I have added a bit this past week. On the BK issue I believe it is laughable. Companies go 11 because of negative cashflow. They go 7 because their business is no longer relevant or the assets are not worth anything. Neither one of these conditions exists for orig as of today.
My big concern is consolidation. A company like Diamond Offshore or Transocean could take us out for say 6-7 bucks which is a huge premium against this depressed price. They could do it with a stock swap and get 800m in cash and 12 new rigs. Certainly for rig this would be a good gig because they could scrap a bunch of old rigs(which needs to be done) and replace them on the cheap. Further a massive non cash write down gives them huge income tax and cash flow breaks and sets them up for the rebound.
At issue is: end Q1 backlog was 4.7b. Q2 sales 400mm, end Q2 backlog 4.3b. No new orders. So the big question is,"will they ever get another contract?" That is where we are at. This is priced like it is going out of business in less than 5 years.
The market is not giving them credit for any management skill at all. The market seems to think when existing contracts run out they are done, sitting there with no business and billions in debt.
So we are supposed to believe they will make no moves at all, just show up to work every day, dill baby drill and when the existing work runs out shut off the lights and go home.
I for one have a little more faith than that. Doubled my position today; puts me in at 4.54. Way less than cash on the balance sheet.
Hey oil is not oversold. The probability of it having a "technical bounce" by year end is remote. We could see 35 before we see 70. Further, we might not see 70 for years.
So to me the question is," based on all that we know about ORIG: including their balance sheet, their operational footprint, their new build schedule, their association with DRYS ect. ect., how will they perform for many years of low oil prices?
What I am getting at is, if oil goes back above 65-70 everyone in this space will be fine. Harder to see is if it stays low who will make the adjustment and move forward?
ORIG's financial metrics by any measure says it is stupid cheap. I for one am not going to sell a holding that is trading below cash and trading at .2 sales. This is not a distressed company.
What I am grappling with is how long will these metrics hold? This conference call is all about backlog and new contract status. What they did last quarter does not mean squat.
Earlier this year in the winter there was the perception that the summer would bring higher prices,like it always does. Now that summer is here and almost gone, there is a general perception oil and gas will go lower into fall, as it always does. Reality is we do not know where oil is going but the pressure is certainly to the downside.
This has been a tough ride. I sold SDRL when they suspended the dividend. Then bought forward calls that are now worthless. I for one am not getting back into this space until the technicals for oil are clearly bullish. That could take years. Face it, this trade is broken. GLTA
I have owned natty tanker forever. Added NAO just recently. Both are backed by very strong balance sheets. They run a simple clean plan. Well capitalized low cost efficient producer. I do not know what the market holds but I do believe these guys will be the last man standing no matter what. Everyone's time frame is different, mine is decades. I like to buy companies I can hold and not worry about. In this general space I own FGP, MMLP and NAT and just recently added NAO. My cost basis on the first three is way less than zero after distributions. I believe 10-20 years from now psv's will be around and so will nao and the 9 bucks I paid for it will be back in my pocket. That is a long winded way of saying relax.
I am not sure what Greece issues have to do with this company. The ships are registered in the Marshall Islands. Greece has no jurisdiction over them.
this is not overweight drillers nor is it all pipelines. In the top ten holdings is 3 shippers, 2 nat gas compression companies, 1 propane distribution company, 1 onshore driller/midstream company. 1 offshore driller, one refiner and one coal producer
Just my 2 cents: everything energy related has obviously gotten creamed. However if you analyze the holdings of YMLP you will find many companies that are not as sensitive to oil price as others in the space. For example the shipping companies (TOO,NMM) are more correlated to movement and availability than to the price of crude. Further the nat gas compression companies (CCLP,USAC) are more correlated to use than to price. Next the refiners (CLMT) actually do better when crude is lower. Last the nat gas exporters (Glop, GMLP) also should do better with prices lower.
Having said that energy is an easy short, so it goes. Also with the fed telegraphing a rate hike the mlp etfs are going to take a hit, it is a very crowded space.
Last quarter I did a spreadsheet to figure out what they would pay in distributions and I got pretty close. I have not done one for this quarter but I do believe they will be right at 35 cents. So I am holding. I am not reinvesting my divs. I plan on waiting until the fed makes their first move and the dust settles.
Made initial purchase at 5.62. Told myself will not add till earnings are out. I really want to pull the trigger again though. 3.85 per share cash on the balance sheet. Leaves the business valued at 77 cents. Price to sales is .33.
I have gone over the financials of UAN and they seem straight forward and rock solid. Very few LP's generate positive levered free cash flow. These guys do. I understand the single site risk is especially high considering they could blow up the whole town on a real bad day.
Further their rolling average distribution had been going south until last Aug. But it is still very strong.
Given the squeaky clean balance sheet and a nominal pay out of 40 cents, this should be trading way closer to 20 than 10.
So what am I missing?
Been gone for a while. Looks like nothing has changed much. When we hired our new hero we should have checked to see if he could actually speak. Only news we have got wind of is all the high priced people they are hiring. Guess GF got tired of wandering around the top floor alone.
As an aside does anyone know what slick nick is up to nowadays?
I am not sure I see your point. I bought Line originally around 15.5 many years ago. I have swapped to lnco and back at least twice, maybe three times. Never a home run but several hundred dollars each time. I have received a little over 17 bucks in dist/divs plus a few thousand dollars in "swap" money. If line never goes above lnco again my swapping days are over. I guess my question is what is the real difference between these two. I know and understand the mechanical side i.e. partnership vs. common, IRA implications ect.. Beyond that what?
I have several times swapped between LNCO and Line when the price differential has swapped. I picked up 3% today selling LNCO and buying Line. I own 2000 shares it seemed like US$600 free money to me. What might I be missing?