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Old 01-07-2016, 12:41 AM   #641
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T Boone Pickens is just killing me! A year ago he predicted by end of 2015 oil would be 70-75. Today he says by the end of the year oil will be 70-75, he was only off by a year!! After stating that Oil then collapses in price. Now I do not pretend to know what the price of oil will be by year end, possible to be 75 also possible to be $15.00. This year is the year of major pain for oil and the related dependent companies if the price does not recover, to bank on a recovery is not a plan, it is wishful thinking. Remember that when you pick companies to invest in......
Yeah. I think Howard Marks said it best... no one has anything intelligent to say about the price of Oil... mostly because the things that impact that are so numerous and unpredictable that it's silly to try and say "it'll be $x by time period Y." It'll be somewhere between 0 and infinity by the end of the year :P.

What I DO think is that there is a reasonable probability that the world will continue to use more oil and that there will be less of it during that time for at least the next 10-20 years; and I think that the companies that can have some ability to profit from that ecosystem will return above average returns to their shareholders based on their price today (assuming they survive). How and when that happens... I have no idea and if it takes long enough... yes... being late/early is indistinguishable from being wrong. All investments are probable outcomes, right :P.

I simply think that the probability of that happening is slightly better than, for example, bonds returning higher than average returns... tech companies... consumer cyclicals, gold, etc. Relative to other opportunities I think oil companies in particular are reasonably cheap... so far they have just gotten cheaper.
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Old 01-07-2016, 08:55 AM   #642
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Yeah. I think Howard Marks said it best... no one has anything intelligent to say about the price of Oil... mostly because the things that impact that are so numerous and unpredictable that it's silly to try and say "it'll be $x by time period Y." It'll be somewhere between 0 and infinity by the end of the year :P.

What I DO think is that there is a reasonable probability that the world will continue to use more oil and that there will be less of it during that time for at least the next 10-20 years; and I think that the companies that can have some ability to profit from that ecosystem will return above average returns to their shareholders based on their price today (assuming they survive). How and when that happens... I have no idea and if it takes long enough... yes... being late/early is indistinguishable from being wrong. All investments are probable outcomes, right :P.

I simply think that the probability of that happening is slightly better than, for example, bonds returning higher than average returns... tech companies... consumer cyclicals, gold, etc. Relative to other opportunities I think oil companies in particular are reasonably cheap... so far they have just gotten cheaper.
Agree, but I believe that the probability of oil and gas survivors outdoing bonds over 2-3 years is very large, not slight. Meanwhile the oil industry will shrink, and undergo consolidation. Also, in addition to higher probabilities, the payoffs will be much greater. Likely involving a lot more thrills and chills than short to intermediate bonds. But this is as it should be.

Ha
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Old 01-07-2016, 09:09 AM   #643
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Agree, but I believe that the probability of oil and gas survivors outdoing bonds over 2-3 years is very large, not slight. Meanwhile the oil industry will shrink, and undergo consolidation. Also, in addition to higher probabilities, the payoffs will be much greater. Likely involving a lot more thrills and chills than short to intermediate bonds. But this is as it should be.



Ha

Agreed, but figuring out the big winners is beyond me. And just making the simple integrated oil Exxon play isn't going to make untold riches. That darn stock sits like a statue in the wind.....Including dividends, if you bought it at peak 18 months ago, you wouldn't even be out 20%. And yes it does frustrate me because I would jump in if it was in the 50's. Yet, the market isn't going to allow this to happen.


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Old 01-07-2016, 09:13 AM   #644
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Agreed, but figuring out the big winners is beyond me. And just making the simple integrated oil Exxon play isn't going to make untold riches. That darn stock sits like a statue in the wind.....Including dividends, if you bought it at peak 18 months ago, you wouldn't even be out 20%. And yes it does frustrate me because I would jump in if it was in the 50's. Yet, the market isn't going to allow this to happen.


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XOM is even UP today, in the midst of the sturm und drang.

makes me tempted to buy, if it ever goes below $70........
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Old 01-07-2016, 09:23 AM   #645
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XOM is even UP today, in the midst of the sturm und drang.

makes me tempted to buy, if it ever goes below $70........

That trade is way too lazy for your abilities, Coolius. Time for you to make a killing and load up Chesapeake 2017 and 2021 bonds!


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Old 01-07-2016, 09:30 AM   #646
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That trade is way too lazy for your abilities, Coolius. Time for you to make a killing and load up Chesapeake 2017 and 2021 bonds!


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Nah, I don't like the way Aubrey McClendon parts his hair.......
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Old 01-07-2016, 10:35 AM   #647
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Nah, I don't like the way Aubrey McClendon parts his hair.......
But he is long gone from CHK.

Ha
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Old 01-07-2016, 10:40 AM   #648
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Well there you have it, Coolius. Your lone obstacle is out of the way....Load up on those bonds and then you can set up a Gates Foundation in a few years.


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Old 01-07-2016, 11:02 AM   #649
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Just tongue in cheek, Ha.

Mulligan is always trying to send me to the poorhouse...... telling me to buy exotic story stuff that will sprout like the beanstalk in the fairy tale.

He just doesn't like competition in the Trapped Utility Preferred area, wants to keep the whole pie for himself.
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Old 01-08-2016, 02:04 AM   #650
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oh-dark thirty here on the left coast, but the Beeb (BBC) reports that Saudi arabia is considering selling ARAMCO.

If I had a few pence, I might consider buying XOM on spec. Not the best choice? China something may be a better deal. I don't know how to make money on that.

Back to mutual funds for me.
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Old 01-11-2016, 10:43 AM   #651
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OK today with another 5% down leg in oil and Conoco (COP) under the gun for ratings downgrades and needing to borrow 4.7 Billion to pay dividend even with plan of WTI @ 50, COP has found a new low. COP realized nearly $50 per barrel in 2015 for their oil, I read an article almost comically about the CFO talking about how well their company is performing in producing almost 4 percent more oil than a year ago, only problem is they are not profitable unless oil gets back above $60 so they lose more per each barrel produced by they are able to produce it very quickly.

The dividend for COP if oil stays below $40 for another quarter is toast and I think that is being recognized by management and the market and likely for a 75% hit. COP has mismanaged it's cash so badly (it bought back 17% of shares in 2011 and 2012 when oil hit 114 and stock price was around $70, a waste of 14 billion dollars and now issuing shares @42) and then at the same time divesting the refining business to concentrate on their core. A disaster of a plan as the oil market worked out, this stock if oil stays here another 3 months, is going to $20.00.
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Old 01-11-2016, 10:48 AM   #652
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Someone on here told me to short COP...wish I had listened to them.

I did short FCX at $12 but exited that at $11.50. Huge mistake since FCX today is at all time low of $4.50, just a few weeks later.
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Old 01-11-2016, 10:55 AM   #653
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Oil is down to $32/barrel. Every commodity is down. After market close today, Alcoa will release earnings. Will see what transpires.
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Old 01-11-2016, 11:57 AM   #654
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T Boone Pickens is just killing me! A year ago he predicted by end of 2015 oil would be 70-75. Today he says by the end of the year oil will be 70-75, he was only off by a year!! After stating that Oil then collapses in price. Now I do not pretend to know what the price of oil will be by year end, possible to be 75 also possible to be $15.00. This year is the year of major pain for oil and the related dependent companies if the price does not recover, to bank on a recovery is not a plan, it is wishful thinking. Remember that when you pick companies to invest in......

I'm not sure which character I find more amusing Pickens or Dennis Gartner...


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Old 01-11-2016, 12:38 PM   #655
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Even though I am in the oil and gas business, I have nothing to add to this thread except it's going to get worse.

As an example, last week I was in New Mexico inventorying a few hundred conventional and coal bed methane gas wells for a potential acquisition. I get paid well for this part time work, but, I think to myself, why, in their right mind, are they buying low production (and low BTU) gas wells in this business environment?
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Old 01-11-2016, 01:23 PM   #656
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Oil is down to $32/barrel. Every commodity is down. After market close today, Alcoa will release earnings. Will see what transpires.
$31.23 now

Are we gotta big to see it in the $20s?
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Old 01-11-2016, 01:25 PM   #657
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$31.23 now

Are we gotta big to see it in the $20s?
I remember $8, so $20's are still big time. But it won't go to $0.
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Old 01-11-2016, 01:48 PM   #658
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I remember $8, so $20's are still big time. But it won't go to $0.
And I remember when you could buy a new corvette for $2900.

Are we returning to those times?
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Old 01-11-2016, 02:16 PM   #659
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Even though I am in the oil and gas business, I have nothing to add to this thread except it's going to get worse.

As an example, last week I was in New Mexico inventorying a few hundred conventional and coal bed methane gas wells for a potential acquisition. I get paid well for this part time work, but, I think to myself, why, in their right mind, are they buying low production (and low BTU) gas wells in this business environment?
If you have deep pockets, is it not better to buy assets when they are on sale? Of course, I realize no one knows where oil/gas prices will be in the near term but there still seem to be a few folks that don't think everything related to oil/gas is going to zero (and stay there).
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Old 01-11-2016, 02:33 PM   #660
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If you have deep pockets, is it not better to buy assets when they are on sale? Of course, I realize no one knows where oil/gas prices will be in the near term but there still seem to be a few folks that don't think everything related to oil/gas is going to zero (and stay there).

I think what Aja is saying it is all about proper timing and quality of company. A person better be very good at a minimum of understanding the debt loads, capital structure, maturity dates, ability to rollover debt, etc...A lot of moving parts. Check bond prices of issues in relation to par... Those can be very telling and the storm may not be ridden out in the wrong company.
KMI is a perfect example of people going in on a company with limited knowledge and understanding of the situation. People were buying that thing hard while it kept dropping from the 30s and into the 20s just knowing that dividend was "secure and going to grow". Well Mr. Market didnt think so and proved it....Is it a good buy now? I dunno and doubt if I ever do.


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