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PowerShares Financial Preferred ETF Message Board

  • ltbhdollars ltbhdollars Oct 8, 2004 7:39 PM Flag

    Thoughts on O&G Stocks Run Up/Down

    For several days this week, all the Canroys have made obscene daily increases just to get murdered to a lessor degree yesterday and today although NG and Oil futures continue to make highs.

    MHO, again MHO only: volumes today and yesterday are pretty normal while the runup was on 10x voulume for many. I beleieve its a pretty simple answer, there are four or five new fund of trusts starting up and they are filling their folios.

    OGF.UN is a case in point, a 5% position in 20 O&G trusts, its just started trading and of course needed to buy those shares to startup. I would not reco it for a US holder as it is not DTC qualified so taxes WILL be with held in IRAs and Roths and in my experience, its the non DTC stocks that also always seem to have problems clearing distributions in a timely manner.

    Note: timely distribution issues, for me, have on a few occasions been my broker (Ameritrade), have NEVER been the paying company, and are usally the holding company/transfer agent (Cannaccord in my experience is really bad).

    These are Canadian trusts reported to be NON DTC and therefore not recommended for IRAs (but NOT from my personnal experience): AWRRF BLXJF CEANF CLWIF CNGTF CWFOF EGYSF IPPLF KSPFF NNDIF NOIGF PFSRF PMBIF RRRGF SFKUF SPIJF TDGNF TWIF WTSHF.

    Also for those who wish to stay away from partnerships, PGH and PVX (PVX claims they are changing back to a corporation) are partnerships for IRS purposes.


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    • A one paragraph except from a Denintex post on CWEI which pretty well outlines his view of the future of O&G, one to which I also ascribe.

      Begin Quote

      Looking ahead: If the industry were stretched thin at one level that would be one thing, but it is stretched thin at every level, with tightness at one end (production, drilling, transport) exacerbating tightness at the other end (refining and marketing).The industry is one of interdependence, requiring enough crude coming out of the ground to meet customer demand, enough refinery capacity to supply the market, enough tankers to transport the product to market. At every level the boat is leaking and sinking under waves of crushing w/w demand. Repairs will be investment intensive and very long-term in nature. Hence, current trader concerns about supply are not fanciful and are not going to be a short-term experience. Those invested in this sector are at the beginning of a very big bull run. While analysts will find a way to suggest that prices are set to decline $20 over night, and while CNBC will tout their conclusions, a lesson we should have learned by now is not to take stock in the opinion of the highly paid oil analysts, but rather to exercise the common sense of a 10 year old boy. In doing so, we have profited very handsomely and will continue to do so. JMHO.

      End Quote

      Do your own DD and broaden your portfolio horizons. IMHO this is a one of a kind event that will shape country and world economies and politics from today forward


    • Short positions on some I follow. Often Canroy short numbers are greatly influenced by their just having or just about to have a bought deal.

      The bankers will short the stock prior to placement and then cover at the reduced price they pay for the placement shares (at least 5% less than current pps and sometimes the pps number is lower than current pps).

      Symbol 31-Aug-04 15-Sep-04 30-Sep-04
      ________ ________ ________ ________
      AE.UN ......0621714 0867370 1607620
      AET.UN ....0470200 0630661 0302689
      AVN.UN ...1021502 1021070 0828522
      AY.UN ......0728702 0290333 0560700
      BTE.UN .....0646300 0632315 0645555
      CSS.UN .....0152593 0243769 0141800
      EIT.UN ......0039700 0329100 1419300
      ERF.UN ......0499172 0623500 0669190
      NVG.UN ....0105500 0050800 ???????
      PMT.UN .....0246986 0344813 0395988
      PWI.UN .....1663400 0480541 0372683

      As Always

      • 1 Reply to ltbhdollars
      • On sweet and sour but not Chinese. The problems with siting a new refinery, nightmare of permitting, high labor and material costs, blah blah ... US has not built a new refinery since 1976 and almost all require sweet oil as feedstock ... of course sour refineries cost allot more to build too.

        Begin Quote


        SAUDI ARABIA�s oil minister said his country was ready to pump more oil but it could not find buyers as the Kingdom�s high-sulphur crude was being rejected by Western refineries. In a bid to quell the surging price of crude, Ali al-Naimi said Saudi Arabia was ready to pump more crude but gave warning to consuming nations that they needed to invest in new refineries to process Saudi Arabia�s �sour� crude.

        �We have 500,000 barrels a day extra capacity and we are ready to produce now but there are no buyers. Consumer nations need to build sufficiently sophisticated refineries to be able to handle sour crude,� said Mr Al-Naimi, speaking at an oil conference yesterday in the Gulf.

        The Saudi minister�s comments highlight emerging problem of high-sulphur oil reserves. �There�s a difference between sour and sweet crude and what�s on offer now is the light sour crude,� Mr Al-Naimi said. Tightening emission controls over motor vehicles have increased demand from refiners for low -sulphur (�sweet�) crudes, such as North Sea Brent or Nigeria�s Bonny Light, which are easily refined into high quality petrol or ultra-low sulphur diesel fuel.

        However, supplies from Nigeria are likely to be under threat today from a general strike in the troubled West African state where the main labour union is protesting high petrol prices.
        A shortage of sweet crudes, such as Brent and America�s West Texas Intermediate, has driven their prices to extraordinary levels. On Friday, Brent set a new record closing just shy of $50 a barrel.

        A chasm is growing between the premium price of sweet crudes and the discounted price at which the bulk of the world�s oil is sold. The surplus of sour crude is hitting the price of Arab Light, a higher-sulphur crude that accounts for most of the Saudi exports, and the Kingdom has been forced to double the discount at which it is priced against Brent.

        Russian oil, too, is being shunned for its sulphur content. Urals, the main blend of Russian export crude is now trading at more than $7 below the price of US Light crude, compared with just $2 a year ago.

        According to oil industry experts, about 40 per cent of the world�s current crude output is �sweet�, but rough estimates of the proven reserves in the ground show more than 75 per cent is higher-sulphur �sour� crude. A shortage of refineries capable of converting sour crude into low emission fuels suggests continuing price pressure on sweet blends and high prices for consumers.

        �The world is going sour,� said Rafiq Latta of Petroleum Argus, a publication that monitors crude prices. �The only regions where there is room for expanding sweet production is West Africa and Algeria.� North Sea and Texas oil fields have been the largest, easily accessible sources of low sulphur crude but these are now in accelerating decline. For future oil supply, the world will increasingly look to the sour crudes of the Gulf and Russia.

        A lack of refineries equipped to process sour crudes is the problem, according to Julian Lee of the Centre for Global Energy Studies. �America hasn�t built a new refinery since 1976,� he said. Ever-tightening environmental legislation is adding to the pressure on refiners to buy premium crudes, Mr Lee said.

        Even refiners equipped to convert sour crudes are now finding it necessary to buy lighter, sweeter products to produce the new
        ultra-clean fuels.

        End Quote


    • Your post was very informative. Thanks, ltbhdollars.

18.99-0.10(-0.52%)Jun 24 4:00 PMEDT