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I like Oil
Old 08-02-2015, 04:13 PM   #361
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I like Oil

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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.

Carguy, you don't have to apologize for gambling with me. Been at it nonstop since threatened in 5th grade to be beaten with the paddle at school by principal thanks to the teacher busting my betting ring.I was cleaning up as the bookie! And my big bets for this year are already laid. Texans 8.5 over and Panthers and Chargers 8 over. Let the season begin!


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Old 08-02-2015, 08:40 PM   #362
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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.
It never ceases to amaze me how many companies buy back stock at high prices!
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Old 08-02-2015, 09:41 PM   #363
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It never ceases to amaze me how many companies buy back stock at high prices!
Remember that many CEO bonuses are tied to increasing stock prices, which stock buy backs should do.

Most CEO's would not suggest buying back stock that is dropping as it would be viewed as catching a falling knife.
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Old 08-03-2015, 09:33 AM   #364
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Just think about the 401k values, over the past year, for oil patch mega corp's employees that have invested exclusively in their companies stock. I know many who did this. Even after considering the companies matching funds and applying quarterly dividends their 401k's are still way down. I suspect many will hold out for a turnaround.

Good lesson/argument for diversification into other sectors.
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Old 08-03-2015, 09:52 AM   #365
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Didn't Enron employees do the same thing?

And from the same industry and areas of the country they make the same mistake?
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Old 08-05-2015, 02:18 PM   #366
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While nothing extraordinary happened in the oil markets today the several MLP's took it on the chin today MMP and KMI got clobbered and are at new 52 week lows, pretty much all the distribution and pipeline companies with the hedges coming off are now showing they are impacted by this drop in oil prices, most of these companies are heavily dependent on continued borrowings as their business model, not quite to the point of KMI as I posted in another thread, but still similar issues.
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Old 08-05-2015, 02:21 PM   #367
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We're back to regular gas for less than $2.00 here in Ohio.
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Old 08-05-2015, 03:12 PM   #368
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While nothing extraordinary happened in the oil markets today the several MLP's took it on the chin today MMP and KMI got clobbered and are at new 52 week lows, pretty much all the distribution and pipeline companies with the hedges coming off are now showing they are impacted by this drop in oil prices, most of these companies are heavily dependent on continued borrowings as their business model, not quite to the point of KMI as I posted in another thread, but still similar issues.

Although i know didly about MLP, i expect the next couple years will be filled with MLP millionaires landing squarely on their bums as the bust and consolidation phase occurs in oil.


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Old 08-05-2015, 05:58 PM   #369
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Although i know didly about MLP, i expect the next couple years will be filled with MLP millionaires landing squarely on their bums as the bust and consolidation phase occurs in oil.


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Yes, a RBD for some MLPs.
However, if there are millionaires out there based solely on MLP holdings, they haven't learned much about diversification
That being said, this looks like a perfect storm of rising rates and falling oil prices. But many of the midstream MLP's, even with the current steep drops, are still up. MMP is still up 150% since 2011. They can be a very volatile segment. Not for the weak of heart...
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Old 08-05-2015, 07:39 PM   #370
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What is MLP?
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Old 08-05-2015, 08:08 PM   #371
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What is MLP?
Master Limited Partnership
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Old 08-05-2015, 08:36 PM   #372
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Is that a company?
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Old 08-05-2015, 09:14 PM   #373
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Is that a company?
Master Limited Partnership (MLP) Definition | Investopedia
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Old 08-05-2015, 09:21 PM   #374
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MLP is a type of corporate structure that the US government has allowed for tax purposes where the profits are recognized down to the individual shareholders and therefore the distributions are higher because the partners pay the tax and not the corporate structure. Therefore they pay much larger distributions than normal dividends and can be tax advantageous way to receive an income stream. It is very popular with oil pipeline companies such as Kinder Morgan and Magellen Midstream.
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Old 08-05-2015, 09:39 PM   #375
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thanks, so you were talking about MLPs going down in general or specific MLPs?
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Old 08-05-2015, 09:47 PM   #376
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The oil pipeline MLP's that I mostly follow all went down much more than the market today, other sectors that have MLP's I was not referring to
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Old 08-05-2015, 09:52 PM   #377
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thanks, so you were talking about MLPs going down in general or specific MLPs?
Right now, only the oil and natural gas related ones that are associated with oil and gas production, transportation (i.e.pipelines), and storage. Other MLPs, those associated with other industries such as coal and timber, are having bad days on their own merits.
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Old 08-05-2015, 10:00 PM   #378
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Are they cutting their distributions or just their share prices are going down?
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Old 08-06-2015, 08:32 AM   #379
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Are they cutting their distributions or just their share prices are going down?
From what I am reading this morning, one of the biggest hit midstream MLP's, Plains All American (PAA), has been downgraded from 'buy' to 'hold'. They reported that they are planning to hold their distribution steady, but this is a change because they have raised distributions regularly for years now. Further, this particular company is the same one that was involved in the California oil spill near Santa Barbara recently.
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Old 08-06-2015, 10:05 AM   #380
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Oil’s $4.4 Trillion Hole - WSJ

Article in Wall street journal putting dollars to the story of the oil price decline and why this is hurting certain companies so much. It talks of how the industry is coping with an implied drop in one year of 4.4 trillion in revenue when so much of the industry was built on debt expecting those revenues, also that pipeline MLP's which were thought to not be price sensitive suddenly are showing overcapacity of pipelines and counterparty risks.

The article is not significantly different in expectations than the outlook I had at the start of the year, however what is interesting is that many of these stocks are far, far lower about 20-30 percent lower on average than on December 1st.

At this point buying some Exxon would be warranted as they have the financing to take advantage of the situation in the coming years, provided one holds to about 1/2 of whatever a normal position would be, using the other 1/2 if the prices were to fall much further or else later in 6-12 months if the oil industry is showing strong signs of recovery, something I do not expect to happen.

It is probably far more likely Exxon will fall to 70 than go back above 90 but the time for avoiding the oil industry's strong players as doing worse than the overall stock market is probably nearing it's end. I would still avoid like the plague weak players, which are those that really took on a lot of debt to take advantage of high oil and low interest rates as they are still very vulnerable.
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