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Lionel Yeo  

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  • Penn West Cuts Dividend 80%, Now Yields 6% [View article]
    The cash cost of PWE is $32.60
    of which 20.74 is operating cost
    10.7 is royality
    1.2 is other

    of the 20.74 about $4 is finance cost. So it's about $16. They'll probably drop the cost to $12 in a few years. But it's only $4 we're talking about.
    Dec 19, 2014. 06:38 AM | 2 Likes Like |Link to Comment
  • Penn West Cuts Dividend 80%, Now Yields 6% [View article]
    Just finished looking at costs across the sector. We're talking about $5/bbl between PWE ($15) vs Enerplus ($10).

    Nothing really significant. I think when the smoke clears you'll find shale costing about $90 given the questionable way they account for the decline curves and the different type of land leases that have been signed. Royalties for PWE and most of the candians are around 18%, while in the US it's only 6%, can't really understand why.

    heavy tax rate of 37% in the US might be the reason why companies prefer to borrow and drill. Easiest way is to let everything come out in the wash.
    Dec 18, 2014. 10:44 AM | 3 Likes Like |Link to Comment
  • Decisive Cuts In Dividends And Capital Outlays Make Washed Out Oil And Gas Producers A Good Bet [View article]
    Same here hendrick.

    As I tell my friends. I caught a falling knife. Am bloodied, but at least I have a knife.

    Have been shopping around adding to some position. I like PGH, and finally PWE gets their capex cut. would prefer to be about $350m cut, but it's okay.

    Mr. Market can go crazy and just because something is cheap doesn't mean it can't get cheaper. I did miss the big implosion on oil due to the US overproduction and got caught.

    When you invest like this, sometimes you'll eat well. but you're certainly not sleep well.
    Dec 18, 2014. 10:26 AM | 1 Like Like |Link to Comment
  • Penn West Cuts Dividend 80%, Now Yields 6% [View article]
    If anyone has a spare $600M to lend me, I'll be happy to take penn west private and become the CEO of my own oil company.

    We've been running and re-running numbers here for clients and there's nobody on earth that can make a profit at oil $55. $70 wti is a if and a big if given all the risk.

    If you buy 20 years swaps of oil you can literally create your own oil company. Cheaper buying it out on the futures rather than drilling in the ground.

    If PWE doesn't go to $0. you'll probably make a reasonable buck. I think we need to flush out the shale and the US producers and their 'amazingly cheap oil'. I don't buy it for a minute that Pioneer and EOG have break evens in the $50s. It'll be interesting to see what happens to their production when they only spend 1x cash flow rather than 2.5x cash flow. The canadian's are spending about 0.7x cash flow.
    Dec 18, 2014. 10:09 AM | 3 Likes Like |Link to Comment
  • Penn West Cuts Dividend 80%, Now Yields 6% [View article]
    No surprise here. $85 vs $65 CAD/bbl.

    would love to see asset divestment and share repurchase. I'm a long term bull on oil, may have caught a falling knife. Can't do anything about it, have the cut, its bleeding, but I now have a knife.

    I'm amazed at the differentials vs the US companies given that the basins are almost the same. I reckon if we see 45% capex cut, we'll see oil at $80-$90 bbl. Doing some bottom fishing.
    Dec 18, 2014. 12:58 AM | 4 Likes Like |Link to Comment
  • Saudi And OPEC Move: It's Just Good Business [View article]
    Can't really understand the article. Long or short?
    Dec 2, 2014. 08:22 AM | Likes Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    you're correct river18,

    ECA buying Permian was the bell ringing.

    The solution to low prices is to stop drilling. What i meant was this shale boom is now over and it will follow Natural Gas prices which have been depressed since 2012. i expect to see mild recoveries. Lot of stress going long but this could be the once in a lifetime play.
    Dec 1, 2014. 09:40 AM | Likes Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    Hi guys,

    No need to go into conspiracy theories. I work in the oil business, so all I have to do is speak with the clients.

    Nobody wants to eliminate shale, remember that they all need $85 prices to balance budgets. What they need is stable long term prices. The question simply was. 'if we cut, will that stablize the market?' The answer is no. any cut would be made up by US shale producers.

    So the answer was simply maintain and let the market balance itself out.

    The russians talk a big game. But they have no chance at $65/bbl cash costs. Terrible winter and poor flowing oil.

    Big talk from some of the shale players, but I hardly see any production around $75. That's really fairway stuff and on leases picked up 5 years ago.

    Why would you want to be stupid and keep producing at a loss?
    Dec 1, 2014. 02:40 AM | 1 Like Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    Hi Jerry,

    Looking at the charts, the issue is about supply, not demand. Whatever demand loss from US and Europe has been made up by China, India and emerging economies. Take a look at my chart above.

    There's no doubt in my mind that demand will raise to take advantage of the cheaper oil prices. But what will stabilize things will be the NA producers cutting back. Demand may strengthen, but $80 is about the price that the Saudi's want without trigger another boom.

    i'm not saying that the shale revolution is bad. What needs to happen is a more gradual increase of production of 250k a year instead of 1.5M
    Nov 30, 2014. 10:19 AM | Likes Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    I think the industry is now wise enough to know drilling will only lead to more pain. You never want to get into a price war with the Saudi's when they pull out oil at $2.50.

    Shale wells decline 2x faster than conventional, so cutting back rigs is the key. Leveraged or unleveraged, it's foolished to produce oil when it costs $70 to produce and you only earn $65.
    Nov 30, 2014. 09:08 AM | 2 Likes Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    - There's no law against countries colluding.

    - The reason I focused on shale producers is that they are the biggest reason for the 4m bbls of extra production in the world. Why OPEC is not cutting is because the swing producer (US shale) is not coming to the table.

    - Once OPEC sees the US players cutting capex, they will look at a relief cut which will support the price. It doesn't have to be 100% US shale cut. It could be 1M barrels shale. 500k OPEC 500k Russians.
    Nov 30, 2014. 05:32 AM | 4 Likes Like |Link to Comment
  • Four 'Cures' On Their Way To Help The Oil Price [View article]
    This is my opinion.

    First, OPEC are going to let the market sweat for a few more months. Honestly this nonsense about shale is getting out of hand. 4m bopd increase in 4 years? That's absurd. OPEC needs to punch a hole in US shale to at least get it back to being practical. A few months of below $75 and a little below $70 should wake up producers. OPEC will not cut until they see some moderation with the US players on their capex.

    Second, low prices will indeed spur more demand. Especially the emerging markets. That trend is still positive.

    Thirdly, a drop in oil prices below $65, will probably not very favorable for OPEC. The production cost for Russia is about $30/bbl (cash). When you factor in that many members use Oil to support their budgets You'll find $85-$95 about the break even.

    This goes for both the state and companies like Rossfneft.

    I'm not really bothered about the price, because 50% is due to rising USD 50% is due to increased production in the US. We know offshore US is out due to pricing and onshore will struggle due to appreciating USD. Already the canadians have an advantage with their CAD dropping. We just need the O&G industry to start budgeting 50% less and we'll be fine.
    Nov 26, 2014. 01:09 PM | 1 Like Like |Link to Comment
  • Linn Energy: Curious Financial Metrics And What They Tell [View article]
    But they have hedging.
    That' an asset regardless. If you bought an oil company today with no production and 10,000bbls a day of swaps at US$95. it would be worth a lot of money.
    Nov 26, 2014. 01:53 AM | 1 Like Like |Link to Comment
  • Linn Energy: Curious Financial Metrics And What They Tell [View article]
    A dividend payout of 60% is quite flush for the stock. It really depends on the cap spending on if they can maintain production.

    Hedging in this environment going forward will smoothern out the price of oil. Kudo's that they have these in place. Buy oil and gas stocks if you believe oil will continue to rise at 2% annually like it has been for last 50 years.
    Nov 25, 2014. 07:07 PM | 1 Like Like |Link to Comment
  • Penn West has turned the corner, CEO says [View news story]
    I work up this morning, burnt a truckload of fuel on my way to work and still got caught in a jam with a whole bunch of other people burning fuel. Anyone else missed the memo of oil going out of style?

    I think this is an excellent opportunity to buy production of an asset that has been raising with inflation for 50 years and there's no sign of it being replaced. If someone's selling oil cheap, I'm buying it.

    Unlike NG, it's only a matter of time before the product is shipped to greedy Chinese or India or Japan with or without Keystone. The market must be crazy to be giving away such wonder oil production companies at such discounts. I'm not talking about PWE, it's across everything, BP, PGH, ERF, ECA, BTX. I couldn't be bothered, the dividends are still rolling in.
    If things are a bit tight, they'll just cut capex and payout the dividends. It wouldn't be a big problem because with such low oil prices, why drill?

    NG prices are stable and trending upwards, so that's positive for the non-producing and a easy 850m in asset disposals. 1B debt would be easy to handle for PWE going forward.
    Nov 25, 2014. 09:26 AM | 2 Likes Like |Link to Comment