Canadian oil sells for about 5% less than U.S. oil and U.S. oil is falling in price.
Big article in the L.A. Times last week said that U.S. gasoline prices will fall in
the next year to lowest prices in 5 years.
Too much oil and not enough demand world-wide at this time. If gasoline
prices fall another 10% as predicted in the article all energy producers in
North America will feel the pain.
This equity could fall to $4 and I am already down big time.
The board of directors was appointed by the CEO so it is not going to help
Hopefully all the bad news is out.
It is not about bad news, it is about a surplus of rigs
being delivered to the competition in 2015 and 2016.
What happened when there was a surplus of coal
or natural gas? The companies in the sector took a
That is going to happen with the drillers as they will all
have new rigs and will be looking for business. This
is going to drive down utilization rates and contract
rates for rigs.
Not worth owning for the dividend as the decline in
price will result as each 90 days companies in the sector
talk about declines in rates and utilization.
Most investors that have purchased in 2014 or do so in 2015 is
not going to make any money.
The problem with this reit is that the price of the equity is almost back to where it was 4 years ago, so no appreciation, just the distribution. Better to invest for 5%-7% distribution and growth in the equity of 5% or more each year and there are many of those.
O, ARCP, CSG, etc.
Every investment connected to oil has been down as the price of oil dropped 10% during the quarter. The problem with CMLP is that the share price has not really climbed at all during the bull market that has taken the indexes to all time highs during the last 4 years. No real equity appreciation while most all the MLPs are up significantly over the last 4 years.
Oil prices around the globe is the reason for the decline in share price over the last month. Oil prices have been weakening and prices have fallen 10% during this quarter. That has had a more dramatic impact on small Canadian producers that receive another 5%+ discount on energy sold below world pricing.
Gas prices have been dropping at the pump and apparently that is not over.
I stand corrected the debt is lower as they sold off some production. Now they have to drill wells to get the production back.
The biggest issue is oil pricing and the last quarter looks weak and what will happen to the share price? I expect it is going lower.
Yes the shares could double in price over the next 1-2 years. But the same could happen for a stronger company, SURGE. But prices are probably going lower.
Not tax planning, just human nature.
If an investor has lost 20-30% in shares they tend to sell, causing pressure on the price.
December is a significant month only because it is the last time to get an immediate
tax write-off if you do not have a $3000 capital loss at that time.
I was rounding debt to $350MM and value of company to $150. OK, I stand corrected debt
is higher on this little stock than I said.
This is interesting but I like the size of SURGE much more than these shares.
The problem is the price of oil on the world markets as it looks to be weak as there
are issues in China and Europe and for that matter in the U.S. where oil production
If oil drops to $90 per barrel or less during the last quarter, these shares could test
You have to take into perspective that the shares lost 20 cents during the last 30 days.
Agree, it is not the debt that caused the fall but the drop in the oil price which could
weaken further, causing more pressure on all oil and gas producers.
If it keeps falling a penny every day, I might have to enter sooner rather than later.
Appreciate your comments.
With the sale of assets the company reported that
it paid down total debt and lines of credit to $350 million.
That is still a lot of debt for a company that has a market
value of $150 million.
What is going to happen with tax loss selling in December?
I would not be surprised if this goes lower still. It might be
an excellent buy come December.
Pie in the sky.
Look at the balance sheet, current liabilities exhaust all the cash.
When there is no cash left at the end of the year they will have
to issue more shares. Right after tax loss selling, so I suspect
the shares will be lower in 90 days than today.
management is questionable as share price is at low of the last four years and
if management has cost overruns on the high rise towers or high vacancy on the
towers the risk of a dividend cut is substantial.
You have to ask yourself when most markets around the world are at highs for the last 5-6 years why this equity is at low in its history. That says a great deal about investor confidence and risk.
The cheap acquisition price of these two rigs has been wiped out by the current selling price of the shares. People that have paid $20-25 dollars a share were basically paying triple the price of the rigs. So it is not a good deal for shareholders in that price range.
They have a $500 million backlog but much of that goes to operating the rigs.
The company equity is valued at $500+ million.
The risk to this equity is that the two high rise towers
have a total cost and capex to open them as two dorms
of about $200 million dollars of which Campus is on the
hook for 1/3 of the cost. The verdict is still out on this
venture and that is a substantial risk. Secondly, management
screwed up on the Copper Beach investment, an investment
which they do not control and which they walked away from
buying the other 52% which tells you that there are issues
with Copper Beach, both the portfolio and they do not operate
Ensco, Noble, Rig are all selling for less than 1X book value of the assets
on their balance sheets. This company is selling close to 3X book value of
Second, the contracts are short term now, about a year left and when they
are close to expiring in a year a lot of shares are going to try to exit all in
the same 90 day period and AWLCF will probably see constant pressure
from here on out on the price including the tax loss period during the last
30 days of the 4th quarter as many that are upside down will sell to take
Thirdly, what happens if one of the rigs takes some time to re-lease the
rig and they have a quarter with no income, just debt payments. The
negative news usually drives down shares.
Three reasons this is dangerous, especially during periods of war
and economic difficulties.
Sanctions are U.S. and Europe and so
SDRL is not going to do business with
Russian Energy giants.
These sanctions will hurt international
energy related companies.
Shares have gone down to low of the last 5 years and most investors
including myself have lost big time over the last 5 years. Management
that watches stock decline for 5 straight years should have been fired,
but obviously, the Board of Directors is controlled by management so no
one is going to make any serious money in this investment. I am getting
ready to dump at the bottom and move on to something that might double
Economic war with Russia by U.S. and Europe. It is going to hurt all economies that
provided services and capital.
I imagine Putin will even look negatively on Russian businessmen that purchase high
end German cars during this economic war.
Also, U.S. is go to expand war in the Middle East. War does not help the economy it
Just lots of bad news nothing to do with RIG business, but remember lots of drilling
platforms being delivered during the next 12-24 months when world economy may not
be growing much and Europe might be contracting.
The price had run up and it was selling close to 3x book value. Even though the platform rigs were purchased at a good price, investors were paying triple the cost of those rigs to the company. Not a great deal.
Also, the contracts are going to expire on the two rigs in another year. What happens if the new contracts have down time and no dividend? Also, what happens when all investors try to unload during the same quarter when these rigs are close to expiration. A small investor group on this exchange can get killed when too many of them see the risk all at the same time.
That is why most investors in this equity might not make any money even with a high dividend over 2014 or 2015. Investing in this security is more like gambling than investing unless you purchase at a price that is at the bottom or very close to the IPO.
Etrade told me that the withholding rate of 30% and the additional ADR fee was done at the source in Russia. They also said the dividends were non-qualified, so taxed at ordinary income tax rate, not preferential 15% tax rate.
Lousy dividend after taxes take 1/3rd.
Until stock brokerages around the world recommend the shares, the share price will probably remain week since small number of international investors will not drive shares higher.
Beside the weakness in the NOK, the price of the shares is almost three times
the book value of the company. Why pay 3 times the cost of the balance sheet?
Three times the cost of the drilling platforms makes them pretty pricey and the
contract price for the rigs has a short contract time. What happens to contract
prices for everyone in another year? By guess is lower prices and what happens
when the current contracts expires? Most investors will try to get out in 12 months
and there could be a large number of investors trying to sell driving the price