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Old 07-23-2015, 03:51 PM   #341
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That's the 25th of August, isn't it?

Yes it is, they released their Operational Review yesterday and when I saw investor call on the 25th I assumed it would be July but actually I guess the prefer to let their investors sit on their operational report and projections for a month before they are willing to discuss their own report.

What they are doing shows how you can be GREAT in field production operations and still fail due to business planning.

BHP added another 10% addition to their long term debt in Euros of 2.2 Billion, while paying 3.2 Billion dollars in dividends. Their investments from the recent past are being written of as "non-cash" but they are non-cash in the sense of the cash was already spent to buy the assets and sits on the books as Long Term Debt. Why anyone would lend this company 750 million Euros at 1.5% for the next 15 years is beyond me, why is buying these worthless bonds?

Again this year so far they are taking over 6 billion dollars of expenses to their income statement due to past transactions:
2.8 Billion as writeoff of 2011 purchase of US oil properties
2.1 Billion for write downvalue of assets spun off as new company - South 32
0.4 Billion sales for Copper in 2014 that had price reset based on actual prices
0.8 Bilion for impairments of Copper assets

The total is equivalent value to the writing off of all the accounts receivable the company holds. BHP as the chart on page 3 of the operational review shows is only now having their hedging roll over and they are counting on stopping investments in new production and pushing present production as much as possible to get efficiency gains in production realized in cost and gain as much cash as possible. When you speak of mines this is possible only for short periods as you mine out your present locations and need to spend capital to get at additional levels of production.

Their plan of recovery is basically they expect commodity prices to improve 20% in 2016 to make them cash zero operationally after dividends. Stock down 22% so far this year and 65% from the top the market is now starting to price in the fact they are going to be very profit challenged coming up here.

If oil stays below $50 for the second half of the year the larger oils will get punished as COP now is as the results from lower prices becomes apparent to shareholders. That COP raised their dividend in April was foolish, their ownly hope for success is that oil goes back over 70, and to increase the dividend in the stock to give shareholders a sign that you are confident this will happen shows I think the weakness of leadership in that company. None could know what the price of oil will do for sure, the most accurate price for the future is the prices you have before you today.
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Old 07-23-2015, 07:15 PM   #342
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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!
SDRL is an interesting case that I'm watching closely. I ended up picking a few hundred shares up at ~ $10.

They're getting beat down because people don't think off-shore / jack-up rigs will be utilized with oil in the 60's or below and because of debt exposure (they have $3B in exposure on new rig-contracts). *this is the bad*

Here's the good:
- SDRL has ~ $1B in cash or near cash assests on hand, and has close to $7B in assets.
-While SDRLs quarterly earnings have been beat down, the P/E is hovering around 3.5 at current prices. Even if earnings fall to .10 for the next three quarters, the P/E will still be less than 10.
-SDRL and Transocean are the two big names in this industry and SDRL is way ahead in terms of fleet age.

This seems oversold to me... It reminds me a lot of AA, which got hammered down to $5/share in the 2008 downturn, then rebounded to $20/share.

Anyone else tracking this with some interest?
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Old 07-23-2015, 09:05 PM   #343
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Anyone else tracking this with some interest?
Yep. If it (ever) gets back to my cost basis you will be very happy. Bought it when it was cheap. Bought more when it got cheaper. Went all-in when it got unreasonably cheap. Unfortunately (for me) it's even cheaper yet. Ugh. Not enough cash to lower cost basis significantly now so I wait.
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Old 07-23-2015, 10:06 PM   #344
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I owned FCX in the high $20s last year and sold for a bit of a loss in the mid $20s. THANK GOODNESS!

Today it dropped to $13.50.

One might consider that low demand for oil and low demand for copper could mean world growth is not what we are being told it is.
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Old 07-27-2015, 02:04 PM   #345
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WTI is starting to look sexy again.....


47.46
USD/bbl
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Old 07-27-2015, 06:47 PM   #346
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Wow - oil down again. Commodities crashing. Gold under $1100. China selling off again. It just doesn't stop!

Often this means some large bets were wrong and the selling forced at low prices. But if it's really China malaise behind this, it may be more structural and long lasting.
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Old 07-28-2015, 10:36 AM   #347
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Wow - oil down again. Commodities crashing. Gold under $1100. China selling off again. It just doesn't stop!

Often this means some large bets were wrong and the selling forced at low prices. But if it's really China malaise behind this, it may be more structural and long lasting.

Interesting in that as oil has been dropping again the last few days, my midstream MLP's are bouncing up during the same period. I read something about an unexpected increase in rig counts, which for pipeline companies, may be good news.

edit: now I see CVX is up 3.5% today, too.
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Old 07-31-2015, 01:09 PM   #348
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CVX hit a 52 week low today. Big drop in profits.


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Old 07-31-2015, 01:16 PM   #349
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CVX hit a 52 week low today. Big drop in profits.


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That hurts. CVX is 6% of my overall portfolio. I just hope they don't have to lower their dividend.
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Old 07-31-2015, 04:19 PM   #350
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What do I know, I tried to short Exxon yesterday when it spiked to $91.50 by buying April $95 puts and selling Feb $90 puts for a price of $3.50. It would have filled at $3.55 but I wanted $3.50. One day later and that spread is worth $4.40.

Sigh.

My take is if you want to play the oil rebound, buy the drillers. They have been absolutely crushed. I don't know how this has played out yet but I think Exxon is overvalued at this level even though they do make good money on refining. I really expect Exxon to fall to the $75 or $80 range soon if the oil slide continues.
Boy were we all so wrong in this thread. Pretty much nothing we suggested buying worked out, and the only good idea I had, shorting Exxon expecting it to fall to the $70s, I did not execute.

One person suggested LNCO, which at the time had drastically dropped to $10 or so. Now it is $3.90!
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Old 07-31-2015, 04:22 PM   #351
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Just waiting for some iran news to pop...


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Old 07-31-2015, 04:23 PM   #352
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What was interesting was the note from Exxon that despite cutbacks in capital spending and shutting down unproductive wells they still estimated that 2015 total production would rise 4-6 percent over 2014. With all the oil companies continuing to push production there is not the normal drop in production that occurs with a rapidly falling oil price.

Oh and Chevron announced they are stopping their share repurchase program to conserve cash. Chevron spent 5 billion in 2014 supporting the stock price at between 120 and 100. Management compared this Chevron did state they are on target though to increase oil production by 25 percent by 2017.
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Old 07-31-2015, 06:45 PM   #353
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But is my dividend still secure?
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Old 07-31-2015, 08:54 PM   #354
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Update on some of the frequently mentioned stocks on this thread:

XOM was at 90 at the start of this thread was 83.79 on 3/31 and closed today at 79.29
UCO was 16.6 at the start and was 6.96 and is $5.50 today ignoring the 1:5 reverse split
COP was at 66 at the start on November 28th 61 on 3/31/15 when the board voted to increase the dividend and closed today at 50.37
CVX was 108 back when Chevron's finance team was busy spending 5 billion buying the stock in November 2014 was 101 on 3/31 and closed today at 88.45 as the finance team says "no mas" on share buybacks
PEO was at 24 at the start 22.5 on 3/31 and 20.48 today
NADL was 2.43 at the start fell to 1.18 on 3/31 and close today at 0.91
SDRL was 14.66 on 11/18/14 9.65 on 3/31/15 and closed today at 8.91
BHP was 51.63 on 11/28/14 46.47 on 3/31/15 and closed today at 38.37

One year ago Boone Pickens was sure Oil would not fall below $70 in the slump and now he is certain it will recover to $70 by year end.

Pickens: WTI Oil Not Likely to Fall to $70 a Barrel - Bloomberg Business

Boone Pickens: Why I€™m standing by $70 oil by year end

Of course US oil inventory continues to grow:
Weekly U.S. Ending Stocks of Crude Oil and Petroleum Products (Thousand Barrels)

While possible this is the bottom, it seems unlikely to me. Oil companies individually keep expecting production for the rest of producers to result in 6 percent decline while their own production will have 4-6 percent increases, the projections of the individual companies simply don't match the market overall expectations. Seems like a global game of chicken with oil production.
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Old 07-31-2015, 09:17 PM   #355
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That hurts. CVX is 6% of my overall portfolio. I just hope they don't have to lower their dividend.

Per CNBC.....
Chevron said maintaining a strong dividend was its No. 1 priority and the company was committed to covering the dividend from free cash flow in 2017, and not just at the previously stated oil price of $70.


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Old 07-31-2015, 09:38 PM   #356
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Did Boone ever run a big company in the business?

Or was he relatively a minor player?
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Old 07-31-2015, 09:58 PM   #357
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Per CNBC.....
Chevron said maintaining a strong dividend was its No. 1 priority and the company was committed to covering the dividend from free cash flow in 2017, and not just at the previously stated oil price of $70.


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BofA, SunTrust say dividends are safe - Jul. 22, 2008
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Old 07-31-2015, 10:08 PM   #358
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Chesapeake Energy (CHK) cancelled their dividend a week or so ago.

There will be more bloodshed before crude oil (and natural gas) bottoms. Expect a long run of low prices, unless the Middle East blows up.
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Old 07-31-2015, 10:09 PM   #359
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I was just passing on what I read.... I certainly don't know. I dabbled when Exxon broke under a hundred and got cold feet and sold after it dropped a couple bucks. Best losing investment I ever made!


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Old 08-02-2015, 12:36 PM   #360
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I was just passing on what I read.... I certainly don't know. I dabbled when Exxon broke under a hundred and got cold feet and sold after it dropped a couple bucks. Best losing investment I ever made!


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I've been buying and selling XOM and CVX this year on their bigger dips (and there's been plenty of them) I'll usually sell within a few days when they rise a point or two. So far I haven't got caught holding more than a week. Yes, I know, it's not much different than casino gambling/sports betting. Example, I bought both XOM and CVX this Monday and sold them both on Tuesday for a nice profit. Something interesting to bet on until football season starts up again. I was thinking about buying again on Friday (big drop for both of them after their earning announcements and they missed their numbers) but thought I'd watch again for a while. At some point I'll probably start buying and holding these again.
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