Can one of the longs on this board please provide input on the prospects of Occidental raising guidance going forward due to the Libyan deal. Apparently the analyst at Standard and Poor raised his earnings estimates for OXY this week. If Oxy raised their own guidance that would be very bullish. See below cut and paste.
Standard & Poor's Equity Research maintained a "buy" rating on Occidental Petroleum (nyse: OXY - news - people ), after the company announced its first lifting of oil from Libya in nearly 20 years.
S&P Equity Research said, "The quality of Libyan crude is very high, which should help Occidental's price realizations. The company's domestic onshore operations and its global diversification have allowed it to benefit from the supply constraints produced by the recent hurricanes."
The research firm raised Occidental's 2005 and 2006 earnings estimates to $10.40 and $11.50, respectively, up from $9.50 and $9.70. S&P Equity Research raised the 12-month price target to $102 from $95.
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I wouldn't get too upset. Even AP's make a few errors. I enjoy your discussions and learn from them. I have a small operation in Pembroke and when I'm up there the next time
I'd enjoy having lunch with you if you can break away from your duties at MIT.
Thanks again for your very inciteful discussions.
In the recent past, Oxy has never issued earnings "guidance" to analysts. They do discuss particular projects, expense items, etc. but never project the bottom line earnings. They leave that to the analysts. If I remember correctly, Dr. Hammer used to project earnings but all that did was cause stupid decisions by those under him to make sure the earnings met his projections. When he died and Irani took over, that was the last of the earnings guidance. Someone else might correct me on this, but that's how I recall it happening.
There cannot be a better bullish case for OXY and some other energy stocks. Guidance does not matter. The driving forces for OXY are the spot prices for crude and natural gas. With, say, on average prices of $60 and $12, OXY will coin money in the just past Sep 05 quarter. Based on these spot prices, the high estimate of $3.35 is more likely than the consensus $2.69,
The current quarter may be an all time record with the natural gas hitting record levels, Crude may back down as it accumulates due to lack of refining capacity With about 50% of its revenues coming from natural gas and the increase in the spot price of natural gas more than any weakness in the price of crude, the net will be better in Dec 05 than Sep 05.
In 2006, there will be another hurricane season and with the Gulf water temperature 2 degrees higher than normal. OXY should fare very well again. At $86, or so, per share OXY, earning $3+ per quarter, is a steal over the intermediate term.
PS It best to ignore media noise which tends to downplay energy stocks (ex Bank of America�s former analyst Tyler Dunn wrote in Barron�s a few year ago that crude will settle at $18 per barrel) It also may be wise to ignore down spikes in crude and natural gas which have no fundamental basis, as this is likely to be government intervention in free markets.
Sarbanes Oxley has pretty much curtailed such corporate optamism. OXY did however say the first Libyan production was a bit greater than anticipated.
Having said that, I myself was a bit taken back by Friday's sell off, but attribute it to nothing more than end of quarter window dressing by mutual fund managers.
It would be difficult to regulate that kind of behavior, but it damn well should be outlawed.
I also was stunned that we dropped fri.
but looked like idiot fund managers are
selling all energy stks in a group with
no reguard to Valuation, I see VLO,ECA
as fully valued at these levels.
with BTU and CHK as OVER VALUED Cramer pumps.
and COP,AHC and OXY very UNDER VALUED BUYS...
yet they all trade together, I suspect
that the energy ETF's are having some
effect on this. I hope eventually market
will get back to reality and valuation
go back to proper levels.PS I bought
more calls Fri afternoon.....