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Michael Fitzsimmons

 
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  • Phillips 66: Impact Of The New Southern Hills And Sand Hills Pipelines [View article]
    Yes Nawar, I agree that Southern Hills is likely to strengthen NGL prices at Conway and I also believe Sand Hills is likely to strengthen NGL prices in the Permian as well, which should help a company like OXY, the biggest petroleum producer in the Permian.
    Jul 8 02:10 PM | 1 Like Like |Link to Comment
  • Whiting Petroleum: $860 Million Asset Sale Not Yet Reflected In Share Price [View article]
    haha - probably not considering the deal with WLL is supposed to close this month. what a time to have a weak stock. that said, it is up 4.6% at the moment.
    Jul 8 01:15 PM | Likes Like |Link to Comment
  • Canadian Heavy Crude Prices Are Rising: Suncor Rakes In The Dough [View article]
    Excellent link! Thanks Uncle.
    Jul 8 10:40 AM | Likes Like |Link to Comment
  • Canadian Heavy Crude Prices Are Rising: Suncor Rakes In The Dough [View article]
    Thanks 6762 - I am glad you enjoy the articles.
    Jul 8 07:20 AM | 1 Like Like |Link to Comment
  • 5 Natural Gas Transportation Stocks For 2013: June Update [View article]
    Seems to me I read a story about a couple of onshore gas wells that were dry holes, and that is why the stock dropped a bit recently. No one likes dry holes, but I care much more about their oil production than dry gas. I think Credit Suisse still has a $35 12-mo price target on the stock. I think it's a buy, but keep a close eye on her. I was trying to find out when the earnings are due, but their website is down or something...can't get to the homepage. Btw, I ended up buying the stock after writing the article and I think I paid $1 or so higher than it is now.
    Jul 7 10:39 PM | Likes Like |Link to Comment
  • 5 Natural Gas Transportation Stocks For 2013: June Update [View article]
    Yes, we have now had both Rep and Dem administrations that have pretty much ignored natural gas transportation. It is happening in the fleet, refuse, and bus sectors, but the big win would be ordinary Americans' cars and trucks and being able to refuel in your home garage. For that, it is my opinion we need government support - similar to the support given for the interstate hwy system or man-on-the-moon project. Just say we are going to do it, then invest and build the infrastructure, and then reap the dividends for the next 100 years. It's a no brainer (which is why Congress is having so much trouble doing it). But I agree with your statement: it's no longer about what is best for the country or for the middle class, it's all about power and corporate control. It's "democracy" gone awry.
    Jul 7 06:46 PM | Likes Like |Link to Comment
  • Canadian Heavy Crude Prices Are Rising: Suncor Rakes In The Dough [View article]
    Ari - the GC refineries will first take all the Canadian heavy they can use to replace more expensive Saudi crude. After that, then perhaps exports will play a role.

    Although heavy refining capacity is expensive, it would not take "MANY years" to add that capability to an Asian refinery. You say that Brent is under pressure, but WCS is still $30 cheaper. That is a big spread, and if Asian refiners could get long term contracts through a Western Canadian export terminal, why wouldn't they jump at the chance?

    Perhaps your logic fails you in the upgrader argument because you are assuming the the price of oil sands crude would remain constant w/o regards to how much is produced. As I mentioned before, you must take into account other production plans, including XOM's Kearl (among others). So, again, SU made a very prudent decision by cancelling this project, telling shareholders the company has moved from its cap-ex heavy phase (focused solely on growing production) into shareholder return phase in which they will only grow production if it will increase shareholder returns. As a result, the significantly increased both the dividend (to $0.20 from $0.13/share per quarter) and the share buyback programs (by $2 billion). As a shareholder, I am very pleased with their decision:

    http://bit.ly/14AXdPO

    Lastly, your opinion that Bakken crude is cheaper to bring to market than is oil sands is, I believe, incorrect. You may be forgetting the drilling costs and high depletion rates of Bakken wells. XOM knows this, which is why they put alot more $ into Kearl (for instance) than the Bakken. The long-term cost/barrel economics are hard to resist. And also, you seem to be forgetting that most of Bakken takeaway capacity is still rail as well. The Eagle Ford might be a better comparison since EF economics are much better than the Bakken.

    Don't get me wrong, I am not saying oil sands is the world's best crude. I would much prefer a nice big convention well in the Gulf producing 50,000 boe/day of light sweet crude (which is one reason I like CVX very much). But we have to be unbiased in how we view the overall economics.
    Jul 7 02:48 PM | Likes Like |Link to Comment
  • Stocks of railway companies that transport oil may be in focus this week following the explosion yesterday of a runaway train that was carrying tankers of crude in the Quebec town of Lac-Megantic. The blast, which killed at least one person, left dozens missing and destroyed buildings, is the latest and most serious in a series of accidents involving freight trains, including those of Canadian Pacific (CP) and Berkshire Hathaway's (BRK.A) BNSF. Berkshire's Union Tank Car and Trinity Industries (TRN), which make carriages that hold the oil, may also be exposed, although the accident could strengthen the case for approving TransCanada's (TRP) Keystone oil pipeline. [View news story]
    The US has a choice: it can either supply its heavy crude oil refining capacity along the Gulf Coast with Saudi crude (as it is today), or build Keystone-XL and supply GC refiners with cheaper crude from Canada. So the question is: who holds more weight with the US government - Saudi Arabia or Canada? Although the answer should be obvious...it is not.....
    Jul 7 02:36 PM | 2 Likes Like |Link to Comment
  • Whiting Petroleum: $860 Million Asset Sale Not Yet Reflected In Share Price [View article]
    Tarpon: I agree with much of what you said. Look at XOM and the dividend they pay - lowest in its peer group while having a great balance sheet. They put $20 billion into stock buybacks in 2012, and only half that ($10 billion) into the dividend. That is exactly backward. But who gives them grief over it (other than me on SA)? You don't hear a peep out of the analysts nor the shareholders. In fact, look at the comments on my article (ExxonMobil: Buyback Heavy, Dividend Light) and you'll see that XOM shareholders on SA supported the company on this! Amazing. And this after XOM's stock has done *nothing* in 5 years while the market has just taken off.

    No wonder the management at some of the oil companies are so arrogant. They can be arrogant because shareholders don't band together and stand up to them. The more they take advantage of the shareholders, the more arrogant they seem to get.

    As for WLL, you are correct - Q2 earnings, and future earnings will dictate where the stock will go. I suspect we will see more of what we have seen in the past: good production growth, higher PPP payments, and net income which does not grow commensurate with production. Lately, drill bit results have been so good and WTI prices so high, I don't even think WLL could screw up the quarter. But I remember a comment left by a reader to one of my first articles on Whiting when I said it was a buy. The user said, yes Mike, you are right, WLL has great assets and will grow production. But with respect to earnings, "it is always something with these guys." And that is why I sold the majority of my WLL last time it hit $51. Just got tired of waiting for WLL earnings to grow like it does at CLR and EOG. If I was CEO of WLL, I'd be embarrassed to let those two companies run rings around me like they have been.
    Jul 6 06:40 PM | Likes Like |Link to Comment
  • Canadian Heavy Crude Prices Are Rising: Suncor Rakes In The Dough [View article]
    Why would the Saudis care? Because they have seen Venezuelan heavy drop and Nigerian light-sweet completely cut out of US oil imports since the start of the shale revolution. So they don't want WCS to knock them out either because, as you pointed out, the US has alot of heavy crude refining capability. But, the Saudis are tight with the Bush family, and apparently Obama too. The US could easily reduce its import bill by building Keystone-XL, because importing Saudi heavy is much more expensive than WCS. But...politics are everything...and we know energy policy is nothing but politics in the US...otherwise, we'd all be driving NGVs fueled by cheaper, cleaner, domestic, and more abundant natural gas.

    I surely hope we are not going to regurgitate the oil sand per barrel cost argument again :) You keep saying It is "my" quote - but as I have mentioned to you before, I always simply report whatever SunCor releases in the their (audited) quarterly earnings for oil sands cost/barrel. So, you can take that up with SU, not with me.

    SU killing the upgrader project was just common sense. Note the big increase in the dividend and stock buyback plan after that announcement. I am fine with it. Who cares solely about production growth if it is not profitable? And why spend more cap-ex when we already have a transportation problem? And remember, its not just SU and CNQ, look at XOM's production coming out of Kearl. The railroads will indeed be busy...and who knows, maybe it's Buffet keeping Obama from OK'ing XL. Let' see:

    Buffet+Saudis versus Canada

    Who wins that? Bottom line: if the US does not build XL, that just means the GC refineries will have to keep importing more expensive Saudi heavy; the Canadians will eventually then have to build a pipeline to the west coast, and probably wouldn't do so unless they have long-term supply agreements with Asian companies; which means Asia would need to build up its heavy refining capability; and they probably would do so because of the wide spread between WCS and Saudi (or Venezuelan) heavy.
    Jul 6 06:30 PM | Likes Like |Link to Comment
  • Whiting Petroleum: $860 Million Asset Sale Not Yet Reflected In Share Price [View article]
    I wish they would surge some more. Oil stocks have been lagging for a few years now....it's as though the market doesn't believe oil prices will stay between $90-100 and instead are pricing the stocks for $80. But I expect Q2 earnings should to be pretty good and hopefully the stocks will take a step up.
    Jul 6 10:11 AM | Likes Like |Link to Comment
  • Whiting Petroleum: $860 Million Asset Sale Not Yet Reflected In Share Price [View article]
    Yes, WLL has gained 8.6% since the announcement. But it was only up $0.25 on the day of the news. Plus, I believe, most of that move has been due to WTI rising nearly 5% as most of the other Bakken producers have been moving up as well. WLL still has further room on the upside in my opinion, and as I mentioned at the end of the article many analysts agree. Time will tell. In the long run, stock prices follow earnings results. If WLL cannot raise net income, the stock will continue to languish.
    Jul 6 09:59 AM | Likes Like |Link to Comment
  • Whiting Petroleum: $860 Million Asset Sale Not Yet Reflected In Share Price [View article]
    Yes, I agree with much of what you said. But again, the $850 proceeds from the transaction equates to about 15% of WLL's current market cap, yet only 8.6% of production and ~8% of reserves. That gap, along with the ability to reduce debt-to-capital by 1/3, does not seem to have been priced into the stock in my opinion. The transaction is due to close in July and I think it will get priced into the stock. Time will tell, but the stock has been moving higher lately, as has WTI.
    Jul 6 09:11 AM | Likes Like |Link to Comment
  • Whiting Petroleum: $860 Million Asset Sale Not Yet Reflected In Share Price [View article]
    PSalerno: you can find more details about the transaction by reading the BBEP transcript link I provided in the article. But please consider: the transaction proceeds of $850 million dollars equates to about 15% of WLL's current market cap, while the assets sold were only 8.6% of current production and ~8% of proven reserves. It is that disconnect, along with the ability to reduce debt, which I believe the market is not pricing in: 15% versus 8% is a fairly big gap.
    Jul 6 09:06 AM | Likes Like |Link to Comment
  • Canadian Heavy Crude Prices Are Rising: Suncor Rakes In The Dough [View article]
    Yup, Bakken is the refiners' top choice:

    http://seekingalpha.co...

    Yet many mid-con refineries have been designed to handle WCS because it is selling at such a deep discount. As the article says, the upgrades at BP's Whiting refinery will enable it to run up to 350,000 bpd of Canadian heavy, up from about 80,000 bpd. That is a 270,000 bpd increase. That said, it looks like the US relationship with Saudi is more important than the relationship with Canada, so as bad as Gulf Coast refineries want to use WCS and cut out Saudi, it would appear the Obama administration is not going to give the go-ahead to Keystone-XL. All that means is the US keeps importing more expensive Saudi crude.
    Jul 5 10:23 PM | Likes Like |Link to Comment
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