U.S. Shale cannot be the swing producer without central control. Hundreds of independent companies can't be directed to ramp up or down to keep things in balance. So if the Saudis have chosen to just run at 100% and not seek balance, then we're probably in for a roller coaster ride going forward until total demand can absorb everything the U.S. can produce.
Basically they were paying out too much for the last couple years. They kept promising to grow income so that the dividend was covered, but kept issuing shares faster than income was growing. BV kept creeping down and finally they had to give it up and just reduce the div. For now the div is covered, so that is different. The question is will they keep issuing shares (mostly through a drip program) faster than they increase income.
If they had just turned off the stupid drip years ago, at least any time share price dropped below book, they would be in much better shape. I can only speculate that management gets paid more when there are more shares.
You can get burned pretty quickly on margin. I don't feel comfortable having more than 130% invested, and even with that I would have a short term trade planned to get out.
Even if they get it working in 15, it needs to be tested deemed safe before roll out could begin. And of course there will only be a handful of people qualified to install and operate it, so widespread use would take decades. I'm all for it, but it will be a long road.
My point is, Gartman takes whatever is in the headline at the moment and bases his predictions on it. They keep putting him in the media regardless, so he must generate clicks.
He's the same guy that said Fusion was putting oil out of business. Yeah ok, in 30 years maybe. He's a clown.
based on today's price action. Personally I don't they will actually get full. This drop in oil is going to re-ignite fear in the oil patch and take out even more investment.
See "Closed for Business" -- Oil Prices Force Bankruptcy Filings in Oil Country
By Travis Hoium
Stephen Sather of LexisNexis Legal Newsroom recently compiled nine energy bankruptcies since October with aggregate debt of $2.4 billion. Not surprisingly, eight of those companies were based out of Texas.
Bought at 6, sold at 8, now less than a month later approaching 6 again. Do I start loading up the truck again, or look for sub 6? Either way, I'm still in wash-sale territory.
Yep, just smaller companies, but its a start. Some of the bigger ones are talking of selling property too. As time goes by and the price stays low, more will join. Hedges are burning off and wells are depleting. Tick tock...
More and more news coming out about companies going under. That means that those with cash to buy should start seeing more deals become available. Recently I'm only holding MEMP and EROC, and specifically because they should be in the market to buy.
Some people may not understand that you do the homework first, then determine if it is a good investment second. That means sometimes, the homework shows bad numbers. You don't pick winners first then do the research to support the decision later!
My business uses a lot of oil/gas. I'm worried prices might go up. I will pre-order 10,000 units per month for the next 3 years if you give me price X. Oil/gas company produces 10,000 units per month. They are worried the price might go down. They agree to sell production for the next 3 years at price X.
Now regardless of where the price goes, these players are locked into price X for 10,000 units every month for 3 years. They are hedged.
The company announced it on Jan 5th. Read the old news release.
"The Company plans to distribute approximately 90% of AFFO and, accordingly, currently expects to distribute between $0.64 - $0.72 per common share in 2015."
14 million? Wow. Now sure how that's even possible. Glad I didn't add anything since oil bounced up.
I have a feeling that Russia isn't cooperating in Ukraine and need to be reminded of the price. I'm ready to double my holdings if the price is right.