Laura Starks

Long only, energy, oil & gas, commodities
Laura Starks
Long only, energy, oil & gas, commodities
Contributor since: 2012
Company: Starks Energy Economics, LLC
Good comments.
The forward strip reflecst today's price and it isn't promising: it is notable some of these companies have been so resilient. Yes, Moody's is late to the party on its downgrade review, but the number of companies in its list is surprising.
I'm still advocating for that condensate-crude detail for a better picture of the Eagle Ford.
Not sure where you are getting the $2.6 billion after-tax profit for 3Q15 for Parsley. Their press release and financials show a barely-profitable $0.9 MM of net income for shareholders.
http://bit.ly/1Oi8niY
PE is interesting but is currently trading at the top of its 12-month range, which I agree doesn't make it a bargain.
Useful insight and I appreciate your comments.
A small change: the $19.64 close price is November 18th, not 17th.
Indeed I have. And a nice close today at $71.10/share.
Summer was very strong for VLO and other refiners--especially those with CA refineries.
A removal on the export ban would be healthy for the economy. Unfortunately, political decisions too seldom are based on just the economics. In particular, after 35 years of the "we're running out of oil" meme, national politicians don't change approach quickly.
This may be a stock of a solid company that gets bookmarked by some and to which investors return. Other people are better than I am at calling bottoms and tops. You may be one of those investors.
ABY1--the shock (and to refiners, benefit) of much lower feedstock costs in 2015 drifted through to gasoline prices, but not immediately, so there was a decently long time of increased margin.
Although most of VLO's refining is in Texas, note that CA regulation effectively kept prices and margins higher for its two refineries there--lots and lots of "frictional regulatory resistance" to XOM's (now PBF's) Torrance refinery getting fully back online to make microbrew CA gasoline. I've been to CA many times and worked for companies there; I appreciate Californians' desire for clean air. But there's a remarkably large regulatory overburden.
Jack and 31456 and other readers,
I'm not a day trader, but it's fair to note the YahooFinance consensus 1-year price on VLO has fallen from $93 at the time of my report research to $77 now.
I assume you saw the reports of China's official 6.9% GDP increase, as well as concerns about whether that's a real number, or if it's actually lower. (on the downside for gasoline).
But--vehicles and gasoline sales have been going to town in the US. Yes, diesel is likely to be off per VW as noted, but Consumer Reports has just withdrawn its recommendation of electric car Tesla S.
http://tcrn.ch/1LCgB2i
As noted, fourth quarter and first quarter US demand is typically weaker, so industry options include waiting through it, doing maintenance, and seeking out further export markets, including for topped light crude.
Thanks for the macroeconomic framing. It is an element of what makes the business interesting--lots of major players, some with literally their countries at stake.
Good points. See my reply--maybe payout is a one-shot deal vs. permanent dividend raise. Operationally, the next issue might be one of lower gasoline revenues, although VLO is helped by being able to export. Really, this instant, the refiners have the best of both worlds--crude can't be exported, products can, and the Saudis are trying to drive small, high-cost producers out of the market, so the crude price is low. There have been many other times, especially since 2005, during which refining has been a much lower-margin business. So you are correct, the cycle will keep spinning.
What's interesting, if you look at the Barclay's material from September, is that the 75% payout is a target. They're not close yet for the year. It didn't jump out at me as to why they set the high target. My speculation--and please appreciate that it is only speculation--is that VLO might be thinking about one-time special dividend, versus permanently raising the dividend, which would create too much of a future obligation.
Exactly.
Woo-Hoo! Great!
Thank you.
Part of the Torrance refinery has been offline since February due to an accident. So that capacity has been "lost" to the market since then. When the accident happened, the refinery was owned by ExxonMobil. They just sold it to PBF, and PBF will be jumping the operational and regulatory hoops to get the refinery back online, at which point the capacity will be regained..
Best estimate is what you see on NYMEX futures for Dec. That said, there is a lot of supply on downside, Greek/euro turmoil on upside.
Best estimate is what you see on NYMEX futures for Dec. That said, there is a lot of supply on downside, Greek/euro turmoil on upside.
Key point: Others have pointed out that the short interest on this stock is 36% of the float.
I disagree. Throughout the analysis & from previous statements from the company and the oil industry, a big downdraft for first quarter 2015, and this year, has been expected given the fall in rig count and the drop in oil price. Upside comes from the 3000 DUC wells, higher use of sand/well, and the ISP diversification noted above. The company's ability to work with its customers over the long term (50+ years) is also a competitive advantage. These are all in the analysis above.
Not in my analysis because it was not in last week's public info was specific discussion of working with customers (trading price for term, etc.) and taking market share from smaller, weaker, less diversified frack sand companies.
"So as first quarter 2015 results come in-and U.S. Silica Holdings will announce its first quarter results after the market closes Tuesday April 28, 2015--a clearer picture of the pain and downshifting for oil service companies will emerge . . . Because 2014 was a banner year for proppants, it is expected that they will provide considerably smaller revenues and margins in 2015... In response to the lower oilfield demand for its sand, U.S. Silica notes that a) 60-70% of its volume has been maintained under long-term contract, b) it is reducing both overhead and supply chain costs, c) it is trading flexibility for value, and d) it is delaying $100-$120 million in capital expenditures."
Investors should of course incorporate the newest public information into their decisions. First quarter 2015 results just announced after Tuesday's' market close:
http://yhoo.it/1bVCONX
Today's quarterly conference call:
http://bit.ly/1bVCQFv
I'd go with whatever your risk tolerance, time horizon, and portfolio needs might be.
ER, earnings report. You mean from its earnings as of 12/31/2014? Or first quarter 2015? SLCA will announce next week--general sense is that all the oil service companies have been hit.
I am not sure I know what you mean by ER.
I think the first quarter 2015 results for all oil and gas companies upstream, especially suppliers, will be pretty ugly. We'll be seeing those soon.
Before the price decline, the only issue was scheduling crews and equipment to get oil out of the ground as quickly as possible. Since the decline, one commentator has said that $141 billion of capital projects, many large-scale--have been delayed or cancelled.
There is so much oil in inventory now that between it and the DUC (drilled-uncompleted) wells there appears to be a short-term cap on prices.
Nonetheless, daily Mideast and Russian tensions reinforce the security advantage of having our own oil production.
Thanks and great question. I don't have the pre-price drop numbers except to know that the inventory has grown. In 2014, the issue was generally getting the crews and equipment as fast as possible--that was the bottleneck. And completion times were numbered in days. Companies wanted to capture the high-initial production rates at high prices. So any DUC (drilled but uncompleted) inventory then was a function of getting the crews and equipment.
Now, most drilling is done to hold leases. (Rig count down by half across the U.S.) I do think it's interesting that North Dakota has a one-year rule that requires completion or plugging.
Long story about the title...not my most creative.
2putttwo, Easy to understand the enthusiasm.LAS
Dirk,
Cool!
LAS
Viper looks interesting for partnership investors.