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Michael Fitzsimmons  

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  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Yes, and tack on a settlement on Venezuela and you have my $80 target.
    Feb 11, 2014. 06:29 PM | Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Time will tell. In my mind, COP management has delivered on every commitment and usually done so on the upside: Eagle Ford production, asset sales, etc. So, the 3-5% guidance on margins and production could turn out to be conservative. As we saw in Q4, the margins jumped 11%, that's a big move for a company that size. Also, they had weather related disruptions and of course Libya, which has really been the only significant issue over the past few years and is largely out of managements control. Anyhow, I think 2014 is going to be yet another very interesting year for COP and I for one am always excited to see what will unfold. You are right that Wall Street pays for growth, and I think they have a wait-n-see attitude on COP's 3-5% guidance on margins and production. Me, I think COP will come in on the top end of that range, if not over the top. Thanks for the discussion and as they say, time will tell.
    Feb 11, 2014. 03:31 PM | 1 Like Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Yes - I think there is excellent visibility on COP's production growth and that is why I am puzzled as to the discount with XOM, where in my mind visibility is not so good, and hasn't been for some time. All of COP's North American production growth plans, with the possible exception of the Gulf of Mexico, are very low risk exploitation plans: Eagle Ford, Bakken, and oil sands for instance. Same with N/A gas production. So the risk profile has come way down with divestments. Not only is the risk lower, but as we saw in Q4, the tax rates are becoming much more favorable. One reason why cash margins expanded by 11%. That is a huge positive change.
    Feb 11, 2014. 02:27 PM | Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Thank you for pushing me on the price target. It made me realize that I should not put out a price target in an article without some justification/rationale of how I got there. I started to do that in this article, but it was already so long I used the length as an excuse to side-step the issue. Thanks for keeping me honest and looking for more transparency.
    Feb 11, 2014. 12:41 PM | Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Hello aeroguy - yes, and contrast that with COP's early entrance into the oily Eagle Ford where they assembled their entire position at somewhere between $2-300/acre. One can make a similar observation about the oils sands: COP in early and a world class position there, and able to sell XOM property at a significant gain.
    Feb 11, 2014. 12:07 PM | 1 Like Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Hi bob68 - PSX is certainly in the spot-light in these still early days of the "Shale USA" revolution due to its excellent position in all three markets that stand to benefit most: midstream, chemicals, and refining. Although PSX is focusing future enterprise growth on midstream and chemicals (refining is in "maintenance mode"), it is still working the logistics of advantaged crude feedstock. As such, the stock appears to trade day-to-day on moves in the Brent/WTI spread. Not sure this Ychart link will work here but let's try it:

    http://bit.ly/1emENni

    That is the YTD "Brent WTI Spread", which has gone from $12 to $16 to $10 (currently) since Jan 1. The stock can be quite volatile on day-to-day moves here. I don't worry about these short term moves (like yesterday) because every time investors have gotten scared out of the stock on a short term move down, they have missed the longer term move higher. In addition, as I have written in some earlier articles, I still believe once spring comes and the oil fields thaw out the Gulf Coast is going to see more light-sweet crude than it knows what to do with. If the export ban is not lifted, I suspect PSX is going to print some serious dollars.

    Long story short: I don't worry about short-term moves in PSX. I hate to keep repeating myself, but long-term I think PSX may well be the single best investment in "Shale USA".
    Feb 11, 2014. 10:42 AM | Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    southgent1951: I totally agree - one of the commitments COP management made at the outset of the multi-year strategic plan was to pay shareholders a compelling dividend. They have done that. Honestly, the dividend rise in 2013 caught me by surprise as the dividend was already above CVX and of course well above XOM. My thinking was COP would wait until 2014 and to digest the divestitures. However, the rise was a nice surprise and I think it speaks for management's confidence in 2014 and beyond. Love that yield.
    Feb 11, 2014. 09:04 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    rjj - I was merely pointing out what the dividend yield would be at $60. That's very high on an historical basis for COP. I don't think a $60 price would be "dropping through the floor". The stock has had a nice run over the past couple years and all three of these stocks have pulled in after the Q4 earnings reports and with the broader market weakness. The point of the article was that if you look at the quality of the Q4 earnings, COP was far and away the best (imho) and therefore the sell-off is less warranted. Could the stock hit $60? Sure, anything is possible. But if I like the stock at $64, I love it at $60.
    Feb 11, 2014. 07:02 AM | 2 Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Yes, soft oil prices would certainly affect the "E". Asset sales are for the most part over, with the exception of Nigeria and perhaps another hunk of oil sands. Downtime is figured into the guidance although the weather this year obvious hit performance in the North Sea and lower-48 shale. Margin contraction I don't think is a big concern considering they grew 11% in Q4. Production growth is the one thing I think we can count on. Remember, most of COPs production growth is exploitation of existing finds that are quite well understood.

    I own SU too, which has made a big swing from a cap-ex intensive production growth story to more of a long-term dividend income growth stock. Still waiting for -XL approval...which despite the rail strategy would help all the oil sands producers.
    Feb 11, 2014. 06:53 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    I think as 2014 rolls on and COP continues to meet its commitments, you'll see the PE expand to ~11 while the company could earn $6.75/share. That gets you to ~$74. I expect a settlement from the Venezuela lawsuit to add ~$4/share which gets you to $78. And, I actually think worldwide energy growth will be strong in 2014 and oil prices will increase, along with domestic natural gas prices, of which COP is a top-10 producer. So there is upside in terms of prices and of course there is at least one geopolitical event per year that seems to goose energy stocks. Will be interesting to see...most of my analysis bets on the fact that, sooner or later, Wall Street will "get" COP and give the management its due and value the company if not higher than XOM, at least on a par with them. It still amazes me XOM is given a higher multiple then either CVX or COP - AAA rating or not.
    Feb 10, 2014. 11:32 PM | Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Perhaps...but I bet those that own XOM are dreaming of the returns they could be getting if they owned COP instead. When was the last time COP's management missed on a commitment? Can you say the same about XOM? Not unless you are dreaming.
    Feb 10, 2014. 11:14 PM | 1 Like Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    retpdguy: Sorry, I cannot bring myself to even look at BP...bad memories.
    Feb 10, 2014. 11:10 PM | Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Thanks for the link paxman - I like the graphs showing energy consumption of China, the US, and India. I wish they had added the Middle East too. Energy consumption in the Middle East is booming.
    Feb 10, 2014. 11:07 PM | 2 Likes Like |Link to Comment
  • ConocoPhillips: Showing Exxon And Chevron How To Run An Oil Company [View article]
    Thanks Albert and yes, COP has trimmed the fat from the portfolio and is now lean, mean, and focused. Notice that STO has recently taken similar steps to divest assets, improve shareholder returns, and concentrate on its biggest discoveries in the future. For the life of me I cannot understand why Chevron, and Exxon in particular, aren't taking similar steps. Chevron did announce it was selling $1 billion or so of midstream assets, but that appears to be a baby step. How ExxonMobil can get away with a sub-3% yield...I just don't get it. I guess the analysts and media must be scared to criticize them.
    Feb 10, 2014. 06:48 PM | 1 Like Like |Link to Comment
  • Statoil: Strong Buy After Making Game Changing Announcements [View article]
    Thanks ship99. Another catalyst Friday was the announcement by a STO VP that a 70% recovery rate may be possible on the giant Johan Sverdrup field. I left a link to that article in a comment up above. Since all this news hit Friday, it's hard to tell how much of the ~6% move was due to which announcement. If you are a long-term reader of mine, you know that I have been pushing STO for years to switch to a quarterly dividend, so I was very happy to see that it is being proposed at the annual meeting. It's a slam dunk as my sources tell me it was STO folks that went to the Norwegian government campaigning for the change in the first place.
    Feb 10, 2014. 04:38 PM | Likes Like |Link to Comment
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