I like Oil

aaronc879 said:
I sold almost all of mine at $3.60 only about a week ago. It literally hurts my head to think about how much more money I could've had if I held it one more week. I still made money as I bought multiple times between 2.25-3.50. I didn't want to be a "hog" and get slaughtered so I sold early. Oh well. I kept 1000 shares so that's worth something at least.
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My gamble has all been on the midstream MLP sector using AMLP etf. I plan to keep it "forever". Currently I will get around $24k per year from income and there is a long track record for steady distribution growth. My expectation is yearly growth around 5% or so. Given that my living expenses are around $28k this is a significant amount for me.
 
aaronc879 said:
I sold almost all of mine at $3.60 only about a week ago. It literally hurts my head to think about how much more money I could've had if I held it one more week. I still made money as I bought multiple times between 2.25-3.50. I didn't want to be a "hog" and get slaughtered so I sold early. Oh well. I kept 1000 shares so that's worth something at least.
Click to expand...

I thought in March you bought around 15,000 shares? You sold them all but 1000?

That is exactly the amount I still have of SDLP. I sold 4000 for $3.50 that I bought for $3.05 but kept 1000. Today it is $5.17. Kind of sickening.

Even worse though I sold all of my Gilead call options for a profit when it hit $93 and today it is near $101. Missed out on about $30,000 there.
 
Fermion said:
I thought in March you bought around 15,000 shares? You sold them all but 1000?

That is exactly the amount I still have of SDLP. I sold 4000 for $3.50 that I bought for $3.05 but kept 1000. Today it is $5.17. Kind of sickening.

Even worse though I sold all of my Gilead call options for a profit when it hit $93 and today it is near $101. Missed out on about $30,000 there.
Click to expand...

I was considering buying 15,000 but ended up buying 9500 total between $2.25-3.50 then sold 8500 at $3.60. The 9500 shares equaled nearly 20% of my liquid net worth so missing out on this big run up is a big deal for me. Oh well, at least I didn't loose any money.
 
I figured things would be down today but just checked and AMLP is up 2.70% to $12.19 now. I'll take a look latter and see what happened.

This might catch up to my avg cost of $13.80 before I can invest anymore money. Oh well. I'll be glad to put money into something else for a change.

If any of you feel like you don't want to miss out, you can still buy into AMLP for a cheaper price than I did overall. :facepalm:

Maybe I will look at buying some SDLP after AMLP passes $13.80 mark. :LOL:
 
So dividend payout info has come out which is a good time for an update on my oil/MLP gamble.

Well this is unfortunate, the AMLP mlp etf has roughly a 25% dividend cut for this quarters payout. Not sure where that came from as last time I looked at individual companies they had all raised or maintained.

Anyway, I changed my portfolio back on April 26 and took a $24k capital loss selling down on AMLP. AMLP is still my largest holding though. I also sold off my individual stocks (at a profit) and consolidated everything into ETFs or CEFs.

Current portfolio looks like:

29.36% in MLPs ETF (AMLP)
26.35% in Global REIT/Utility/Infrastructure CEF (DRA)
11.83% in Mortgage REITs ETF (REM)
11.18% in MSCI World idx, Covered Call CEF (EXG)
10.99% in S&P 500, Covered Call CEF (ETY)
10.21% in BDCs CEF (FGB)


Main reason for changing was I just became uncomfortable going all in.

I have no plans to sell anymore shares. Not entirely sure where I will allocate dividends though.
 
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What will we hit next, $30 or $60?


Sent from my iPhone using Early Retirement Forum
 
Closes over $50 since July.

That's the alert I get from the CNBC app on my iPhone.
 
I am done betting on oil. I got hurt. If oil goes back up, I may go back to work for a while, but that's it.

Sent from my SM-G900V using Early Retirement Forum mobile app
 
Oil must have gotten ahead of itself. It finished above $50 earlier in the week. Then dropped and today the alert I got on my iPhone said increased rig count. So the oil companies are increasing production or something?
 
explanade said:
Oil must have gotten ahead of itself. It finished above $50 earlier in the week. Then dropped and today the alert I got on my iPhone said increased rig count. So the oil companies are increasing production or something?
Click to expand...

U.S. rig count is an indicator of drilling activity. That really doesn't mean all new production. New wells are drilled for a variety of reasons with varying lead times. In simple terms:

New production can be drilled, but not brought to completion to "hold" a ground lease permit obtained up to 18 months ago.

New drilling can be for a re-completion of an existing well to try to obtain additional well life.

Leases can be drilled to replace played out wells to maintain existing levels of production. Oil companies have to do this to stay in business.

Exploratory wells are sometimes drilled to conduct tests to evaluate the extent of the pay zones.

There are also "workover" rigs used in the field to "fix" wells with production problems but they are not counted in the rig count.

Hope this helps.
 
Yeah it does.

But can oil going up in price stimulate these drilling activities?

Or are you saying a lot of this activity might have been planned awhile back, before they knew which way the oil price was going?
 
explanade said:
Yeah it does.

But can oil going up in price stimulate these drilling activities?

Or are you saying a lot of this activity might have been planned awhile back, before they knew which way the oil price was going?
Click to expand...

Yes to both questions.

Oil is a worldwide commodity.

What drives oil sales is supply and demand. No one knows what the price of oil will be tomorrow or next week.

Oil companies MUST replace what they sell or they will go out of business. Any company that sells crude oil has to drill wells (or acquire other companies that have crude oil reserves) in order to stay even with sales. Since it takes months to years to obtain leases and permits to drill, they have a long lead time in front of them.

The oil price you hear from the talking heads on CNBC is the futures contract price bidding. It has nothing to do with current crude sales prices or production levels as they vary based on crude quality, location, inventory, hedged pricing, discounts, etc.

Since the business is so complex and convoluted, the only data point to decide on what's going on across the board, is rig count and futures pricing. Throw in the lack of intelligent/knowledgeable news reports and you have what you have, which is not much.
 
Right... that's partially why the price can vary so widely over years. Since it's a competitive arena being too early or too late can be catastrophic.

For me the only question is when oil will no longer be a primary driver of many parts of the economy. Despite large technical leaps in many areas I still think it's decades away from making big dents in oil use so... I put my 5-10 year hat on when looking at oil companies and believe that oil will probably become much more expensive before it goes away or become a lot cheaper... when... no idea. I've been "long" a few oil companies for over a year now and doing OK generally... not great but not bad. I suspect over the next 3-5 years they will do quite well... but who knows :)

Sent from my HTC One_M8 using Early Retirement Forum mobile app
 
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