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Michael Fitzsimmons  

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  • Exxon Mobil: Time To Break It Up And Slim It Down [View article]
    Thanks for the link Fleet. The first things I notice from Raymond's c.v. are:

    1) Raymond had a phD in chemistry as opposed to T-Rex's degree in civil engineering. I know which one is my choice as most applicable to running XOM...

    2) Raymond made his reputation at XOM, and got his early promotions, from cost-cutting and efficiency gains - exactly what XOM needs now.

    3) After the Exxon merger with Mobil, to increase profits Raymond eliminated 2,000 executive positions out of the 3,000 in place between the two companies. Again, exactly what XOM needs to do now.

    After reading Raymond's c.v. I am convinced more than ever that XOM needs at change at the top. The company is too big, there are too many executives all of which are over-compensated, and their arrogance in the face of a very poor 5-year track record is quite amazing. I just don't know what catalyst will force changes to be made as the majority of shareholders seem to be asleep at the wheel. Just look at some of the comments left on my articles that criticize XOM - even the "Buyback Heavy, Dividend Light" article I wrote which I just assumed every shareholder on Seeking Alpha would have supported (it was pretty much the opposite). Perhaps the only thing way thing will change is if a few large institutional holders banded together and began a PR campaign. Otherwise, I fear we XOM shareholders face another 5 years like the last 5....
    Aug 25, 2013. 11:42 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Hopefully Val will reply to some of my questions above and substantiate their very poor dividend rating with additional color.
    Aug 25, 2013. 09:01 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Val, also, I am still waiting for you to address the seemingly contradictory view that " while we like ConocoPhillips a lot".... and the assertion that the dividend statement is very poor and comparing it with a list of companies that have made dividend cuts?

    Does this imply that if COP cut the dividend the stock would go up? Otherwise, I don't see how Valuentum would like COP "a lot".
    Aug 25, 2013. 08:52 AM | 2 Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    I never thought about sending an email, but it seems the comment section is as good a place as any to debate differences of opinion. I'm still curious about the "very poor" rating your "dividend cushion" model predicted on COP. You say COP's dividend is not a safe long-term payout. Can you tell me, when does your model predict COP won't meet it's dividend payment? 1 year out? 3 years? 10 years? 20 years? 30?? There is absolutely no worry about the dividend over the next 2-3 years in my opinion, and the only way it would be worrisome longer than that is if their production plans do not materialize, but you never made a case for that. The reason is probably the production plan is primarily a low-risk exploitation plan: oil sands, Eagle Ford, Permian, Bakken, Australian LNG, Norway/UK. It seems to me if you predict COP's dividend safety is "very poor", you've got to come out and show how their production plan is going to miss. So I'd like to hear your comments on that.

    I guess every company could play it ultra safe (like XOM for instance) and pay a very low dividend in comparison to its peers. I'm glad COP, CVX and other international oil companies prefer their yields are substantially above the S&P500. And do so very safely because the companies are well managed.
    Aug 25, 2013. 08:48 AM | 1 Like Like |Link to Comment
  • Exxon Mobil: Time To Break It Up And Slim It Down [View article]
    JoeBubba: your analogy of Raymond/Tillerson equating to Gates/Ballmer is perfect. I never thought of the Japanese deal with respect to their stimulus package but again you seem to hit the nail on the head. One reason I thought XOM should "slim down" is because they have a large deal mentality to "move the needle", and this I believe is what was behind both XTO and the Russian venture. At the same time, XOM poo-poo'd shale oil while COP went into to Eagle Ford very early, grabbed $300/acre property, and now it's a 100,000+ bbl/day cash cow. Meantime, back at the ranch, in 2012 Tillerson & Co. decide to spend $20 billion on share buybacks and only $10 billion on dividends, in a "shareholder return" policy that seems to benefit over-compensated management over ordinary shareholders.

    So we are in agreement that Tillerson should be replaced and you made the case better than I. My concern is that, in general, I have noted XOM shareholders, based on *past* results, seem to have a very complacent attitude that XOM can do no wrong - even despite the lousy performance over the last 5 years. So, it really seems to be left up to institutional shareholders to put pressure on the company for a change in leadership. But as you then point out, who? I have a feeling all senior managers at XOM are very similar to T-Rex, after all, can you imagine not playing ball with those guys and what it would do to your career there? I bet any manager who disagrees with XOM's direction has been suppressed in a back office.

    I guess my main concern is XOM seems obsessed with being "big" for "big's" sake, when all indications are that it would be much better to slim down, get super efficient, and sell non-core assets in order to reward shareholders that have seen very little return in 5 years. For XOM to pay the lowest dividend yield in its peer group says volumes about management's performance.
    Aug 25, 2013. 08:36 AM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    THK: Believe it or not, I got a response from my COP contact (on a Saturday no less) regarding your MIGA question:

    "MIGA is an insurance program of the World Bank covering political risk and some contractual 'creep expropriation risk' cover. COP did not have MIGA coverage in VZ."
    Aug 24, 2013. 08:58 PM | 1 Like Like |Link to Comment
  • A Diversified Fund Of MLPs Yielding 5.2%, No K-1s And Significant Upside Potential [View article]
    Hi smurf - I believe the "current distribution" yield is based on actual payments made to shareholders, i.e. after expenses.
    Aug 24, 2013. 08:42 PM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Thanks alot Bahamas, I am humbled by your comments but I do appreciate them. With respect to your last comment, Val has many more followers than I do, so they must be doing something right. Perhaps I need to hire a marketer :)
    Aug 24, 2013. 08:39 PM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Wonderful Rock - I am glad you have liked the articles. Hopefully you will look back a few years from now and feel really good about your COP holdings.
    Aug 24, 2013. 08:37 PM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Hi Realtoi and thank you. I would have a difficult time advising you to sell COP and buy XOM, regardless of yearly high/low levels. The outlook for COP is superb in my opinion, both operationally and from a shareholder return perspective. XOM I think has some problems, which I hate to see because I've got a slug of it that I cannot sell for cap gains issues. I think XOM is being managed for the management instead of the shareholder. If you search my list of articles, you'll see that I have been very critical in terms of their over-emphasis on stock buybacks over dividends. I also think XOM management is way over compensated considering their performance. Now I am not a CFA, so please check with others, but I do follow these two companies very closely and COP continues, quarter after quarter, to do exactly as they said they will. XOM? Not so much. Regardless, I wish you good luck with whatever choice you make.
    Aug 24, 2013. 08:36 PM | 1 Like Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Thanks heglimp. I don't think engineers ever retire, we just stop working for others :D
    Aug 24, 2013. 08:32 PM | Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Yeah Okie, I have been contacting XOM for years wrt their small dividend - to no avail. Today's XOM is much more focused on rewarding management than it is shareholders. For XOM's management to try to convince shareholders that all the stock buybacks are just wonderful for them, while the stock has gone nowhere in 5 years and pays the lowest dividend yield in its peer group, well, that is a smokescreen that doesn't work on me. I think XOM needs a change at the top.
    Aug 24, 2013. 08:31 PM | 1 Like Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Valuentum: Thanks for the detailed response. We are making progress as we found something to agree on (COP's Q2 was best among major peers). Wrt asset sales reducing future cash flow, this can be modeled quite well if the asset sale was a "discontinued operation", but for something like the $750 million Clyden divestiture, this was an undeveloped asset that COP, considering their huge oil sands position, had no intention of developing. Yet, COP is going to increase oil sands production by ~100,000 bbls/day by 2017. Cedar Creek was $1 billion sale producing only 13,000 boe/day. So each divestiture has to be analyzed according to its merits. Some asset sales may reduce future cash flows, but also future cap-ex. So yes, it has to be forward looking, but as long as the company is developing near-term (more economical plays) and its organic reserve growth is over 100% per years (COP's has been), the "forward lookingness" needs to be stretched out a ways - especially for an asset like Clyden. Regardless, I am still confused how your "dividend cushion" model can still say COP's dividend coverage is "very poor". Perhaps it is a matter of timeframe. The article apparently thinks this is true "now", which I think is ludicrous since my asset sale and CFO analysis (in this article) clearly proves this is not the case. For your assertion to be true, you would have to make a case that production, somewhere, would have to take a huge plunge along with oil prices. You didn't make that case and I don't think you could make it.

    I am also confused, like I was from your article, from your comment above: "and while we like ConocoPhillips a lot"....how do you square that statement with assertion that the dividend statement is very poor and comparing it with a list of companies that have made dividend cuts? I mean either you like the stock or not, but it seems you are playing both sides of the fence on COP.

    You said "we don't fudge our numbers just to support a popular opinion. We're completely independent." I never said you intentionally fudged the numbers, I merely suggested your "dividend cushion" model needed refinement to take into account a company like COP. I still think it does because you have defended the model, apparently think it's fine, yet you still believe COP's dividend safety is "very poor" and I think I have proven, with a fairly simple analysis, that it is not easily covered for years to come, even if production and margins stay flat. If you are implying that I fudge the numbers to support a popular opinion, please point me to the numbers you regard as "fudged" and I will defend them. All my numbers were taken from press releases and/or earnings reports - very transparent data sources. What is quite opaque (at least to me) is the "dividend cushion" model since there was no detailed analysis given on why COP's dividend safety was "very poor" other than "the model says so".

    So I guess I am still not a believer in the "dividend cushion" model, especially with respect to COP. Perhaps you would like to write another article with a detailed analysis that perhaps predicts exactly when COP will fail to make its dividend payment? Thanks.
    Aug 24, 2013. 08:28 PM | 2 Likes Like |Link to Comment
  • ConocoPhillips: Investor Update On The Safe Dividend, Venezuela, Libya, And More [View article]
    Hi Okie, I am not certain, but that sounds like the breach of contract suit discussed in the article. It has settled and COP got $66.8 million. There was no press release issued by the company because it was considered not material. But is in a 10k filing, I think around Nov of 2012.
    Aug 24, 2013. 07:41 PM | Likes Like |Link to Comment
  • Energy Recovery Inc: Shares Could Double On Patented Desalination Product Line [View article]
    Hi tiger01: You're back again. Well, I suppose it depends on what market share is being measured. I am simply repeating ERII's market share data for full-year 2012. I guess if you insist on characterizing ERII as a "pump company", then it is clear where the disconnect is.

    As for a cheaper product, that too is a matter of perspective. Carlsbad chose ERII (as have most all other recent desal plants) not because ERII's products are the "cheapest" (they aren't) but because long-term they are a superior value proposition. While ERII parts are more expensive up front, they quickly make up the difference in efficiency and energy savings and then pay back dividends to the operator over a 25-year lifespan of extremely reliable no maintenance operation. And this is why they pretty much have a lock on isobaric pressure exchangers. Can you point to one recent contract where FLS took an isobaric pressure exchange contract away from ERII? Maybe you can..but I bet I can point to many more where ERII took the business from FLS:

    http://bit.ly/15l9gSA

    As for why FLS should take over ERII: I obviously think ERII is terribly undervalued now. It has a market cap of only $290 million, has excellent patent-protected technology that delivers great margins. The company is on the cusp of a big "revenue wave" as a result of years of pent up credit crunch demand and the lack of new infrastructure spending. That is changing. I have also read anecdotal evidence that Carlsbad was a gating factor prior to "go ahead" decisions for many other desal projects. Time will tell.

    As for the lumpiness, I understand why it is there and I don't mind it as long as the big lumps eventually come through in a timely fashion.

    At the end of the day, you and I just disagree on the outlook for ERII. And that's OK. But rather than exchanges endless message trying to get the last word (not saying you would, but it happens on SA), let's just let a few more quarterly results come in and then we can have another good exchange on the subject. Meantime, I do appreciate your perspective. ERII may look expensive to some at the moment. My belief is that it will look very cheap after a few more quarters. In fact, I think it's cheap now given their market position, patent-protected technology, expected revenue growth, and gross margins.
    Aug 24, 2013. 07:37 PM | Likes Like |Link to Comment
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