Seeking Alpha
View as an RSS Feed

Nawar Alsaadi  

View Nawar Alsaadi's Comments BY TICKER:
Latest  |  Highest rated
  • Oil Will Bottom In 3 Weeks: A Comprehensive Analysis Of Domestic Oil Production [View article]
    Great article, I believe the assumptions in your model are realistic and the projected supply and storage levels are in line with my expectations, even though mine are a bit more aggressive and I expect supply to hit 8.7m by year end compared to your 8.7m barrels projection for March 2015. I also believe demand will continue to surprise to the upside due to the combination of low prices and higher employment, this should further accelerate inventory draw-downs in Q3 and Q4.

    Regards,
    Nawar
    Mar 23, 2015. 01:08 PM | 10 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    "I disagree with you about calling Opti's asset one of "low quality". It was an expensive asset (just like some of PWT's) with a lot of problems but its share was 1.8 billion bbl."

    Ed, Opti Canada was a low quality asset, and it was their only producing asset. The fact it was expensive does not change the fact that the geology at Long Lake was not conducive for a high quality SAGD operation with a low SOR ratio, not to mention the Israeli technology OPTI used to substitute NG burning didn't preform as expected. I know OPTI very well as I traded the stock "profitably" at the time. (Likewise with Compton, I actually met with their CEO in May 2012 in Calgary as their were liquidating the company, and I reviewed their assets in detail, and concluded that they have not much value and can not be compared in any way or fashion to Penn West.)

    Penn West production base is vastly different from an oil sands developer such as OPTI , Penn West produces from thousands of conventional and tight oil reservoirs, their assets are spread over a host of formations (Cardium, Viking, Slave Point, Seal...etc). Penn West has enough asset depth to liquidate what is required to clean the balance sheet. Will their NAV take a hit as a result of the balance sheet repair, you bet they it will, but the stock price is so far below NAV that even a meaningful haircut will hardly reduce the 100%-200%+ upside from current levels.

    I really don't think listing names of bankrupt companies (both in the energy sector and a dying yellow pages business!) adds any value to the discussion other than fear mongering.

    Having said all the above, you are fully entitled to your opinion, it is a free country, you can speculate any outcome you see possible or probable, however I do think events will prove you wrong in the next few quarters.

    All the best,

    Regards,
    Nawar

    Feb 10, 2015. 06:41 PM | 12 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    "Opti Canada, Oilexco, Compton Petroleum"

    The fact that the author is comparing Penn West to those 3 companies is highly indicative of lack of understanding of the energy sector and the fundamental differences between the above mentioned companies and Penn West. Opti Canada was a single asset company that collapsed due to the failed Long Lake reservoir which operated at more than double the budgeted SOR ratio, thus rendering the operation highly uneconomic. Oilexco had over $550m in debt against a mere 2P reserves of 66m barrels ($8.3 in debt per barrel vs. $3.36 for Penn West) and being a deep water developer Oilexco was highly dependant on a handful of very expensive projects meeting their production estimates such as Brenda Nicole which produced half what was expected despite hundreds of millions of dollars in commitments. Finally Compton was an NG company with B class NG assets in a very depressed NG pricing environment.

    Penn West has no resemblance to any of the above, based on recent transactions for light oil by Raging River and Torc, Penn West can liquidate 15% of its production (20% of oil production) and pay HALF its debt at today's transaction prices.

    What ultimately establishes the value of an energy company is the quality of its asset base. The value of those can not be derived from the company current capital structure, but rather measured interdependently based on their own merits. OPTI, Compton and Oilexco failed because they had low quality assets that failed to cover their debt obligation. Penn West assets are worth materially more than the company debt burden.

    Regards,
    Nawar
    Feb 10, 2015. 01:45 PM | 21 Likes Like |Link to Comment
  • At What Oil Price Do U.S. Shales No Longer 'Work?' [View article]
    The issue that is most often overlooked when discussing shale is geology. Both shale operators and analysts talk about drilling moving to the most productive areas, hence shale oil is profitable and economic at $60 or below. Yet several sources indicate that the most productive areas (sweet spots) present 15% to 20% of the total area of a given shale basin, hence can those areas sustain the ongoing 4m barrels in shale oil production and even grow that number?. The whole reason the industry moved to shale is due to geology, we basically run out of accessible onshore conventional reserves, thus any discussion of production growth is incomplete without a proper evaluation of the available sweet spot inventory.

    Regards,
    Nawar
    Dec 31, 2014. 01:21 PM | 1 Like Like |Link to Comment
  • How Much Does It Cost To Produce One Barrel Of Oil? (Russian Companies) [View article]
    Chris, I appreciate the article, however have you attempted to calculate total cost including capex to drill and develop new fields?. This is quite relevant since Russian oil production is steadily declining (11% decline rate for the major western Siberia oil fields) and thus Russian companies must continuously invest in new reserves to maintain supply.

    Regards,
    Nawar
    Dec 30, 2014. 10:30 AM | Likes Like |Link to Comment
  • Continental Resources: Budget Cut In Half, Production Still Growing [View article]
    "Under these price assumptions, I estimate that Continental will generate ~$2.2 billion in discretionary cash flow in 2015. In addition to that, Continental will have realized ~$520 million from the recent hedge monetization and the sale of interest in Northwest Cana to its JV partner."

    Richard, what I gather from your analysis is that without monetizing the hedges and selling assets, CLR wouldn't be able to show any growth in 2015 at $60 crude?. Would you know by how much their production would have evolved if they were limited to only their discretionary cash flow of $2.2B for capex?. It seems to be me at $2.2B CLR production would have declined.

    Regards,
    Nawar
    Dec 24, 2014. 12:45 PM | Likes Like |Link to Comment
  • $60: Not A Reasonable Price For Oil [View article]
    Excellent article, it captures very well the underlying dynamics of the oil market. I believe prices will start to adjust meaningfully higher in 2H-2015 due to the factors you describe above. Traders are too focused on the short term (next few months), but oil companies produce their oil for decades, thus what matters is the long term price. The long term price can't trade below the marginal cost of production for an extended period of time. Having spent years studying the oil market, I can comfortably state that to supply the world with an adequate amount of crude, we need prices in the $75 to $85 range or an average of $80. This range is lower than the previous average of $90 to $110 due to improved shale productivity of late, I believe this new range will hold until shale oil production tops out in the latter part of the decade.

    Regards,
    Nawar
    Dec 17, 2014. 10:20 PM | 3 Likes Like |Link to Comment
  • Saudi Arabia: Do The Math [View article]
    Over the last many weeks and months, we have heard multiple times the assertion that Saudi Arabia is repeating the 1985/1986 orchestrated price collapse to gain/maintain market share, and thus by implication, Saudi Arabia is ready to scarify substantial revenues to gain market share.

    On the surface, the logic presented above by the media (either by purpose or omission) appears sold but it omits a crucial difference (among several differences) : In 1986, Saudi Arabia did indeed cause a sharp price collapse as it changed its swing policy, but it also substantially increased its exports from 2.3m barrels in 1985 to 3.9m barrels in 1986 or a 70% increase in production as prices declined from an average of $26.5 in 1985 to $14.65 in 1986 or a 55% decline, thus their maneuver was largely revenue neutral. Between 1985 and 1986 Saudi Arabia’s revenues declined by only 6.5% or roughly $1.4B less revenues per year, this was a much smaller drop in revenues than for the rest of OPEC and the rest of the world (except for Kuwait and UAE which followed the same Saudi strategy).

    Today, the situation is very different. Saudi Arabia is taking a real hard price cut of about $40 per barrel (from the Brent average the last 4 years) without a corresponding increase in production. Thus, they are losing over 40% of their revenues or close to $100 billion per year due to their decision not to swing produce.

    Those who believe that Saudi Arabia will maintain this strategy for more than few months are sorely mistaken, if prices don’t adjust higher in early 2015, Saudi Arabia will likely adjust course regardless of whether they have achieved their political goals (even in 1986 they adjusted their production lower in the latter part of the year). The price Saudi Arabia is paying today to maintain its current strategy is too costly in comparison to a slight adjustment in production over the next couple of years. If anything, this price swoon will convince all participants to adhere to their quotas and may even get Russia to pitch in as well, and we will hear once more that the death of OPEC was greatly exaggerated.

    Regards,
    Nawar
    Dec 8, 2014. 12:25 AM | 5 Likes Like |Link to Comment
  • Oil Markets: Sentiment And Lame Thinking Are Currently In The Driver's Seat [View article]
    Excellent article Value Digger, I share your outlook on oil as well. I would strongly advice reading this article as well in regards to the significant risks of $150B in cancelled oil capex in 2015 and a subsequent supply crunch later in the decade. At current prices up to 12.2m barrels in new supply are at risk between today and 2025:

    http://bit.ly/12EquNo

    Regards,
    Nawar
    Dec 5, 2014. 12:03 AM | 2 Likes Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    I just saw this post as I was quite busy with my book tour. The only thing I can say to you Chris: It is truly pathetic to see the level you stooped to in your personal attacks.

    Regards,
    Nawar
    Aug 6, 2014. 12:42 PM | 2 Likes Like |Link to Comment
  • TransCanada eyes shipping crude by rail amid Keystone XL delays, CEO says [View news story]
    Canexus is still one of the best ways to get exposure to the Canadian bitumen by rail trade:

    http://seekingalpha.co...

    I wouldn't be surprised if TransCanada or Enbridge makes an offer for their NATO terminal or at least partner with them on the project.

    Regards,
    Nawar
    May 22, 2014. 11:17 AM | Likes Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    By the way, where do you see the stock down 50c?. The stock is showing green on my side. It looks like the market cares about fundamentals after-all.

    Regards,
    Nawar
    May 8, 2014. 11:36 AM | Likes Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    Chris,

    The fundamental value of the company has not changed, and Canexus continues to be an attractive investment with a potential upside in the $7+ area at some point in 2015. Worrying about the dividend level is a concern for a speculator, thus only those who speculate for a living worry about dividend levels.

    Regards,
    Nawar
    May 8, 2014. 10:24 AM | Likes Like |Link to Comment
  • Canexus Corporation Positioned For A 30% Rebound [View article]
    Lavee,

    DOT 111 regulation could effect their manifest business, however this is a small portion of their operation and different from the unit train operation. Also, we need to keep in mind, the industry has 3 years to replace or retrofit older DOT-111 rail cars, so there is no immediate impact. Finally, to my knowledge Canexus does not own the rail cars, it is their clients who own them, thus any concern is likely related to a possible disruption of service rather than a direct financial cost to the company.

    Regards,
    Nawar
    May 1, 2014. 07:24 PM | 1 Like Like |Link to Comment
  • Canexus Corporation Positioned For A 30% Rebound [View article]
    John, that's correct, I do touch on that in the article as I compare undiluted bitumen train transport economics vs. pipe. Once you remove the diluent, rail is actually cheaper than pipelines for uncommitted shippers.

    I would recommend listening to MEG Energy conference call from yesterday, MEG highlighted that once their diluent recovery unit is constructed their rail shipment costs will diminish by a third:

    http://bit.ly/1fwGaaK

    There is an extensive discussion of rail and its advantages in that call, Canexus is the company serving MEG for its bitumen by rail transport.

    Regards,
    Nawar
    May 1, 2014. 11:15 AM | 1 Like Like |Link to Comment
COMMENTS STATS
440 Comments
480 Likes