I plan on holding till 2031 so, i guess yes I am serious. They sell a commodity that the world can not do without, is in a state growing demand, and has a limited finite supply.
Take today's closing price $8.40 - 1.80 in subordinated distributions for remainder of 2015= $6.60 . $6.60 -$1 in residual value in 2031 =$5.60, /16 years = that's an average ANNUAL distribution of .35 that 35 cents annually and a buyer today breaks even. while that would be disappointing, do you seriously believe they can't beat .09 a Quarter?
With oil at avg 49 last Q they made .51 in the QUARTER, yes they were hedged but even without that they made .25 or $1.00 annually at $49 oil . oil now 60 and going nowhere but up
Reasons not to hold?
My money is where my conviction is. My first 100 was at $12,and yet i have a very nice profit ( yes i added very, very substantially in DEC and Jan sub 6.50). Looking forward to collecting 15 k in distributions this year,.
With an averaged down cost basis of 7.21 without distributions, and my feeling we return to 100+ oil i feel very comfortable with my( i'll do the math for you) 6,000 shares .
not to worry this is just a small part of a well balanced portfolio, as, Citi could be correct and we go to $20 oil for the next 16 years, he types sarcastically.
Anyway, If that's the case, buy guns and ammo. Which, just in case, is also part of my portfolio
ouch 9 thumbs down, didn't know there were that many people here.
However you speak the truth, But it will have no impact on distribution for the next 2 quarters.
With hedges they earned .518,and yes it would have been about .25 without, BUT distribution still would be .64, because of subordination. Which is what matters.
Next 2 quarters will be similar, however it appears that oil will average way over the $49 price of last Q.
Just for example. assuming 60 oil and similar production, unsubordinated and unhedged earnings might be .35 however distribution still be about .62 WITHOUT hedge but WITH subordination.
Now fast forward to Q 1 2016 sub is gone, where is oil price? no one knows but say $55, dist. would be about .25/Q or 12 % yield still beats a cd.
However if oil is 100, dist. is more likely .45/Q at that point,
Appears to be very little downside risk here, unless you believe Citi call for $20 oil, then buy smith&wesson stock, not anything oil related
So with oil probably averaging below $50 last quarter, trust managed to earn .518 with oil at those levels , had to add .122 to get to the guaranteed distribution as promised in creation of trust.
IMHO that is dam good, i am personally glad hedges will be gone by the time subordination is gone in early 2016.
Seems all working out just right , hedging oil price in dropping oil market is great, hedging oil price in rising market is bad, plain and simple. If oil is back north of 80 next year all longs will be happy hedges are gone.
In the mean time enjoy the 30+%( for some who bought lower even higher) return till end of first Q next year.
Sentiment: Strong Buy
Almost 1,000 rigs off line since late last year peak of around 1,600 now the count is .....679. and yet we still import opec and south american oil. Logic?!?!
drops for 21 st straight week. lowest since 2010 . Tell me is oil demand worldwide greater today than 5 years ago? Oil prices gonna rebound and overshoot so far, people not in oil stocks will be screaming.
Can you say $ 4 Kalifornia gas for summer.
Sentiment: Strong Buy
texas and titus, good points and thanks for your thoughts and opinions.
Anyone else have any contrary or positive CONSTRUCTIVE opinions or thoughts
no cheerleaders or bashers , please.
Sentiment: Strong Buy
Caveat: the following means nothing if oil does not cooperate .... coop means stable to slightly rising
12/14 after div suspension sdrl = 14 ish mid Jan low 9 ish mid Feb revisit 14 area mid march test 9 ish lows.
so thru test should be $14 again if it breaks 14 and holds on anything more than normal volume
no resistance till 20 .
What to do? If your new... standard is to wait for confirmation and hold once over 14 then buy. If your wrong and long like me, well , I doubled down at second visit to w bottom and will add again but not till over 14
any chartist see something else?
you could be correct, but will most people get over the " I am not paying x(11,12,13,20) when two months ago i could have paid $9". . Also has upward movement started? 10 day, 50 day upward sloping, and 100 is basically flat, but if the late Jan and late march lows of 9 ish were a double bottom, then the chartist in me would say "all clear" over the low 14 level set in early Feb . But then again woulda coulda shoulda is always a problem, for me at least.
caveat : I started my position @28 ,(so clearly i have been wrong) but with many many double downs, i am certainly happy with current direction and look forward to a new overshoot high in 2/3 years.
Panic and fear work in both directions
another question would be why was it a hold from 40 to 8.. I love the fact that they valued rigs over 15 y.o. at zero. Transocean and others have 35 y.o. rig still operating.
I would put you on ignore, but the comedy is priceless. And an intelligent response to what XRX does today not 20 years ago would not change what little mind you have
several 1 million share blocks, guess we will see. post market all over the place on 1 share and 100 share trades ??? not sure what is going on, I count 3 million+ shares in last 3 minutes
you mean like last earnings when it dropped to $2.20 on 1/30 then hit $3.20 on 2/20 is that what your basing your call on??
I am generally not a conspiracy guy, but I am guessing they missed the move from 6 to 8 and want in. Oil seems to have bottomed and looks to be heading nowhere but up. Certainly seems suspicious to me.. some big blocks over 30 K shares also add to my feelings of shenanigans. as that block volume is fairly rare.
If your holding till 2031 like me, it is of no concern. Only thing that matters for this trust is the future price of oil and how much is in the ground, and i can assure you no one working at Raymond James has any clue as to the answer to either of those issues.