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Michael Fitzsimmons  

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  • Keyera: Satisfying Strong Demand For Critical Infrastructure By Canada's Fast Growing Oil & Gas Sector [View article]
    Hi UnclePie and thanks for breaking the comment barrier. Yes, like IPL and VET, KEY pays by the month. I suspect that once the Norlite pipeline and Base Line storage terminal come online, the additional long-term fee-based contracts from these to fairly large projects should enable KEY to securely raise its payout ratio.
    May 27, 2015. 11:16 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Craig - by the way, I especially liked Table 3 on page 16 which is the first exhaustive study I have seen that quantified the *premium* over Brent that both Eagle Ford and Bakken should realize due to the higher quality of those shale crudes. Specifically, for $60 Brent, this study suggests a $3-6 dollar premium for low-sulfur Bakken and EF crude, respectively. Even if the study is off a little bit (and I am not saying it is...), obviously the export ban is severely penalizing our inland shale producers - the same companies that practically single-handedly pulled the US out of its economic recession. With the current discount to Brent, that penalty is somewhere in the neighborhood of ~$10/bbl for low sulfur shale crude. That is a lot of wealth destruction due to an artificial restriction of the US oil market.
    May 27, 2015. 09:28 AM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Hi Craig- thanks very much for that link. I just speed read the study and there are a couple points that don't get much coverage:

    1) lifting the export ban would reduce overall oil price volatility, which is good for both producers and consumers
    2) lifting the ban would have positive affect on US security interests
    3) lifting the ban would likely most positively affect Bakken producers since the discount to Brent of their inland product has been as much as $25/bbl due to transport costs to refining centers.

    Another interesting point that many don't consider is the affect of keeping the export ban in that it could further blowout the price discount of inland producers going forward. The US has already reduced light-sweet imports to next to nothing, so the only way to absorb new light-sweet shale production seems to be to convert refineries or export. I would love to see an in-depth study on refineries that run a heavy crude slate, and how much it would cost to convert them to light-sweet, and how long the payoff time would be.
    May 27, 2015. 09:08 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Hi Joni - I know your comment was directed at Random Logic but I hope you don't mind me jumping in (with this LONG comment) because that was a very interesting observation by Fidelity. Phillips Petroleum was the second company I invested in after graduating college. There was a period of time after purchasing when I got busy in my career and pretty much forgot about it. Once I checked it and saw how much it had appreciated over the years, I thought about selling it. The problem with trying to time sales is that if the stock you sold keeps going up, most investors are unlikely to buy back at a higher price. It's just human nature. Obviously I am very glad I held those shares through thick-n-thin, which was one of the subtle points of this article.

    As far as I know my grandfather never sold a share of any oil company he invested in. It worked well for him too. Many were acquired by other companies (ARCO, Amoco, Mobil, etc.). I think history shows that if you invest in an energy company with quality assets and management, over time that investment will appreciate and throw off dividends along the way. For COP, the reason they have outperformed Exxon and Chevron is that management has been focused on delivering shareholder returns. As I suggested in the article, many Nervous Nellies were skeptical of COP's plan to sell non-strategic assets after the 2008 financial collapse. I have to admit I was dubious of the plan myself because it seemed an inappropriate time to sell assets and I was concerned about realized prices of those assets. But as I witnessed the first few asset sales, I was like right on. To put it mildly, COP's management executed the plan flawlessly and unlocked tremendous shareholder value in those assets which I think anyone would agree would be worth much less in today's environment. At the same time, COP high-graded the assets it kept, and added to, in the portfolio.

    Spinning off the mid- and downstream assets also unleashed huge shareholder value. Not only is PSX now one of the best energy logistics mid- and downstream companies in the US, but every time PSXP accesses the debt market to fund a drop-down (at very low interest rates I might add), that is effectively PSX (i.e. COP) monetizing those assets while at the same time generating tax-advantaged distributable income that finds its way back to PSX (i.e. COP) shareholders as dividends. It still baffles me that the comments left by Exxon shareholders at my strong suggestion that Exxon form an MLP to unleash shareholder value (considering XOM's low dividend yield combined with the lack of stock price appreciation) was viewed so negatively when it has been shown by many companies how well it works. See the comments to Exxon Immobile: No 3% Yield And No Plans To Form An MLP:

    So today we have this big aberration of increased production from US shale oil. But we have seen such aberrations before in places the like the North Sea and Alaska, yet look at the production from those two regions today (down big-time). Currently, many shale producers are targeting the most prolific sections of those plays to maximize cash flow with the lowest cap-ex possible. So what will that mean for those shale plays in 5 years? 10 years? Meantime more cars are being sold in China, India, the Middle East and Africa could rise as well. Americans are back to buying large trucks and SUVs and gasoline demand is growing. So while oil producers are currently being shunned by the market due to the low price of oil, I would say history has shown such periods are times to buy, not sell.
    May 27, 2015. 07:26 AM | 3 Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Fred - still not sure I understand your original comment which implied a lifting of the export ban "suggest increased probability of continued lower crude prices". Perhaps instead of WTI you were referring to overall average Brent+WTI prices? If so, not sure I agree. The main reasons WTI sells at a discount to Brent despite being a (generally) higher quality crude is because the US doesn't have enough refining capacity to use it all and this is exacerbated by the export ban. If the ban is lifted, those bbls will be very competitive, even with shipping costs, to any refinery in the world that could run it. Therefore Brent may come down, but WTI would go up. Whether or not the world average of Brent+WTI would go up or down would likely still be largely determined by OPEC's production levels and geopolitical issues as it had. As a result, I think the best way to analyze a lifting of the export ban is to focus on those companies that are primarily domestic shale producers. From that perspective, I think we agree that it would be a very positive development because all things being equal, realized prices would go up immediately.
    May 27, 2015. 06:51 AM | 2 Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    The reason for the Nervous Nellies reference was because they remind me of the same crowd that was so skeptical of COP when they embarked on their strategic plan back in 2010. Many of those same Nervous Nellies were instead recommending shares of Exxon and Chevron. As the chart in the article clearly shows, COP has run rings around both those companies in terms of total shareholder returns.
    May 27, 2015. 06:42 AM | 1 Like Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Hi fuzzy222 - yeah, getting the records shouldn't be a problem whatsoever. But say you've held COP for 10 years and you DRIP'd every quarter. If you sell the entire lot, you'd have 40 calculations to do, plus long-term and short-term determination. Not the worst exercise in the world, but not the most fun either. In hindsight I wish I had DRIP'd, but the income has been nice and had I DRIP'd I'd likely be significantly over-weighted in COP. I prefer to be a bit more diversified than to rely so heavily on one stock.
    May 27, 2015. 06:38 AM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Fred - starting in 2010 and continuing through the years you listed, as part of COP's strategic plan, they divested over $28 billion in non-strategic asset sales.
    May 27, 2015. 06:33 AM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Thanks for the comment reh4082 and the break from quoted statements in the comments.
    May 26, 2015. 09:26 PM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    I don't know what the terms Venezuela and Exxon agreed to on the $1.6 billion judgement ruled in Exxon's favor in 2014. My suspicion is that if Exxon was unhappy with the agreement, we would have heard about it by now. I suspect Exxon refined quite a bit of gasoline with its Gulf Coast refineries with which the feedstock was Venezuelan heavy.

    If you are worried about the dividend, then that's fine. But the article did not suggest COP shareholders buy or sell at the current price. Nor did it make any suggestion about waiting to do so. The article was meant to simply give another perspective on COP other than the majority of negative press (at least it seems to me) the company has been getting lately. As long as you like to quote so much, you said

    "with such a superlative description of this fantastic opportunity how can one possibly wait to take advantage?"

    Please point to something in the artilce that was a "superlative description of this fantastic opportunity" or something that was state that was incorrect.

    As for the intention of the article, I think the title sums up exactly what my intention was.
    May 26, 2015. 09:25 PM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Fred - I was responding to your suggestion that COP would go to $50 and I think the possibility of that happening would be much greater if as I said "oil goes back into the $40's and stays there."

    COP is not the same company it was in 2012. To predict a valuation simply off of EPS and the price of oil negates so many other factors when it comes to evaluating the value of an oil company. A few other factors come to mind: reserves, technology and exploitation potential (i.e. the Eagle Ford), and large cap-ex projects with long-lived production. COP has significant long life production investments in projects like Jasmine in the North Sea and the oil sands. These projects required significant investments, much of which was made, and production brought online, since your snapshot in 2012.

    Similarly your comment below that it has everything to do with price and earnings appears to completely negate "assets".
    May 26, 2015. 09:18 PM | 1 Like Like |Link to Comment
  • Energy Recovery: Fresh Water Is Being Taken For Granted [View article]
    bkayoc: As an engineer, and very familiar with the concepts of keeping things small and simple. That said, i am also very familiar with cost efficiency. So I guess we'll just disagree on this one. Also, ERII doesn't build desal plants and doesn't have near the capital to begin doing so now. Lastly, desal is not a solution for "huge Californian farms". Perhaps focusing on ERII's technology is "myopic". Then again, perhaps you need to take a step back and look at what is realistic and what history and experience shows: large-scale SWRO plants are the rule rather than the exception. Mostly because, due to cost, they are the last resort to solve a fresh water crisis of significant magnitude to justify the cost. All that said, if you want to build some small desal plants with your VC friends, I am sure ERII will be happy to sell you PX devices one or two at a time. And you'll pay significantly more for them than would a plant buying them by the dozens. Cost efficiency 101.
    May 26, 2015. 09:06 PM | 2 Likes Like |Link to Comment
  • Energy Recovery: Fresh Water Is Being Taken For Granted [View article]
    I have better luck in the past calling them directly.
    May 26, 2015. 08:59 PM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Hi again Fred - for COP's onshore domestic shale production from the Eagle Ford, Bakken, and Permian, I haven't seen one analyst predict that WTI would fall if the US lifted the export ban. Currently WTI is trading at a $5.50/bbl discount to Brent and it has recently been trading closer to a $7/bbl discount. Considering that much of the shale oil is very high quality (Bakken crude is perhaps one of the highest quality crudes on the planet), most analyst see a quick pop in WTI were the export ban lifted. As I said in the article, if the US became a major exporter of high quality shale, I would not be surprised to see it trade at a premium to Brent. I don't agree with that lifting the export ban would cause lower crude oil prices. It may cause Brent to decline a bit because of the higher competition, but for share oil producers it would absolutely be bullish development.
    May 26, 2015. 06:53 PM | Likes Like |Link to Comment
  • ConocoPhillips: A Fresh Perspective [View article]
    Hi Fred - I appreciate your perspective and yes, anything is possible, especially if oil goes back into the 40's and stays there.
    May 26, 2015. 06:46 PM | 1 Like Like |Link to Comment