That prospect is hard to get used to. In Houston now and hard to believe the growth that $100 oil is still bringing to TX, but you are close to the boom in ND. My concern is nothing lasts forever, just not sure this is going to roll over soon. Seems every week there is another project announcement for the Gulf Coast, petrochemicals, terminals, exports...
Not one word about Portugal banks yesterday. And the immigration crisis. Would still think the assault on Gaza is more important. Hard to know what is a media event vs a real issue.
Don, I think GDP could be a triple if the TMS works and it appears that HK and ECA both like the play, good enough for me. GDP has 300k acres. And SN has a good position plus a great Eagle Ford position. SN is less risky. Both are good bets imo.
Bottom line summary of consensus, but I do hear what I want to, just like everyone else. The gurus are forecasting that we will have another 2008 again, can't argue with that, but it could be a decade out. Humans always continue to fight the last war. Interest rates have declined for the past three decades, could take a couple for rates to get out of control again. We need to forget about the macro and find companies that will increase earnings rapidly over the next few years, imo.
Listening to the talking heads on CNBC, don't do that much anymore, and i know why. Telling us over and over what the Fed is thinking, doing, while the Fed itself has told us what it is going to do. And referring to the bubble in the market, waiting for a decline. If you believe $137 of S and P 500 earnings next year, that's 14.5 times earnings. That's not even near a bubble multiple imo, even at higher interest rates. We had a 3-x times multiple in the late 90s, and much higher rates, that was a bubble. At current rates, 20x wouldn't be excessive. Either we get a spike in rates or the market advances 50% in the next couple of years, my bet in on the latter, but I have been accused of being an optimist. Fleckenstein isn't short now, that could be one of the few contrary indicators.
The third quarter div will be $2.24 annualized, 3.9% yield. And the company's forecast of the div in '17 is $3.25, that's 5.6% yield on today's price. That's a value trap I can live with. A 4% yield would price the stock at $80. Interest rates rising and the oil price falling are the risks. But that can be said for the energy sector as a whole and the market too. Wonder what happened to Peter. He did have a creative take on most investments. Since I've owned WMB for over a decade, my next move will be pairing but with the ACMP acquisition, feels like the growth is extended a couple of years. At a 3% yield, not unreasonable for a pure general partner, which is their goal, the price could be $100 in three years, admittedly three years is a ways out.
Birdog, back in FW for a couple of days, feels like Texas and it's not triple digits yet. I do think PDCE will do well, pressure is on since you bought, I know how much you didn't like the old management. They report on 8/8 or there abouts. My biggest concern is peace breaks out in the ME but I'm not counting on it. Saw a report this morning, analyst revised NAVs to reflect $90 oil and $4 gas, up from $85, and the upside for the group is 36%.
WMB actually forecasts $3.25 dividend in 17 at 4% is $100 plus. WMB will grow 15% per year after raising the div 30% for the 3rd q. WPZ will grow 10 to 12% per year, WPZ should do well, WMB will do better. With WMB you don't have the k1 issues. WPZ should be mid $70s in three years. I own both but would buy more WMB if I didn't own so much.
Also, PAGP just announced the increase of 7.5% in the div from last quarter, that's 30% annualized while PAA raised their dist 10% from last year, great but shows the leverage of the GP and incentive dist rights. PAGP should grow 25% per year for the next few years. The infrastructure cos should continue to do well with low rates and $100 oil.
Looked at latest CS report on WMB. They see $2.83 div in 17 at 3% yield, $94 per share, $58 today, 70% upside including yield. Probably needs interest rates to stay under control, three years is a ways out. Low interest rates will make a difference. And $100 oil.
Bison, imo, it is a great buy now. Will report on 8/8. Have been trying to figure out how to buy more today. It is my favorite e and p. I think it's a $90 value selling for $60. Predicated on $100 oil which looks good now.
Also PAGP for infrastructure, it should announce a div increase in the next couple of days. Would think it will move the price up some. Also GDP, watching it, reported a TMS well today, market didn't seem to like the no, around 800 b/d . Still think the play will be a good one. If the TMS works, GDP will triple.
Four of the six were surrenders of stock to cover withholding and two were automatic sales authorized last November. Don't think these transaction are an indication of the quarter's performance. Still think this may be one of the best values in the e and p sector.
Represents shares of common stock surrendered to issuer to cover tax withholding obligation of the reporting person upon the vesting of restricted stock pursuant to time-based vesting.
Don, good question. Would like to hear what others think about the next ten years, even if forecasting the future is maybe just academic. I have been thinking the 10 yr T note gets to 4%, maybe takes a couple of years to get there, would probably make the 30 yr 5%. Guess you have to start with expectation for inflation, and seems 2% is probably a good number. Central bankers have been more concerned with deflation than inflation. But I'm not sure what would drive inflation up with all of the technology in the world that seems to be lowering prices. So if inflation is 2%, the 10 yr would need to yield 4%? Greenspan's formula was that the market multiple should compare to the 10 yr yield, so 4% market yield would be a 25x multiple. Not sure it is linear but looked up what we did in the 90s bubble and the multiple was in the 30x range and the 30 yr was in the 7% range if I remember correctly, so a 20x+ multiple is not unreasonable. Saw a S and P projection of $137 earnings next year, at 20x that's 2750, that's 40% upside. At 5.5% 10 yr, you might see a 16 to 18x multiple, that would get you a 2300 S and P, 15% upside. Seems to me that you have to make a case for inflation for the market to collapse, and seems it is monetary policy, printing money that would do it. Just feels that we are past the worst of that scare, the deficit is now maybe a surplus and the Fed is starting to trim bond buying. I don't think we will have the demand style inflation that we had in the 80s because of technology. Just in energy, think about cars that get 30 miles/g vs the Olds Toronado that got 6 miles to the gallon. Housing is cheaper because of low rates, clothing is cheaper, food could be problematic, health care seems to be getting more efficient but the flip side is we all will live to 90 vs 60 a few decades ago. Bottom line, I think interest rates stay low 3 to 4% for the 10 yr T note and the market multiple on $137 earnings next year is 15, that seems too low.
Birdog, didn't know about the flooding, guess we must have been unaffected. Made it to CO a couple of weeks ago, so far, has been nice. The park had a fire of a few acres that was contained, it's always something. Hi to Teresa also, you two don't work too hard.
I kind of feel the same about my holdings, Williams has given me the best 6 mos return I've ever had but don't want to sell it when the div increases 15% a year for the next few. This year has been a surprise, didn't expect much. Just seems that oil at $100 should keep the sector moving. Not convinced that an oil price decline is near.
ADP number, seems we've been wanting a stronger jobs number and got it but it's too much for the 10 yr T note, some say. Bill Gross says the new normal gets you a 2% Fed funds rate, making stocks look fairly cheap even at the market avg 17x. Seems to me that rates will stay low and the economy both here and globally is improving. Jim Grant this a m said to watch the growth of India over the next couple of decades. would guess the market continues higher and the energy stocks may do even better, global demand rising and supply problems except for the US. At $100 oil, the e and p s will be much higher, if investors believe oil stays at the current level. And the infrastructure cos do just as well. And the same reason still applies, if you don't buy stocks, where do you put your money. S and P 500, 2400 next year. Not sure the past gives us a play book for this bull market. It will end but bet it's a couple of years out.
Have been buying PDCE, at 6x 16 ebitda, will be $90, at 8x which is not unreasonable for the Wattenberg and Utica positions, $125 stock price, $61 today. Scott Black with Delphi said proved reserves are worth $90+ and unproved potential is worth another $70. CS has a target in high $80s based on NAV, which is conservative based on the price deck assumption.
Birdog, you should watch PAGP, a pure GP, a partnership which has chosen to be taxed as a c corp and the dividends should be a return of capital for the next few years, only yields 2.5% but could grow 25% per year for the next few. Don't have the k1 issues, div tax free. I think it will be $50 plus in three years.
Don, looked at Genesis briefly, 4% yield, GP is embedded, probably ends up with someone else eventually.
As for oil, the condensate export opp seems a big deal, won't overrun the Gulf with light crude, plus refiners seem to be converting. Means WTI should be close to Brent, and global supplies look iffy. Read an article that SA is using twice as much oil, 3mm b/d, as it did a decade ago. Will import in a couple of decades. And the mid east, outside of SA, may never be stable enough to increase volumes, Iraq was the big potential. Bernstein forecast $132 oil bey 2018. If that comes about, won't matter what you own, everything will triple. DNR is a mid $20s value now. Owning anything in the Permian will be a good bet, as well as the Bakken, Niobrara, Utica and even the EF looks more attractive with the export rule change. Also, the big offshore plays are being hurt by run away costs. US supply at $40 vs $80 in the rest of the world.
No America could end up being the marginal producer in the world in a few years. Read a comment today that there is good upside to cos at $80 long term oil. At $100 plus, the values are a bunch higher, double maybe. Interesting times.