I like Oil

[Fermion]

Quote:

Originally Posted by Running_Man If only you could find a forward 30 year contract

Yeah well everyone is talking like oil is going to be under $50 for decades it seems.

Maybe just buy Exxon when it hits $60.

[maloney50]

How is the softball pitch


Sent from my iPad using Tapatalk

[Running_Man]

I like how everyone says oil price has to decline because production is going to fall, here is Norway's oil minister making that point:
Norway's Oil Minister Says Crude Price at $40 Can't Last - Bloomberg Business
And here is Norway's 2015 record production up 10% from last year even with reduced demand:
Norway reports increase in net oil production - UPI.com

You can't make this stuff up

[nerdyJON]

Quote:

Originally Posted by Running_Man I like how everyone says oil price has to decline because production is going to fall, here is Norway's oil minister making that point: Norway's Oil Minister Says Crude Price at $40 Can't Last - Bloomberg Business And here is Norway's 2015 record production up 10% from last year even with reduced demand: Norway reports increase in net oil production - UPI.com You can't make this stuff up

This is the typical Walmart strategy led by OPEC. With other countries getting involved in Oil production, OPEC says great we will make profits minimal (because we have cash reserves) and squeeze everyone else out of production then increase prices again.

Its a classic strategy just executed on the most expensive industry. I can't wait for the December 4th OPEC outlook. That will determine who will chicken out first. Hence why I am staying far away. If someone can explain all the politics behind this one and the rationale then I will be more confident but I think these are macro level strategic political moves.

[Fermion]

Now SDLP is $8.65

Is this because RIG eliminated its dividend today?

I need to dig into SDLP more and see how it is structured. My understanding is that it is essentially a holder of contracts on rigs and would have a hard time eliminating the dividend entirely as this money is needed by majority owner SDRL to fund operations.

On the other hand, at $8.65 the yield is 26%, which seems ridiculously high.

[ESRwannabe]

Quote:

Originally Posted by Fermion Now SDLP is $8.65 Is this because RIG eliminated its dividend today? I need to dig into SDLP more and see how it is structured. My understanding is that it is essentially a holder of contracts on rigs and would have a hard time eliminating the dividend entirely as this money is needed by majority owner SDRL to fund operations. On the other hand, at $8.65 the yield is 26%, which seems ridiculously high.

I believe SDLP is required to payout almost everything. I don't think they can cut if they wanted to.

[Fermion]

Well, I am in for a trade here at 1000 shares for $8.58, which seems like a bargain price but I have had bargain fruit turn out to be rotten on the underside.

[haloFIRE]

Put in a buy today?

I bought a small piece of BBEP with the thought of not paying any attention to it for at least a year...maybe longer.

[Fermion]

Looking to sell my 1000 shares of SDLP today for $1000 more than I bought them for...not sure if it will hit 9.58 though. Maybe I should just be happy with a one day gain of 10%... Edit: Just sold at 9.47. Not quite $1000 but good nuff.

[Fermion]

Oops

SDLP up another 15% today to 10.73

And here I was so happy to sell at 9.47 yesterday.

It was an amazing bargain at $8 two days ago.

[CoolChange]

Quote:

Originally Posted by Fermion Oops SDLP up another 15% today to 10.73 And here I was so happy to sell at 9.47 yesterday. It was an amazing bargain at $8 two days ago.

After swearing off buying individual stocks for many years, I did pick up 3,000 of SDLP @ $8.10 a couple of days ago; with many thanks to the folks on this thread and a considerable amount of dumb luck.

Now, what to do: I have over a paper gain of 36% in two days, happy days! But, this still looks like a good buy to me at the current price; so, I am reluctant to sell. (And, I am still cash heavy anyway.)

Yes, this minor victory was dwarfed by other portfolio losses (again, paper) this months. But, it somehow makes me feel better.

[Fermion]

Sell half for $11, and you essentially own the other half for $5 a share with a $2.20 per share dividend.

[hesperus]

Quote:

Originally Posted by CoolChange After swearing off buying individual stocks for many years, I did pick up 3,000 of SDLP @ $8.10 a couple of days ago; with many thanks to the folks on this thread and a considerable amount of dumb luck. Now, what to do: I have over a paper gain of 36% in two days, happy days! But, this still looks like a good buy to me at the current price; so, I am reluctant to sell. (And, I am still cash heavy anyway.) Yes, this minor victory was dwarfed by other portfolio losses (again, paper) this months. But, it somehow makes me feel better.

what's your investing horizon? I would say that if it were 5 years or greater, just hold.

[CoolChange]

Quote:

Originally Posted by hesperus what's your investing horizon? I would say that if it were 5 years or greater, just hold.

I'm not sure how to answer questions about my investing horizon. Since I hope to live another 60 years and this is a very small slice of my portfolio, we could say 60 years. Truthfully, I do not know what my horizon is for this specific investment.

It seems to me that if they don't go to zero or significantly cut the dividend in the next five years, I will by holding. These both seem like fairly low probability outcomes; so, I am inclined to just hold on for the ride.

[Fermion]

It isn't low probability at all. If for some reason oil stays in the 40s for years, deep water drilling is dead. Done, put a fork in it. Buying SDLP at $8 was a good deal because they have contracts covering the rigs until 2017 and later, but thinking long term on this one is hard because of the issues with oil pricing. I am always a fan of locking away some profit on these riskier ventures. It could easily do a Molycorp in 2019 or 2020.

[Car-Guy]

(Just saw this from Reuters) - Warren Buffett's Berkshire Hathaway Inc disclosed a $4.48 billion stake in oil refiner Phillips 66 , rebuilding a bet it had made in the energy industry before oil prices fell.

[ESRwannabe]

Did some more reading on MLPs this weekend and I feel even better about that sector.

I looked into alternative car fuels to oil and the most realistic change would be to add more flex cars which can handle oil, ethanol, and methanol. Actually its turns out most cars can already do this... It would just be a matter of a software change on the car for most people and they would have a flex fuel car automagically.

Methanol would probably be the best fuel to change to as it is the cleanest burning from what I understand and the US is overflowing with natural gas. I could see the US continuing to change from coal to natural gas power plants and methanol also become the main car fuel.

Anyway, regardless of what fuel is used MLP pipelines would be the best way to transport it.

There is also a bill in congress called the "Master Limited Partnership Parity Act" which would expand MLP status to a lot of alternative fuel sources.

Master Limited Partnerships Parity Act| U.S. Senator Chris Coons of Delaware

I think the MLP sector as a whole is going to be in good shape no matter what energy sources we use in the future. I feel more comfortable investing in an MLP index now, knowing that the sector has some future proofing. If alternative fuel sources take off my guess is that the large MLPs will make acquisitions to stay relevant.

Also saying all of that, oil might be too valuable to be burning as fuel anyway. Its amazing how much stuff oil byproducts are used for (plastics, lubricants, solvents, fertilizer, etc).

[ESRwannabe]

On a related note here is something anyone investing directly in MLPs might want to read:

Obama Tax Proposal Would Spell Doom For Oil, Gas MLPs - Law360

For me if this were passed it wouldn't make much difference as I'm investing in AMLP which is a C-corporation already.

[brewer12345]

Ding! Somebody just rang the bell. If this has legs we may see the largest short covering event in years: Oil Jumps to One-Month High as OPEC Ready to Talk to Producers - Bloomberg Business

[audreyh1]

Quote:

Originally Posted by brewer12345 Ding! Somebody just rang the bell. If this has legs we may see the largest short covering event in years: Oil Jumps to One-Month High as OPEC Ready to Talk to Producers - Bloomberg Business

Seriously!!!

I just looked, and couldn't believe it was at $48!!! When it was $39 on Wednesday.