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  • Making Sense Of The Gazprom-CNPC Gas Deal
    May. 15, 2014 OGZPY, PTR 17 Comments

    Summary

    • Gazprom and CNPC are set to sign a deal that will result in Gazprom supplying China with 38 bcm of gas annually by 2018.
    • This is in addition to a 2011 deal that called for Gazprom to provide 30 bcm of gas annually by 2015.
    • This will result in substantial increases to Gazprom's revenue once it takes effect.
  • Seadrill's Modern Fleet And Contract Status Provides An Advantage Over Peers
    May. 13, 2014 SDRL 13 Comments

    Summary

    • Seadrill is one of the largest offshore drilling companies in the world and has the most modern fleet of all the majors.
    • Seadrill has rigs operating in every major oil producing region which provides it with protection against regime risk.
    • Seadrill's modern fleet provides an advantage in contract negotiations due to the preference of oil and gas companies towards these rigs.
    • Many competitors will need to replace their jack-up fleets due to the rigs reaching the end of their useful life. Seadrill is an exception.
    • Seadrill is extremely well-positioned to weather the short-term slowdown in the drilling industry.
  • Gazprom Looks Incredibly Undervalued Despite Sanctions On Russia
    May. 12, 2014 OGZPY 36 Comments

    Summary

    • Gazprom is by far the largest natural gas producer in the world but its market cap does not reflect this.
    • The European Union is unlikely to go along with any sanctions against Gazprom as the company is responsible for 1/3 of the gas consumed by the continent.
    • Gazprom's natural gas reserves are almost ten times the size of ExxonMobil's.
    • Gazprom is more profitable than any American oil company despite having a lower market cap.
    • Gazprom currently trades at a P/E of less than 3.
  • Investigating The Impact Of Consolidation On Seadrill's Fourth Quarter Results
    May. 7, 2014 SDRL 46 Comments

    Summary

    • Seadrill owns interests in three subsidiary companies that are consolidated into its results.
    • Seadrill does not own a 100% stake in any of these subsidiary companies.
    • Therefore, Seadrill does not actually get all of the money earned by these companies even though it all is reported on its results.
    • Deciphering the results to determine what Seadrill earned on an isolated basis is extremely difficult.
  • First REIT: Offering Investors The Best Of All Worlds - Safety, Growth, And Income
    Apr. 27, 2014 FESNF 13 Comments

    Summary

    • First REIT is a healthcare-focused real estate investment trust with fourteen properties located in Singapore, Indonesia, and South Korea.
    • The trust's tenants are in an inelastic industry and this should ensure that they will be able to consistently make the rent payments.
    • First REIT has significant growth potential through the acquisition of new properties that should allow it to grow its topline revenues at 12% year-over-year.
    • The trust is also looking at acquiring several more properties that could allow it to continue its strong growth.
    • First REIT provides income-seeking investors with a distribution yield in excess of 7% and should be able to increase this going forward.
  • Novo Nordisk: Increasing Obesity Rate A Positive For Stock, But Share Price May Have Increased Too Quickly
    Apr. 24, 2014 NVO 12 Comments

    Summary

    • The obesity rate has been increasing among all age groups in the United States and abroad.
    • Obesity carries with it a number of health problems including the development of type-2 diabetes.
    • Novo Nordisk is the world's largest manufacturer of diabetes care products.
    • Novo Nordisk is likely to grow as type-2 diabetes becomes more common.
    • Unfortunately, the stock price has increased much more rapidly than the company's earnings so investors may want to wait for a dip before buying.
  • Vantage Drilling: Modern Fleet May Produce Growth That Makes Debt Bearable
    Apr. 21, 2014 VTG 23 Comments

    Summary

    • Vantage Drilling has one of the most modern fleets of ultra-deepwater and shallow-water drilling rigs in the industry.
    • This modern fleet is highly desired by exploration and production companies.
    • Vantage Drilling has had to take on a very high debt load to build this fleet.
    • The company has very strong forward growth potential that should allow it to carry this debt load.
  • Ascendas REIT: A Bastion Of Stability Amidst The Market Storm
    Apr. 15, 2014 ACDSF 7 Comments

    Summary

    • The market has seen significant volatility year to date and this may have spooked some investors.
    • Ascendas REIT appears to offer a bastion of stability in the storm.
    • Ascendas REIT has one of the most diverse property portfolios in Singapore and has a very wide tenant base.
    • No single tenant or property accounts for a large percentage of the trust's revenue or income.
    • The trust's unit price has been remarkably stable over the past year and pays a high distribution.
  • Seadrill Part 2: New Jackup Contracts Promise Revenue Growth And Improve Forward Earnings Visibility
    Apr. 11, 2014 SDRL 112 Comments

    Summary

    • Seadrill recently announced that it has secured contracts for four of its existing jack-up drilling rigs.
    • Three of these four contracts carry higher dayrates than the rigs' existing contracts.
    • The higher dayrates will result in forward revenue growth.
    • These new contracts also increase Seadrill's forward earnings and cash flow visibility.
    • The improved forward cash flow visibility provides confidence that Seadrill can maintain its high dividend.
  • Seadrill Part 1: New Jackup Contracts Promise Revenue Growth And Improve Forward Earnings Visibility
    Apr. 11, 2014 SDRL 9 Comments

    Summary

    • Seadrill recently announced that it has secured contracts for four of its existing jack-up drilling rigs.
    • Three of these four contracts carry higher dayrates than the rigs' existing contracts.
    • The higher dayrates will result in forward revenue growth.
    • These new contracts also increase Seadrill's forward earnings and cash flow visibility.
    • The improved forward cash flow visibility provides confidence that Seadrill can maintain its high dividend.
  • We Have Finally 'Climbed Out Of The Jobs Hole'...Really?
    Apr. 10, 2014 9 Comments

    Summary

    • The latest job report says that there are now the same number of jobs in the economy as there were in December 2007.
    • The Labor Participation Rate and Employment to Working Age Population Ratios show no improvement since the recession ended.
    • The evidence shows that most new jobs created since the end of the recession pay less than the jobs that were lost in the recession.
    • The BLS says that the fastest growing occupations going forward will not be middle wage jobs.
  • Pacific Drilling's Modern Fleet And Newbuilds To Contribute To Outperformance
       • Apr. 8, 2014 PACD 45 Comments

    Summary

    • Pacific Drilling owns and operates the most modern fleet of ultra-deepwater drilling rigs in the world.
    • Exploration and production companies are demanding the use of modern rigs much more strongly than older rigs.
    • The reason for this strong demand is because modern rigs have much better performance characteristics.
    • Demand for modern ultra-deepwater rigs is expected to exceed supply in the coming years.
    • This demand coupled with the company's new rigs should make it one of the fastest growing companies around.
  • Seadrill Partners' Acquisition Of West Auriga To Be Accretive To DCF Per Unit
       • Apr. 3, 2014 SDLP 2 Comments

    Summary

    • Seadrill Partners acquired the West Auriga ultra-deepwater drillship in March.
    • West Auriga is a modern ultra-deepwater drillship that has comparable or superior technical-capabilities to other competing ultra-deepwater rigs.
    • The acquisition of this rig should increase the company's DCF per unit from $0.523 to $0.656 on a quarterly basis even after accounting for dilution.
  • Ensco Is Well Positioned To Prosper In Offshore Drilling Industry
    Apr. 3, 2014 ESV 12 Comments

    Summary

    • Ensco has offshore drilling rigs operating in every major area of the world which provides it with protection against regime risk.
    • Ensco has one of the youngest ultra-deepwater fleets among its largest peers and these rigs are greatly preferred by customers compared to older rigs.
    • These modern rigs allow the company to achieve higher margins than many of its peers.
    • Ensco has six new rigs under construction that should increase its revenue and cash flow once they have left the shipyard.
  • Several Geopolitical Events That Could Prove Negative For The Dollar And Bullish For Gold - Part 3
    Mar. 30, 2014 OGZPY, PTR, RNFTF 7 Comments

    Summary

    • There have been several geopolitical events that have occurred recently that show an increasing distrust in the U.S. dollar by foreigners.
    • The large metal producers in Russia currently demand payment from Chinese companies in U.S. dollars or euro, but this may soon change.
    • China and Russia recently signed an energy deal between them that may threaten the petrodollar standard that has resulted in the dollar being the reserve currency.
    • There is reason to be skeptical of the official data from the Treasury International Capital report.
    • Even if that report is accurate, the foreign buying of Treasuries has been in vain.
  • Several Geopolitical Events That Could Prove Negative For The Dollar And Bullish For Gold - Part 2
    Mar. 30, 2014 GLD, FXI, FXE 4 Comments

    Summary

    • There have been several geopolitical events that have occurred recently that show an increasing distrust in the U.S. dollar by foreigners.
    • Foreign central banks have been decreasing their holdings of U.S. Treasuries (see Part 1).
    • In addition to buying eurozone assets, the central banks of some nations have been purchasing gold.
    • Public and private buyers in China purchased over 50% of the world's annual production of gold last year.
    • If Russia ramps up its gold purchases in response to the sanctions, that could also represent a large portion of the world's production.
  • Several Geopolitical Events That Could Prove Negative For The Dollar And Bullish For Gold - Part 1
    Mar. 30, 2014 GLD, UUP, UDN 2 Comments

    Summary

    • There have been several geopolitical events that have occurred recently that show an increasing distrust in the U.S. dollar by foreigners.
    • Foreign central banks have actively been reducing their holdings of Treasuries all year.
    • Some central banks that have been dumping Treasuries have been buying eurozone assets.
  • Could AES Tiete Be Forced To Cut Its Dividend?
       • Mar. 27, 2014 AESAY 3 Comments

    Summary

    • AES Tiete is a power generating company in Brasil that owns and operates hydroelectric dams.
    • AES Tiete sells most of its power to AES Eletropaulo under a long-term contract that ends in 2015.
    • The price that AES Eletropaulo pays AES Tiete for its electricity is well above market rates.
    • AES Tiete is unlikely to secure a similar rate for its electricity starting in 2016.
    • The lower cash flows that will ensue due to the lower rates are likely to force the company to cut its dividend.
  • Don't Sweat North Atlantic Drilling's Debt Load
    Mar. 24, 2014 NADL 28 Comments

    Summary

    • North Atlantic Drilling is one of the most highly levered offshore drilling companies.
    • The long maturity dates on North Atlantic Drilling's debt adds safety.
    • North Atlantic Drilling's new rigs will help increase the company's cash flow and ability to make debt payments.
    • A good portion of North Atlantic Drilling's debt is owed to companies that have interests in ensuring its success.
  • 3 Drilling Companies That Could Be Good Buys In The Current Environment
    Mar. 21, 2014 NADL, SDLP, SDRL 44 Comments

    Summary

    • The difficulties in the offshore drilling market makes near-term capital gains unlikely so we need to buy dividends.
    • Rigs are contracted for long-periods of time with guaranteed cash flow over the contract duration.
    • Seadrill, Seadrill Partners, and North Atlantic Drilling have high dividend yields secured by rig contracts and minimal exposure to the current market.
  • A Closer Look At North Atlantic Drilling's Opportunity In The Arctic
       • Mar. 20, 2014 NADL 35 Comments

    Summary

    • The Arctic regions of the world contain an enormous amount of resources that are relatively untapped.
    • Oil and gas companies are likely to want to tap these resources going forward.
    • North Atlantic Drilling has the only fleet of rigs that are all designed to operate in this area.
    • There is no surplus of these rigs and oil and gas companies are likely to demand more going forward.
    • The company's long contract durations provide for sustainable cash flows.
  • Dr. Copper Shows The Market's Disconnect With The Real Economy
    Mar. 17, 2014 PLUG, SPY, TSLA 13 Comments

    Summary

    • The price of copper is historically a good gauge of the health of the economy.
    • Jim Cramer says that parabolic moves in stock prices are signs of a market top.
    • Margin debt now exceeds levels set in 2000.
    • Market irrationality may continue but risks continue to increase.
  • Seadrill Discusses The Downturn In The Offshore Drilling Market
    Mar. 12, 2014 SDRL 72 Comments

    Summary

    • The offshore drilling market has been negatively impacted by reduced spending by E&P companies.
    • This downturn has primarily been focused on ultra-deepwater.
    • Shallow-water still offers strong fundamentals, but there are some concerns about potential future oversupply.
    • Drilling in Arctic environments remains a good opportunity for Seadrill and North Atlantic Drilling.
    • Seadrill and North Atlantic Drilling have limited exposure to current market weakness.
  • Seadrill Discusses Offshore Drilling Industry Future At Credit Suisse Seminar
    Mar. 11, 2014 SDRL 30 Comments

    Summary

    • Seadrill's large fleet of high-performance rigs gives it a competitive advantage in current market.
    • E&P companies are reducing their exploration spending due to constrained cash flow.
    • Offshore drilling fundamentals still favor contractors over the long-term.
  • Seadrill Announces Stellar Results, Moves To Strengthen Balance Sheet
    Mar. 11, 2014 SDRL 59 Comments

    Summary

    • Seadrill increased its revenue and operating profits on a quarter-over-quarter basis.
    • Seadrill has strong prospects for near-term growth due to new rigs starting their first full quarter of operation.
    • Seadrill's dividend freeze combined with growth will strengthen the company's balance sheet.
  • A Few Reasons To Be Bullish On Gold
    Mar. 9, 2014 GLD, IAU, PHYS 25 Comments

    Summary

    • Gold has been the best performing asset year-to-date.
    • China and Russia continue to amass huge quantities of physical gold.
    • Banks that are short gold are being forced to close their positions due to Fed taper resulting in a short squeeze.
    • The U.S. currency is the reserve currency mostly because of the petrodollar standard.
    • Russia has threatened to leave the petrodollar standard and dump its Treasury holdings due to the current events in the Ukraine.
  • Seadrill's Pemex Contract Increases Financial Flexibility Going Forward
    Feb. 26, 2014 SDRL 28 Comments
  • Novatek: From Russia With Love
    Feb. 26, 2014 NOVKY 2 Comments
  • Argosy Property: A Stable New Zealand REIT With Forward Growth Prospects
    Editors' Pick • Feb. 24, 2014 IGPYF Comment!
  • Seadrill Appears Able To Sustain Its Dividend As Long As Industry Weakness Is Short Term
    Feb. 18, 2014 SDRL 73 Comments
  • Prosperity REIT: This Hong Kong REIT Could Deliver Very High Returns To Investors
       • Feb. 17, 2014 PREUF 3 Comments
  • What Can Walmart Tell Us About The U.S. Economy - Part 2
    Feb. 14, 2014 WMT 13 Comments