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Old 07-07-2015, 01:41 PM   #321
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Seadrill went down to $8.97 today and then shot back up to near $10...all in a couple hours.

Volatility!
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Old 07-07-2015, 03:08 PM   #322
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What specific companies or ETFs are you adding or waiting to add
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Old 07-07-2015, 04:14 PM   #323
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Personally for me it's more about the particular company. I added NOV today because they got hit hard by a few things. I also added to HP (oil company not computer company ) and Exxon.

I think NOV and HP are very well run companies with low debt a d differentiated offerings. I like Exxon because they are massive and also relatively good at managing debt.

I'm avoiding the higher dividend payers that also run huge debt loads and payout ratios approaching or exceeding 100%. If interest rates go up they will struggle and it's hard to break a debt addiction in a low oil price environment. That will allow the companies with string balance sheets to have more decisions: acquire, shore up, etc.

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Old 07-07-2015, 04:34 PM   #324
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I am tempted by the refiners, because they must be making money hand over fist with current gasoline prices and the low cost of oil.

I was inches away from taking a large stake in Valero when it was $35...now it is $65
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Old 07-07-2015, 05:01 PM   #325
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I was inches away from taking a large stake in Valero when it was $35...now it is $65
We've all 'been there' unfortunatly

As far as oil stocks, I started a position in Conoco Philips (COP) back in /march ?
Bought 50 shares in the mid 60's & 50 more for around 61.

Sold June 29th for a small loss.
Just don't trust oil in the current political environment.

The militant ones are even against natural gas. (not clean enough for them)
I believe the next president will also be a democrat & don't see the forces against oil doing anything but strengthening going forward.

All this IMHO
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Old 07-07-2015, 05:47 PM   #326
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If you like oil, you should love coal.
Ahhh, coal...the stuff diamonds are made out of....if you have the patience.
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Old 07-08-2015, 07:35 AM   #327
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Hearing of every available tanker already full and Saudi Armco pledged to not let up on volume when Iran gets permission to ship the potential downside on oil looks ominous. The next month won't be boring anyway.


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Old 07-08-2015, 09:44 AM   #328
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Hearing of every available tanker already full and Saudi Armco pledged to not let up on volume when Iran gets permission to ship the potential downside on oil looks ominous. The next month won't be boring anyway.


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got a source/reference? Been watching barrel price, just trying to gauge how bad the drop is going to be when the capacities are finally near max. I'm still sticking with my prediction from before we are going to have a second big price drop and some fallout from it.
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Old 07-08-2015, 04:41 PM   #329
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Well BHP is the poster child and a small study of what has occurred worldwide.

It is heavily in the commodities that have been in oversupply, and one of the major players in creating the oversupply. In 2008 it had 8 billion in debt and has borrowed another 22 billion to get to 30 million in long term debt at advantageous rate of 4 percent due to worldwide interest policies.
in 2011 on 72 billion in sales it had 5 billion in annual depreciation costs now with 71 billion in sales and falling it has 9 billion in depreciation.

It has another 12 billion in commitments for another 8 projects it has undertook, main attraction appears to be proposed split of their minerals division from the commodity oil and gas properties. Which will increase total debt to about 40-45 billion dollars, (currently with short term debt BHP's total debt is 35 billion dollars. While it is not costly in low interest rate environments to only pay 1.5 billion in interest on such a large sum of debt, this company has positioned itself for long term bull market in commodities in a time when commodity prices are in a major bear market, yet this stock is only off from 100 when the strategy appeared to be a very smart move.

From it's most recent presentation on 6 month performance review of July - Dec 2015:


From it's review you can see the 131 million barrels of oil realized an average sale price of 85 dollars per barrel, meaning the price decline of oil has not yet hit BHP. However taking that 131 million of production doubled for yearly production, if it sells for $45 per barrel you have a decrease of 11 billion dollars of sales forthcoming in 2015 just from oil (15 per cent of sales), with all of these dollars falling from the bottom line, meaning at 45 dollar oil BHP as a company is not profitable. I do not think this is reflected in the current stock price as investors instead are focused on the 85 realized and the dividends paid from that as opposed to the future with 45 dollar oil.

If you then layer in copper average of $3.00 per lb realized in 4th qtr now at $2.45 I do not see how this company can withstand current prices and maintain it's current stock price. Already they are announcing they are taking 200 million in provisional pricing for copper in the 4th qtr, a 350 million charge for failure of planned asset sale to go through of their Nickel West business and a write down of those assets, a 850 million tax charge for loss of a deferred tax asset in Australia, a 250 million charge for petroleum producing assets in Louisiana and announced while it plans to go forward with it's tar sand oil project it will review to optimize cash flow.

And this is before even discussing their plan to increase Iron Ore production by 30 percent in 2015 even while iron ore prices have dropped even more than oil.

I think this company is a very good proxy for the overall world process in oil and commodities and will be a leading indicator in 2015 of effects of large amounts of low interest debt tied to high production of natural resources.
Time to review this the reality of commodity prices is starting to come home to some of these oil companies as their hedges are coming to an end, and virtually all of them are down 10% or more with BHP down 22%. Amazingly BHP has been using cash to increase dividend and pay down debt, which in about another year will all have to be undone or they will be in serious financial jepoardy.

XOM is starting to get nearer to the 70-75 where they might be a buy, smartest guy in the investment room and look at a chart of XOM and you can see where Warren Buffet sold this year. Chevron and COP have been equally poor this year.

On the 25th BHP will be having an investor first half in review, I look forward to listening to that, I presume Wolfman Jack will be their presenter.
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Old 07-08-2015, 06:29 PM   #330
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Hearing of every available tanker already full and Saudi Armco pledged to not let up on volume when Iran gets permission to ship the potential downside on oil looks ominous. The next month won't be boring anyway.


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The Saudis hate the Iranians, so no doubt they will keep pumping. As for the tanker side, if there were a shortage of crude tankers I would expect to see VLCC rates well in excess of $100k/day (like 150k). We are 80k-ish on spot, 48 to 50k for a 1 year charter.
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Old 07-17-2015, 05:46 AM   #331
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Hay anyone consider the state own companies like PBR, EC, and E.


They do have the oil that the world needs.
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Old 07-17-2015, 07:44 AM   #332
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No. They are badly run and investors will always be secondary to national politics.

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Old 07-17-2015, 08:19 AM   #333
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I am actually planning on selling big oil in the coming months.

Reason is that I've had a good runup with Total (in EUR, so alot of it is currency effects) and don't see the long-term - 20 years+ - potential anymore (greener energy and regulations). Strangely with the drop in oil prices Total barely moved. Guess it was priced in already?

I don't remotely understand enough about the exploration and oil shale stuff, but I can imagine there are some real bargains to be had there at the moment.
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Old 07-17-2015, 10:21 AM   #334
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I don't remotely understand enough about the exploration and oil shale stuff, but I can imagine there are some real bargains to be had there at the moment.
The oil shale leases in the Dakotas and Texas were bought on the way up and at very high prices. Wells are costly to drill and frac ($8 - 12 million each). And in many areas there is no infrastructure (pipelines, gas plants). Now we are starting to see write downs of those lease expenditures since no new drilling is taking place. There will be a bunch of companies having financial trouble in the oil patch because of the write downs. I would wait until WTI oil hits bottom ($40's?) and the shake out occurs before buying anything associated with crude oil extraction/production.
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Old 07-17-2015, 11:04 AM   #335
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Doing some TLH today by selling energy stocks, and buying Vanguard energy fund.
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Old 07-17-2015, 01:29 PM   #336
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Doing some TLH today by selling energy stocks, and buying Vanguard energy fund.
TLH - What does TLH stand for?

acronyms.thefreedictionary.com/TLH
  • Definition. TLH, Total Laparoscopic Hysterectomy.
Do you sell and buy energy stocks every time you do a TLH? Have you considered selling and buying consumer discretionary stocks after performing the procedure?
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Old 07-17-2015, 02:02 PM   #337
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"tax loss harvesting"
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Old 07-17-2015, 05:11 PM   #338
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"tax loss harvesting"
oh.

thank you.


edit: Maybe this isn't correct. Does it mean I knew and forgot? (I don't recall knowing or forgetting what TLH means).
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Old 07-23-2015, 09:04 AM   #339
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On the 25th BHP will be having an investor first half in review, I look forward to listening to that, I presume Wolfman Jack will be their presenter.
That's the 25th of August, isn't it?

BHP Billiton | Corporate event calendar

I looked into BHP today. Your points are all very valid, though I think you mixed up some periods in your original post (2014 vs 2015). I made a few calculations of my own and based them on the planned production increases, and BHP's own expected prices for H2/2015 as published here: http://www.bhpbilliton.com/home/inve...30June2015.pdf, page 3.

Those prices look like reasonable guesstimates for the near-term to me.

Oil is really not their only problem. With copper at 2.61 US$/lb, iron ore at 53 US$/wmt, and Hard coaking coal under 100 US$/t, I can't see them making any money in the second half. That's already assuming they really can expand production and sales as planned.

Their only chance to end up in the black would be some serious cost-cutting, to the extent of 1 billion+ US$. I don't think that's possible while at the same time increasing production across the board.

And if prices do not go up within 6-9 months, the nice dividend is gone. Too bad - At first I thought BHP could be a nice portfolio addition, since I'd like to get some exposure to commodities. I believe their portfolio of iron ore/coal/copper will do quite well in the longer term, and they have the lowest production costs in the industry.

Any suggestions for alternatives? I have a bit of money earmarked for investing that's kinda burning a hole in my pocket.
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Old 07-23-2015, 09:32 AM   #340
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At one time I was following FCX. They had the brilliant idea of diversifying into copper. What a great place to be - Oil and copper.

But, these are two commodities that the world still needs. This is just a link, and nothing more.

Commodities Today: This Copper Miner Is A Buy, But Too Soon To Buy Big Oil Stocks | Seeking Alpha
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