EF, and a rig or two in the Panhandle, all of these are oil focused. The NGL rich granite wash is not being drilled at present, neither is the haynesville gas play.
    Apr 13 11:11 AM | Likes Like |Link to Comment
  • Lone Pine Resources: Time Is On My Side [View article]
    Thoughts on the conf call:

    The tone of the new CEO was very good, he expressed confidence in the future of the company, and importantly, signaled that further deleveraging and value creating transactions were likely in the coming weeks and months.

    So despite the lackluster oil production in the quarter (the result of dropping to only one drilling rig this winter), the stock rallied from down a few cents to finish solidly higher on strong volume.

    Stay long here, $3 could be here sooner than you imagine.
    Mar 15 06:25 PM | 2 Likes Like |Link to Comment
  • Petrobras Higher By 13% - Shorts Getting Squeezed [View article]
    short interest is minimal in PBR, the rally today is due to hope that fuel prices will be closer to market prices.

    If Brazil was serious they would not only have raised Diesel prices (industrial fuel) they would have also raised gasoline prices (consumer fuel).

    How many times have investors been tricked into believing that the fuel subsidies are drawing to a close, only to be disapointed.
    Mar 6 02:38 PM | Likes Like |Link to Comment
  • Petrobras - Not Too Late To Sell [View article]
    Good news for PBR this am with a 5% hike in Diesel prices. This will reduce losses in refining every so slightly, helping but not changing the basic negative cash flows from refining.

    Taking the opportunity to reload on puts here.
    Mar 6 10:02 AM | Likes Like |Link to Comment
  • Lone Pine Resources: Time Is On My Side [View article]
    Dont know. That is the issue with trading stocks like this. you have to size your position so that you have room to add during newflow dry spells. Their recent press release did suggest that they are working on additional deals.
    Feb 21 08:10 PM | Likes Like |Link to Comment
  • Lone Pine Resources: Time Is On My Side [View article]
    Asset sale announced for $14 million, 74% natural gas. Works out to $49,000/flowing BOE/d which is pretty good for a gas weighted asset. Proceeds to pay down debt, further derisking the balance sheet.
    Feb 19 08:43 AM | Likes Like |Link to Comment
  • Petrobras - Not Too Late To Sell [View article]
    More refining losses on the way... note the spike in fuel imports. Every barrel of imported fuel must be subsidized by PBR.

    --Petrobras imports rose 78% in January from a year earlier to $4.14 billion

    --Brazil's imports of fuel oils such as diesel nearly quadrupled in January
    to $1.08 billion.

    --Brazil's gasoline imports more than doubled in January to $509.2 million.


    RIO DE JANEIRO--The costly fuel imports that delivered Brazilian state-run energy giant Petroleo Brasileiro SA (PBR), or Petrobras, its worst earnings last year since 2004 showed no sign of abating in January.

    Petrobras's imports rose 78% in January from a year earlier to $4.14 billion, according to data released in recent days by the Trade Ministry. Official data don't give further details on trade by companies, and Petrobras declines to comment on such matters.

    But separate trade numbers showed soaring fuel imports in Brazil as a whole,
    where Petrobras maintains a de-facto monopoly on the market for gasoline and
    diesel. The company sells gasoline and diesel to domestic distributors at fixed
    prices that in recent years have fallen below the international prices at which
    it imports the fuels, discouraging potential competitors from entering the
    market.

    Brazil's imports of fuel oils such as diesel nearly quadrupled last month,
    rising 280% from January 2012 to $1.08 billion, the Trade Ministry said.

    Imports of gasoline more than doubled, rising 122% in January from a year
    earlier to $509.2 million.

    Higher imports of those two products likely explain most of the jump in
    Petrobras's overall imports last month. The company's refining capacity has
    been outstripped in recent years by surging domestic demand, and declining
    consumption for ethanol due to weak sugarcane crops has exacerbated the need
    for gasoline.
    Feb 15 09:23 AM | Likes Like |Link to Comment
  • 5 Commodity Stocks Moving On News [View article]
    PBR is certainly interesting from a value perspective as you point out. The CNBC commentator also cited it as a bounce candidate due to oversold conditions.

    PBR could certainly bounce on any kind of good news, however it is clear that their drilling program is a pipe dream and that the multiple is way too high relative (nearly double some) to other big caps.

    Play the options market and go out far enough (April and beyond) since vol is cheap and PBR is highly likely to continue to underperform as it has done for a long time.
    Feb 12 06:06 PM | Likes Like |Link to Comment
  • Petrobras - Not Too Late To Sell [View article]
    Two positive things could happen, oil prices could pull back causing refining losses to diminish, or the losses get so bad that the govt allows mkt prices.

    I think PBR is a short because both of those things involve further share price declines.

    Because PBR is so highly leveraged and dependent on debt to finance their $250b capex plan, it is very hard to pin point a valuation floor. Rather a turn in key drivers is what I prefer to focus on.
    Feb 12 08:42 AM | Likes Like |Link to Comment
  • Petrobras - Not Too Late To Sell [View article]
    With a market cap of $109 billion, there is a lot of room for stock to fall. I think everyone who is close to the oil industry recognizes that the local content rules are going to hamstring PBR efforts to develop.

    Not allowing foreign companies to help with the $250 billion capital program is also a mistake which is likely to really slow down the process, disapointing investors in the process. Its a shame that the resource potential is being wasted.
    Feb 11 11:54 AM | 1 Like Like |Link to Comment
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