Traded a bunch of PAGP for PDCE. Still think oil stays in the $90s, a lot folks are talking about lower numbers. Will see.
A comment from an investment bank, a rumor, so probably not worth much. ECA is buying liquids plays and they have some Niobrara. Would think the Niobrara is as good as the Permian, maybe better.
Saw a comment that BCEI was a rumored target of ECA, would think it and PDCE would make a great buy for someone wanting more Niobrara exposure, ECA shows 55 to 85% returns for their current position. Only showing 40% for the TMS at $13mm wells.
Bison, this impact seems to not get much attention. The Hong Kong discord is worth watching. An unstable China could be a big deal, a black swan???
Encana buying Athlon, should help the sector. Was thinking about m and a for e and p and would think now is good time, same as midstream. Although the majors have lots of acreage in the Permian. GDP reported a couple of 1000 b wells. Good but wonder if they are enough to make the play top tier profitable, considering the $10mm plus costs.
Don, Birdog, good article also in Barron's on farm related investments. Said farmland is selling for 32x rents, compare that to 16x earnings for stocks, believe it was 10x at the low several years ago, mid 80s. Factors, corn prices down 2/3s a couple of years ago, ethanol and developed countries not eating as much corn fed beef??? I just tried some grass fed beef from Australia that was better than Co angus corn fed, a better taste, less fat. And it was 20% less cost. If farmland comes down some, would bet it won't stay there, the global effect. I would think it would be a good buy in the 20x range. Although I'm betting stocks go to 20x+ in the next couple of years.
Don, the debt does seem to be the global issue. I'm just not smart enough to know how it is resolved, gradually or short term in a crisis. As Peter Dane used to talk about, our standard of living should be less going forward because of the debt overhang, the new normal. Investors have done fairly well while the workers haven't fared as well. The longer it goes, the better off we will be. Seems we would pay off the debt while rates are low. A couple of years ago, people talked about California being or going bankrupt, not sure exactly where they stand now, but seems they have worked their way out of it. I probably do put too much emphasis on the US energy boom and what it could do for us in the world, could be the thing that gets our house back in order. Look at what it has done for places like your region or Texas and the whole Gulf Coast. The 4.6% GDP number sounded like a good one to me, although I didn't look at the fine print. If you don't buy US stocks, what do you invest in. I'm not going to China or Russia or South America and Europe is worse off than we are. And govt bonds don't give me a lot of confidence for the same risk as stocks, spiking interest rates. Guess you can just invest and pray. Cheers.
Good article on inflation on Bloomberg. CPI, 40% is housing. Around 15% each for food and trans. Health is probably more competitive in the future. GDP today well over 4%, 10 yr T note 2.5%. Tech is driving down costs, wages aren't pressuring prices. Nat gas is a bargain, oil has probably peaked for a time. Supplies here exploding. Don't see in all that what drives stocks down for a while. Probably just rolls over as value expand, seems some of the techs are already close, others not so much.
Bought WMB and PAGP today. Good article from Morningstar on KMI site. Talks about the consolidation that will probably come over the next year. KMI will be in the mix, WMB probably accelerates what they will do. ETE/ETP. OKE inolved. SE probably. Targa, MWE and GEL. GEL looks attractive now. Also mentioned WMB. I would guess the landscape looks a lot different this time next year. Would guess KMI goes after a Canadian company. CEQP looks attractive for a take out also.
End up with KMI, WMB, ETP, EPD and PAGP as the major players. Probably the only ones remaining will be those attached to an e and p company, Enlink, Western...
Think I would cover now, with those type of wells, could be double digits in a year.
KMI pays a div, it's not a partnership. KMP and EPB are the MLPs. After the merger, the MLPs go away and KMI remains as a c corp. DNR has billed itself as a yield play, will see. I do agree that the reserves should be valued in the mid $20s. I only mentioned KMI because around 20% of their income is CO2 related.
KMI's dividend is distributable cash flow, above maintenance capital, 5%+ yield and 10% growth, 15% return annually. And they have a substantial CO2 business and the best nat gas franchise in the country and Canda assets plus opps and Mexico opps. DNR 6 to 8% growth plus 3% div, 10 to 11% return. And if oil drifts down, KMI will hold up much better. Not sure $90 isn't a good long term price but who knows. I can't build a case for DNR over other cos.
IMO, they want to be a yield investment with some growth. But there are better yield choices with the MLPs and even a KMI. KMI will pay 5.2% next year and DNR is paying 1.6% now. KMI will grow 10% annually to '20, DNR could do 8% maybe. If you want a growth e and p, there are better choices. I own ARP and it yields 12%, should show some growth and you get DNR with maybe 3% yield and 8% growth. And there are the other e and p s that could show 20%+ growth for a few years. Not sure why anyone pick DNR over other choices. Seems management has no sense of urgency for growing value. You sit back and collect you salary and bonus. And there has been no shareholder pressure that I know of. Do agree that it's undervalued but there are others that are also. Looked at DVN numbers, they are cheap, yield almost as much as DNR and have great growth prospects, and good management.
If people will read the report, think it should put to rest the issue of fracking contaminating aquifers. The risk was there before if the well wasn't cased appropriately, seems old vertical wells over time would be a risk. There is an issue with the water needed for fracking but seems that could be addressed. There is also the issue of earth quakes but seems that also is a minor issue. One comment that fracking wouldn't cause an eq but water injection would, seems it happened here in CO at Rocky Flats. One comment is that the related earthquakes relieved pressure that would have caused quakes naturally in time. The aquifer issue hopefully will be put to rest.