Seeking Alpha
View as an RSS Feed

Power Hedge  

View Power Hedge's Comments BY TICKER:
Latest  |  Highest rated
  • Bakken Update: Kodiak's Well Results Are Better Than Brigham's [View article]
    Statoil is one of the most undervalued oil companies on the planet right now. I think that some investors see that the Norwegian government owns about 2/3 of the shares and get scared off by that.
    May 29, 2012. 12:14 PM | Likes Like |Link to Comment
  • Deepwater Oil Investing [View article]
    Good article, but I do agree with goldenretiree on the choice of companies.

    Rowan is primarily a shallow-water operator. I just had a look at their fleet and I don't see any rigs capable of operating in more than 5000' of water, let alone the 7500' that defines ultra-deepwater. The company does have three drillships under construction, but that's it.

    You spend a lot of time discussing ultra-deepwater here. I agree with you that there is a lot of growth potential in ultra-deepwater... but then why exclude Transocean (http://bit.ly/oeANwU) which has the biggest ultra-deepwater fleet in the industry? Ensco is primarily a shallow water driller (there is an attempt to focus on deepwater but the fleet right now is more than 60% jackups which are only good in < 400' of water) but they are actively building up their deepwater and ultra-deepwater fleet as a part of a company focus on that arena.
    May 24, 2012. 03:16 PM | Likes Like |Link to Comment
  • Seadrill Can Afford Its Recent Dividend Increase [View article]
    As did Frontline (FRO) a while back. You're exactly right to advise caution. Offshore drilling is a cyclical industry and I fully expect that the company will end up having to cut its dividend when it can no longer afford to pay it. That's one reason why I advise caution with it... and it's why I'm looking so closely at the financials when they announce something like this.

    The company looks well-positioned until at least 2014 given the industry fundamentals. You definitely don't want to let this one be a buy and forget stock and it's one that should be followed pretty closely.
    May 24, 2012. 10:05 AM | 2 Likes Like |Link to Comment
  • Chesapeake's Lesson For The Oilpatch [View article]
    Every one of Suncor's oil sands projects coming online to grow production has an IRR of at least 15% at $85 per barrel crude.

    The company has flat out stated that it's cost of production per barrel is somewhere around $42 and it is trying to get it down to $35 or so.

    The cost per barrel was trending down and then it increased during the first quarter. It should go down in later quarters.

    Suncor would still be profitable at $85 per barrel oil.

    It definitely wouldn't be if oil falls too far though, that's true. And you are correct that their cost per barrel is higher than conventional companies (it costs something like $4-$6 to produce a barrel in Saudi Arabia).
    May 22, 2012. 03:04 PM | Likes Like |Link to Comment
  • Suncor Share Buyback Deal Confuses Investors [View article]
    I agree with the commenters here. This isn't really a bad deal for Suncor. The company isn't trading or gambling with options. They're basically writing cash covered puts against their own stock. If the stock doesn't hit the strike price then Suncor keeps the premium. If the shares do fall to the put price then it ensures that Suncor buys the shares when they're undervalued.
    May 22, 2012. 11:40 AM | 1 Like Like |Link to Comment
  • Seadrill Can Afford Its Recent Dividend Increase [View article]
    Most companies that are associated with John Fredriksen (including SeaDrill) have a similar dividend philosophy. The man loves his dividends and he tends to use quite a bit of leverage to boost ROE.

    SeaDrill has the highest ROE in the offshore drilling industry and the highest dividend. It's also got the highest debt.

    Fredriksen is the chairman of SeaDrill and the singularly largest shareholder. He directly owns roughly 23% of the company and has short put options which give him exposure to another ~4 or 5% of the shares at an average price of $42.
    May 21, 2012. 09:46 AM | Likes Like |Link to Comment
  • Seadrill: Earnings Results Show Strong Fundamentals [View article]
    You're exactly right... but he doesn't have to take physical delivery of the shares. I believe that he can settle in cash in which case he'll have to pay the difference between the $42 or so strike price and whatever the price is at the end.

    I'm not convinced that it will actually affect the price even if he does take delivery in shares but it might. It depends... if the buyers of the put options already own the shares then they may just sell them to him for the $42 per share. No net new purchases in the market on option expiry day. However, if they are all speculators, then the owners of the put options might buy the stock in the market and then turn around and sell them to Fredriksen at $42. That would apply buying pressure to the market and may drive up the share price.

    Short answer - it may affect the stock price but I can't say for sure that it will. This isn't really a short squeeze per se since Fredriksen didn't short the stock. In effect, he actually bet that the price would go up (he went short a put option) and then he'd profit off of the options. That obviously hasn't happened yet.
    May 17, 2012. 01:36 PM | Likes Like |Link to Comment
  • The Case For Telefonica S.A. [View article]
    I agree with you on this one. I'm deeply in the red now on the shares that I've been buying since it was in the high teens. I'm still accumulating shares at this level and will probably begin reinvesting the dividend to buy more ADRs.

    I'm thinking that this is one of those cases where fear has gotten the better of people and causing them to panic sell. I don't mind losing some paper money short-term. The stock will almost certainly come back once the fear subsides and I intend to be there to enjoy the profits!
    May 17, 2012. 10:19 AM | 1 Like Like |Link to Comment
  • 5 Stocks Yielding Over 4% From 'Safe Haven' Norway [View article]
    That's how I prefer to do it as well. You're right, the tax laws depend on where you're at.

    Statoil just increased its dividend this year to NOK 6.50 per share. Which one did you use here?
    May 15, 2012. 11:00 AM | 1 Like Like |Link to Comment
  • 5 Stocks Yielding Over 4% From 'Safe Haven' Norway [View article]
    Kudos to you! I think this is the first article I've seen on in the U.S. financial media (other than my own) that actually had the correct dividend yield for Statoil.

    For people that don't know, Statoil's last dividend payment was about $1.10 (not $0.92 like most sites claim). The dividend is subject to a withholding tax of 15% which lowers it to the more commonly quoted figure. You can claim this through the foreign tax credit so, essentially, the commonly quoted dividend yield is after tax. American companies are quoted with their pre-tax dividend so it's rather misleading.

    http://bit.ly/zw7Mwu

    The author in this one looks to have used the pre-tax dividend to compare Statoil to other companies here such as SeaDrill which has no withholding tax (because it's a Bermudan company headquartered in Norway and not a true Norwegian Allmennaksjeselskap).

    Thanks for the article!

    SDRL increased their dividend yesterday. The new dividend is $3.28 per share for a yield of about 9%. The company is also paying out an additional $0.15 per share special dividend this quarter.
    May 15, 2012. 10:08 AM | 2 Likes Like |Link to Comment
  • Seadrill Is Likely To Increase Dividends Going Forward [View article]
    No, it's a Bermuda corporation. Their dividend policy does bear some similarities to REITs or MLPs though (although they do not pay out 90%+ of their cash flow).

    Dividends from the company are taxed at the regular 15% rate in the U.S.
    May 14, 2012. 10:12 AM | Likes Like |Link to Comment
  • Seadrill Is Likely To Increase Dividends Going Forward [View article]
    SeaDrill has been holding up surprisingly well and lately it's been one of the least volatile stocks in the industry (usually it's one of the most).

    The stock is down pre-market so you may get a buying opportunity today.
    May 14, 2012. 08:42 AM | Likes Like |Link to Comment
  • Seadrill Is Likely To Increase Dividends Going Forward [View article]
    SeaDrill increased their dividend in today's conference call. The new dividend is $0.82 per share per quarter plus a $0.15 special dividend.

    Overall, the results look pretty good but I haven't had a chance to review them in depth. I'll be doing an analysis as soon as I can.
    May 14, 2012. 08:40 AM | 1 Like Like |Link to Comment
  • As Oil Prices Continue To Slide, These Dividends Become Much More Attractive [View article]
    The only reason I've been able to come up with is that they're being hit by declines of oil prices and the overall market.

    SDRL is actually up in the last month though... or at least, it was until the last day or so. It's down now to $35.75 or so. I just added to my position. I wouldn't be surprised to see their dividends go up again. Probably not this quarter, but maybe by the third or fourth quarter.

    SDRL is actually trading at a premium to OCF versus the other drillers, so maybe that's a reason. Then again, all the drillers are being hit (but SDRL has been holding up better than ESV or RIG).
    May 8, 2012. 12:00 PM | Likes Like |Link to Comment
  • More Overlooked Stock 'Bargains' [View article]
    SeaDrill has sold their position in Ensco. However, I do agree with your position that it's a good company. The industry fundamentals and trends are also looking quite promising.

    As CommodityRun points out, SeaDrill's earnings do fluctuate a lot based on their investment results. The cash flows though are quite promising. The company's strategy is to pay out most of their cash flow from operations while using debt to finance their rapid fleet expansion.

    They are more heavily leveraged than their competitors but so far it has worked quite well for them. The company uses interest rate swaps to hedge their interest rate exposure. This caused them to take a paper loss in Q3 2011. The company also took a paper loss in Q4 2011 due to a writedown of shares in Archer. This swung the net income to a loss but cash flows were still positive and the company raised their dividend.

    Overall, I like the company but their model is a bit different from some of the other drilling companies.
    Apr 30, 2012. 12:25 PM | 4 Likes Like |Link to Comment
COMMENTS STATS
1,019 Comments
1,489 Likes