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User 353732

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  • Penn Virginia: Weak Balance Sheet And Weak Asset Base [View article]
    1. Given the efficiency gains of the upstream industry and the continual reduction in supply chain costs, $70/bbl is the new $90/bbl for US shale. This makes US shale much more competitive than most deep onshore and all Arctic drilling so that during the next price upcycle US independents will see an impressive acceleration in cash flows and resetting of asset values

    2. M&A is likely to be very muted at least until there is evidence that US shale production has peaked for 2015 and there are clear production declines in Latin America, Africa, North Sea and Russia( perhaps by late Spring) suggesting a price upcycle within 6 months following; there is no pressure on potential buyers to make offers and do deals now given that downside oil price risk over the next 60 to 75 days is higher than upside potential

    3. Private capital is the mostly likely source of new equity and debt for small independents rather than asset sales or mergers with other small independents
    Mar 31, 2015. 08:33 AM | 2 Likes Like |Link to Comment
  • Diamondback Energy started at Outperform at Morgan Stanley [View news story]
    Given that most upstream companies are pursuing avenues to lower their production cost structure by 20 to 25% during this price downcycle and institutionalize this reduction via embedded innovation( walking multi pad drilling , microseismic, well automation, refracking e.g) and much better supply chain management , $80 /bbl WTI will be the new $100/bbl.
    The next price cycle does not have to reach even $85/bbl for much of the US upstream industry to achieve record cash flows and hence valuations.
    US shale will be at a decisive competitive advantage versus much deep offshore, globally, North Sea and Arctic drilling( which need oil at or above $90 to $100/bbl to be lucrative) during the next cycle and will also be at a competitive advantage versus new tar sand projects and new projects in Russia.
    Mar 26, 2015. 11:55 AM | 1 Like Like |Link to Comment
  • West Africa Is A Big Part Of Chevron's Plan [View article]
    LNG is an excellent long term business but CVX's execution on major LNG projects, especially Gorgon, has been most unimpressive and shareholders are right to be wary of CVX's projections. No doubt the Company is learning from its mistakes but at current stock prices and given its negative cash flow for 2015, CVX does seem to be a near term buy.
    Mar 25, 2015. 10:35 AM | 2 Likes Like |Link to Comment
  • Investors Presented With Good Entry Point As Duke Energy Earns Bullish Thesis [View article]
    DUK may be a buy at $70 but not at current prices given sensitivity to interest rates and unimpressive foreign operations. DUK would do well to exit via a sale or spin from its international business and focus on organic growth in its attractive domestic footprint.
    Mar 25, 2015. 10:31 AM | 4 Likes Like |Link to Comment
  • American Eagle Energy reportedly starts debt restructuring talks [View news story]
    The stock is already trading at bankruptcy levels. AMZG does have potential and a restructured company post bankruptcy may well be a survivor poised to benefit from the next upcycle. The company has a liquidity but not necessarily an asset problem.
    Mar 25, 2015. 10:27 AM | 1 Like Like |Link to Comment
  • Kinder Morgan: Time To Get Bullish? [View article]
    Why buy any upstream or midstream company now when the downside risks to the entire energy complex over the next 90 days are greater than upside potential?
    Why not just wait until there is clear evidence that US liquids production has peaked for 2015 and the logic of the decline curve is beginning to overwhelm flush production from new wells and that production in Africa, Latin America, Russia and North Sea has also started to decline whilst global consumption has started to increase?
    That may be the inflexion point when worldwide oil inventories also peak creating the condition for the next price upcycle in early 2016........Six months in advance of the upcycle may be the best combination of risk and reward for buying energy equities, including KMI.
    Mar 24, 2015. 02:32 PM | 3 Likes Like |Link to Comment
  • Exxon Mobil: Seeds Of The Next Oil Boom Are Being Sown As We Speak [View article]
    XOM is the perennial stock, not just in energy but across all industries. It is a stock that rewards investors over decades, not just a few years. It is an investors stock but has enough monthly movement to appeal to cautious retail traders.
    However, why buy now as a strategic investment when downside risk to cash flow clearly exceeds upside potential?
    Why not wait till late Spring when it may be obvious that liquids production has started to decline from Feb 2015 levels in Latin America, Africa, North America, Russia and maybe even southern Iraq and global storage levels have peaked.
    Mar 20, 2015. 10:27 AM | 3 Likes Like |Link to Comment
  • Petrobras partner Galp signals year of Brazil delays [View news story]
    Brazil will see declining production over the next 2 years, as will almost all of South America. Combine this with declines in Russia, North Sea and Africa and in 2 years demand growth will have to be met by substantial inventory drawdowns, even at $100 oil.
    In the global oil market all conditions are transient and sharp downcycles are inevitably succeeded by sharp upcycles.
    Mar 12, 2015. 11:43 AM | 1 Like Like |Link to Comment
  • Laredo Petroleum - Brilliant Stock Issuance [View article]
    To benefit from the next price upcycle first a company must survive: most small independents fully understand that: dilution is better than extinction.
    Mar 11, 2015. 02:47 PM | 2 Likes Like |Link to Comment
  • Still not time to buy Exxon or other big energy stocks, analyst says [View news story]
    Late Spring/Early Summer might be the time to buy once there is evidence that a material consumption(up) and production(flat to declining worldwide) response to $50 oil has manifested itself wih the usual 6 month lag.
    If so then by Jan/Feb next year net storage withdrawal will start and the next price upcycle will begin. Quite often the best value is secured about 2 quarters before the upcycle.
    For the next several weeks downward pressure on oil prices is significantly greater than upward pressure. Storage levels worldwide are still rising and the only onshore spare storage capacity in the world is now in the US. What is the hurry?
    Mar 11, 2015. 02:43 PM | 2 Likes Like |Link to Comment
  • Exxon adds proven reserves totaling 1.5B boe [View news story]
    If XOM continues to add reserves organically during the price downcycle while reducing Capex and can produce them during the price upcycle it will continue to create real wealth for shareholders
    Feb 23, 2015. 02:49 PM | 2 Likes Like |Link to Comment
  • If Oil Prices Are Surprising, Then That Can Only Mean Demand [View article]
    1. The futures price is not a predictor but an aggregator of current views. It is as much as captive of the recency effect as any other price or market metric. Traders and investors make( or lose) money by expecting the futures price to be wrong, otherwise a massive amount of transactions would not occur

    2. The futures price is valuable for hedging, of course, but not for investing ; it has about as much inherent insight as the stock rating of a Wall St "analyst" which not only changes every quarter but lags the actual direction of price movement

    3. The current imbalance is about 1.5% of global supply which would be troublesome were it not for the reality that a demand response lags prices by about 6 months and reductions in Capex are generally not manifest in terms of actual output for at least 4 months: after that the logic of the decline curve exerts itself. By Q3 there will be much greater clarity about both the demand and supply responses to $50 WTI. If global consumption does rise by about 0.5% and supply does decline by 0.5 to 0.75% (from current trajectories) then the futures price will aggregate and transmit this information and the curve will shift yet again.
    Feb 20, 2015. 05:09 PM | 2 Likes Like |Link to Comment
  • Strategy of delaying rigs completions makes sense, EOG says [View news story]
    US shale production is now a manufacturing business with the ability to turn operations on and off quite quickly. Drill but not complete is the adaptation of just in time manufacturing techniques to oil and gas production allowing companies to manage cash flow and ROE much better than any other segment of the upstream industry.
    Contrast this with Russian operators who have no ability to ramp production down even if they want to( too cold) and need at least 12 months to increase it.
    Feb 19, 2015. 03:06 PM | 6 Likes Like |Link to Comment
  • ConocoPhillips target upped to $80 at Oppenheimer [View news story]
    Given that these targets change every quarter and contain no insight, retail investors are much better off relying on their own view of prices and conducting their own company analyses.
    Wall St is in the business of creating proprietary trading and transactional profits for itself; not making retail investors rich.
    Feb 19, 2015. 01:32 PM | 7 Likes Like |Link to Comment
  • Pioneer Natural Resources: Core Assets Economic At $60-$65 Per Barrel Oil [View article]
    Just because PXD can produce from core assets at $50 does not mean that it should. Shareholders will benefit far more if the resource is conserved and produced during the next price upcycle, which could be less than a year away.
    Margins not volumes create wealth.
    Feb 19, 2015. 01:27 PM | 2 Likes Like |Link to Comment
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