since early 2005. Does anyone here have a real good explanation for why this is taking place? Many of you argue that this stock is so cheap, it cannot possibly go down any more; however, in a real down turn (which I feel that we are probably now seeing) things correct very quickly and then fade lower for long periods of time until the economy heats up again. With all the bad news out there regarding the broad economy, can someone honestly say this stock will recover this next year? Unfortunately, a slowing economy means less demand, lower prices and lower profits. Any thoughts? I am long, but I think I am about to be spooked out of my long positions. My thought is better to conserve cash for when the entire market hits bottom in the next couple of years instead of losing a good portion of it.
"Recent market volatility does not impact our confidence in the quality of Provident's asset base, the strength of our operations, or the excellence of our people. Our unitholders continue to benefit from the stable, predictable, cash-generating assets in our diverse energy portfolio."
I don't feel that this statement assures the level of the Div. AS there was no reson to put a statement about the 3 months div into he earnings statement, other than to put us on notice that the div "COULD" change if things don't improve earnings wise.
We will see, but that answers the question if the level of the div is in ?
It should not have been a surprise for some time that stock price will be collapsing. Look at the earnings projection in financial newspapers. If I remember correctly, deficit is expected for next year. Check the latest estimates on- line in Barron's stock listings.
Tue, December 4, 2007
Oilpatch takes a 'body blow'
By PAUL JACKSON
Oilman Earl Hickok's lineage includes being related to Wild Bill Hickok and like the legendary gunslinger the Calgarian is a straightshooter himself. Right now, Hickok, president of Tusk Energy Corp., is taking aim at Premier Ed Stelmach's plans to wallop the oil and natural gas industry for an extra $1.4 billion in royalties. He believes Stelmach is a "honourable man" but fell for the royalty panel's hard line and uneducated stance hook, line and sinker before assessing the "unintended consequences" hiking the royalties 20% would have. Those "unintended consequences" will bring economic turmoil to the province and few of us will escape that turmoil, no matter what we do for a living. Over recent years, the industry has been hit four times by government intervention with devastating results: Finance Minister John Turner's 1974 budget that made provincial royalties non-deductible for federal tax purposes, Prime Minister Pierre Trudeau's National Energy Program (NEP), Finance Minister Jim Flaherty's hidden reversal on income trusts, and now Stelmach's royalty grab.
In the midst of various rollercoaster rides, oil prices tumbled to $10-a-barrel before soaring to close to $100 now, and natural gas prices have fallen in half over the past two years. Hickok says the industry can take only so many "body blows" and remain viable.
For a start, he says one has to separate oilsands development from the search for conventional oil and natural gas. Despite the high cost of investment in the oilsands with plants running in the $6-billion range, there are proven reserves there second only to those in Saudi Arabia. That's not so when it comes to companies -- usually juniors -- in the conventional oil business. "It costs $2 million to drill a well two kilometres down, and $1 million to drill a well one kilometre down. That's $5 million or $10 million for five wells and perhaps only two out of those five will be successful." Hence, it's a risky business and while government will grab its share of the successful wells, it won't compensate companies for their unsuccessful wells. The Tusk president certainly knows what makes his industry 'tick' -- and also what can make it go 'tock' and stop. Now 50, he spent 12 years with Esso and Exxon as a production engineer, including two years in Houston, before returning to Calgary because he wanted to run his own company and make his own plays. After making a name for himself as an independent operator, which included starting up an energy services company, building it up, and selling it, he joined Tusk two years ago. Today, Tusk produces 4,400-barrels of oil and equivalent a day, split between 58% gas and 48% oil. "Tusk itself is in a very strong position, and that's lucky for us. Even if our share price is down, our production is up, and our reserves are up" Listed on the TSX, Tusk's share price has actually collapsed in half from $3 to $1.30, which, considering the company's strength, doesn't seem to make sense. Except for the royalty regime's sledgehammer. Hickok says those supporting Stelmach's royalty heist should reflect on what the NEP did to the economy. "A lot of people initially thought only the industry had a problem. But when teachers and health-care workers started to lose their jobs because governments didn't have the taxes to pay them, they realized no one was going to escape the consequences."
All of us who recall those days of cutbacks and layoffs can only start perspiring for what the future holds unless the province starts thinking very deeply about the wrong turn it has taken.
I was about to write an opinion as to why the canroys are doing badly when I read a post by Pinewood bear on another board. This post summarizes my view I would only add Albertas plan to increase royality taxes 20% on oil/gas is also to be blamed. See Calgary Sun article in a second post about this.
No matter how much you twist in the wind or ideas you try to come up with.... your nose keeps being forced down and rubbed in the smelly truth...
The stock action of the entire Canroy group which has dropped in price and then gone no where as the USA oil patch continued to climb up ... as did the Chinese and Brazilian and European oil patch....can be laid at the feet of the Canadian politicians making their stock market into a third world banana republic not to be trusted. Mass exit out of this arena and very few willing to venture in with new money so the stocks languish.
So far most of the merger activity is between the trusts merging with each other. Don't you think it strange that other oil companies have continued to shun the Canadian oil stocks? Even PDS... the biggest driller and supplier in Canada with ventures into the USA is less than half the price it was last year....yet the USA drillers who have been on a rocket do not show any interest (yet) of buying some good assets at a cheap price in PDS stock..
As stated before... when stocks get beaten down so low then they also get very low take over/ merger prices for their stock. CNE had been $24 before and bought out----merged at $16.... with many investors then forced to lock in losses.
So the Halloween fiasco and the laws installed since then has done nothing but shaft the investors... and shown that the politicians in particular don't give a damn what affect their actions have on "foreign" investors.... like the USA folks.
So what can you expect if this is the attitude and climate for investing in Canada?
The stock markets around the world are tricky and risky enough without the added Canadian shell game and ill will from the politicians.... which were voted in and seem to remain by the will of their voters. You see the on going consequences of this stand.
The yield alone is a great reason for buying the stock. The current price reflects a reduced dividend, which may never happen. Canada is a sound safe country so I expect the Arabs to continue to buy out the O&G companies. It appears that my PWI will be gone (having been sold to Abu D.) and i will just be rerouting my money to other Canroys.
Now, if Mulrunny just drops that tax pending in 2011, then all the canroys would head north and billions of dollars of value would be restored to Canadian voters. Meanwhile, PVX continues to pay monthly sp you might as well enjoy it.
I used to own this a long time ago at 7. Sold out at 8.5 after months of div. Pull up a 4 yr. chart and it shows good support at 10 with the possibility of a brief retreat to 9.5-9.6. RSI in the 4 yr. or even a 2 yr. chart is way into oversold territory. Of course it could see 9 also. If you want to take a position take half at 10.06 and if it goes down more go in with the other half. In my eyes if the Fed lowers rates people will be looking for yield and buying. If not this could go lower.
Possible reasons for decline in CANROYs
1. Increasing supply of LNG gas and recent talk of reviving a pipeline project from Alaska to US Midwest.
2. Recent drop in oil & gas futures.
3. Cost of production rising, especially in refining operations
4. Poor hedging strategies
5. Fluctuations in Canadian vs. US Dollar
Prediction: We will see more mergers or buyouts of the CONROYs. More likely mergers where the price premiums will be small. Some firms will convert to MLP status in the USA before 2011. PVX is a good candidate for MLP conversion since it already has an operation in the US in BBEP.
Full disclosure: I have owned PVX shares since August 2004.
Don't panic. 12-15% return is great. owning a non-dollar asset based company is great. unfortunately, some people are mixing up balance sheet items and P&L items. it's difficult to know how they handled the expenses they had acquiring Tri-West. Dividends are why we own this stock and they intend to continue paying and their dividend and increase their assets. If oil falls and the US dollar goes up, then the earnings will be affected, otherwise, just sit back and relax. Oil might drop, but the US Dollar is in a world of hurt and I don't see Iraq,welfare or the housing mess disappearing soon and a sudden burst of high paid 20 plus somthings appearing to pay the bills
But why does this continue to fall sharply?
Is it the acquisition?
The pullback in the Canadian dollar?
The pullback in energy prices?
Fear the dividend will be cut?
Some combination of the above?
I'm new and looking at these investments, but trying to understand what's going on. Thanks.
(PS - What percentages is PVX in gas vs. oil, anyway?)