Usual dog and pony show summary of business. Question concerning Buffet investment. According to Garland he has filed to buy up to 25% of the company. Will continue to return 40% of EBIDA to shareholders via dividend and stock buy backs. Reiterated that they will increase dividend at least 10% this year which would be a minimum of 6 cents per quarter. Have not increased their oil storage very much. Usually to 100 -130 million barrels in their system. Gasoline demand is good, distillate not as good and chemical demand good.
Production is starting to roll over in a number of areas. China will lose as much as 400 - 500K barrels per day. India not a big producer losing production. Mexico and Venezuela have been going down for awhile. Russia has no currency to buy outside equipment. Their production appears to have topped. US is lowest level of production since late 2014. In general oil fields lose 3 - 5% of production each year without massive amounts of CAPEX. From what I have read recently is that there is only 1 million barrels per day of over production on a scale of 95 million barrels per day. World demand is also rising. Later this year demand will exceed production and the huge inventories will start to be worked down.
I think Exxon is looking to buy properties that may adjoin their existing locations rather than whole companies. In US shale areas companies are always selling, buying and swapping to get larger blocks to work with. OXY sold their Bakken property and is buying in the Permian where they are King and have midstream assets and their own pipes to the Gulf Coast.
It is now about two weeks after the drop and we are up a point from the price when the drop occurred. It is a small cap stock and constantly has these accentuated ups and downs.
As of the February analyst's meeting EMR still had no concrete details on the disposition of Network Power. Although it will probably be a spin off it could still be a sale. At the meeting on slide 44 of Farr's Business Update presentation it states that spin or sale will occur by September 2016.
LOW has been behind HD in the professional market and has put an all court press on attracting the Pro as they refer to them. In addition, this market does not lend itself as much to buying on line but they are trying to use on line to increase sales. The key is that housing prices have come back somewhat and home owners want to put money into their homes.
They actually have very low level of debt and have been recapitalizing by adding debt and reducing equity. The debt is coming on at a time when interest rates are at rock bottom lows. The only time they have been this low since 1900 is in the 1930's and after this last financial met down. They have tremendous cash flow and based upon economic activity really cannot invest in more plant and equipment. They have increased the dividend substantially over the last few years. Organic growth is strong but masked by the strong dollar. MMM has been buying back stock during this whole market pull back. Their assessment is that the company is under valued.
Interesting. So the fuel that everyone is turning to, NG, is not going to be carried on the pipes. First off the Marcellus/Utica makes money at lower prices than NG is at now. Most of gas comes from big producers who have deep pockets plus more and more gas is demand driven by utilities for electric generation. more gas will be processed rather than less. Oil pipes are a very small amount of KMI's portfolio.
All good answers, so if things are so great why did they cut the dividend which they had said over and over was solid. In the end they did not have the cash flow to do everything and pay the dividend because they lost access to the capital markets. All of the midstream MLPs that were weak hurt this whole industry. Even D and NEE who have strong operating MLPs watched their values go down. Because the parents were strong they were able to actually take advantage of the situation.
The whole world is not fracking for gas. It is pretty much only in the US due to the geology here. The Middle East has a lot of conventional gas and the big Chevron led project off the Coast of NW Australia is just starting to ship. Most of that gas is going to Asia. There are not that many terminals opening in the US. Lots of applications but only a few are being built and it takes a number of years to construct each one. Dominion is building Cove Point in Maryland addition a lot of US gas will get piped into New England which now imports gas. I know Spectra is involved in projects going through NYS to get to NE.
They will not raise it until they have determined that the stock price is high enough to warrant issuing new shares in along with new debt. The problem has never been about cash from operations but about using their stock to raise additional CAPEX money. In order to keep a decent credit rating you need to have balance in the debt and equity.
Buffet never spins stuff off. Read his investment letter. There are also the MLPs to deal with (PSXP and DCP) and the CPChem join venture which may trigger a sale to CVX. Not sure what the covenants are behind that operation.