My guess is that EOG will go well below 80 if the price of oil remains low for a while. Currently, they are getting around $96/bbl for about 2/3 of their crude because of their hedges which expire 12/31/14 (tomorrow). They have negligible hedges for 2015. Add in the Bakken differential and I think 2015 analyst earnings estimates are too high, based on oil at its present price under $60.
I've been looking into EOG puts, but the bid/ask spread is too high for my liking. That tells me market makers aren't too enthusiastic to sell puts.
As always, do your own research and due diligence. Good trading!
I think WLL is one of the few shale oilers that will survive, but they are not a healthy company. Their hedges that worked so well in a $100 WTI environment are now hurting them. They acquired too much debt from KOG, and interest is increasing their cash bleed. I'm wondering when creditors will start to tighten the screws. Their market cap is around 3 billion, but they have debt of 2.75 billion, pre-merger, plus what KOG had, which I believe was more than 2 billion. It will be interesting to hear what they say when they report Q4 earnings and give forward guidance for 2015.
FY 201 Analyst Estimates have been dropped to 2.12, down more than a dollar from a week ago. The analysts are just now adjusting their previous estimates, which were based on a much higher oil price. EOG only has about 15% of their oil hedged for the first half of the year, and then only about 3% for the rest of the year. If oil stays low, their stellar balance sheet will not look so good, and they will revert to being cash flow negative.
That North Sea project that has been delayed for more than a year should be coming online soon, but the 20k bopd will be getting less than half the revenue they had expected. None of it was hedged, either. EOG is one of the best shale/unconventional oilers out there, but it is way overvalued, in my opinion and based on my research.
You're right, but as the saying goes, "The market can stay irrational longer than...."
Several recent events seem to have been misinterpreted. Zack's downgrades EOG, citing their dependence on natural gas prices. The SEC filing from EOG spoke of 750 million dollars in hedging gains, but that means most of EOG's revenues from crude will be cut in half or worse. After the death of the Saudi king, there appears to be no change in the policy to keep pumping and not cutting. Yet EOG holds steady around $90.
4Q14 earnings will be pretty good due to hedges on about 2/3 of their production, but those hedges ended December 31, 2014.
I heard some trucking firms and other big consumers of oil had bought a lot of futures, which tells me that oil is probably close to a bottom, but I'm certainly not going to predict oil prices. I can, however, predict that OAS is essentially worthless at sub-$50 oil. They missed earnings estimates badly and made 52 cents when WTI averaged $98 during the 3rd quarter. In Q4, WTI averaged $74. Despite hedges, I doubt if they will earn much, and I think they lose money for 2015. Too much debt and too many freebies for a greedy and inept management have doomed this company.
With their hedges, I think OAS will stay liquid through 2015 as they burn cash and the tsunami of debt and interest hang over them like the Sword of Damocles. Ultimately, without much higher oil prices, OAS and a lot of the shale oilers are worthless.
These prices being thrown around by experts that wells or companies are profitable at such and such an oil price are bogus because they do not account for all of the factors involved in running the companies, particularly debt and interest.
Just curious, spillworthy, how many hours of research did you do before your WLL purchase? I do hope to buy WLL again, but at a good value, and it's not there yet in today's oil price environment.
I've seen too many investors lose a lot of money who just "knew" what a stock was going to do. Let's wait till summertime and see what happens.
"Short interest in down to 2.47%...that's about the same as the Airline stocks....nobody is betting this is going down"
What about that 2.47%? Aren't they betting that this stock is going down? And what about those who are long puts?
"In the LONG term, I even know that my $31.00 dollar position will make a nice profit as it will likely be a triple at that price."
When I read a presumptuous statement like that, it tells me that the stock probably has farther to fall. I made some money on WLL, lost some, and got out when it was in the 70's. No, I am not a short, just a realist. I still follow WLL and some other shale oilers, but won't buy unless I see a compelling reason, which I don't expect for a long time.
Yeah, I should have said that Q4 earnings will be pretty good compared to the price of oil in Q4 and the current price they are receiving, but I was trying not to be too verbose! After they report Q4 numbers, I'll run some numbers for projected Q1 earnings, revenue, etc. If oil stays under $50, I'm guessing earnings will be just a few small coins.
Win, I think it's an "all of the above" answer to whom the Saudis are targeting. Even though the shale oilers are some of the most nimble, they are a part of the attack on US production. The Gulf of Mexico is also a big target which is not being mentioned much, and those are some of the multi-year projects that are not being started due to capex reductions. The Saudis realize that the US has the potential to start exporting before too long (I realize the difficulty of that due to politics) and want to stop that possibility.
My take is that the shale oilers provide the tipping point when their production is added to the big projects. A corollary to this is squelching international fracking/horizontal drilling. I'm sure that there are other potential horizontal drilling locations around the world, but if the US cuts back on horizontal drilling, other nations are unlikely to start.
I'm well aware that what someone says on a Yahoo message board does not control a commodity like oil, but it reflects the sentiment of a lot of small investors. I've been to this rodeo a few times before, and I've seen what happens.