He may be right, but energy is still a badly performing sector. The stocks took a bad hit, went into oversold, and by many measures, are overbought right now.
if oil stay where it is, these stocks drop. Every one he lists will go BK in mid to late 2016 if oil is still at the current levels. Hedges will keep many of them from that fate until at least early 2016.
Congrats on your great timing, but your data is a little flawed.
You post a date of Jan 17, and SN at 7.15. The only way you get SN at that price was to buy in mid Dec at the very bottom of the mkt for E&P stocks.
That also seems true for the others.
So we are to think one of 2 things. One choice is that you timed the market exceptionally well, buying in Dec at the very bottom, then telling this MB about your buys a month later.
Or we are skeptical about your post.
Last, the bounce in oil stocks is beyond their capacity to produce positive results, should oil stay where it is. The bounce has been for 2 reasons, one is that the selling was fueled by the bad people (YHOO won't let me use more descriptive language) at GS and elsewhere saying oil goes to 25, driving the prices lower than was reasonable. And, the oil ministers etc saying that oil will recover to 90 or so.
I agree with you that these stocks can go much further if oil recovers. The price of oil is 100% determined by government actions in unstable countries like Russia etc. I am not going to take that bet.
But I have successfully traded LPI and PE, 2 of the best hedged small cap plays.
no idea, but I have others that moved at the same time, so I have to guess there was some oil news...and, they are both retreating at the same time/rate....
sounds like good news to me as an investor, sorry for the people who are losing their jobs.
The entire E&P sector needs to re#$%$ their plans for the next 2 yrs, shedding costs is the first thing that shd be on their agenda.
imo, a little overly optimistic. I am not sure where LPI will go if oil stays under 50, but I can't see 14-15.
If you read the repts from the E&P companies, they are all going to pump more in Q1 than Q4. They just can't turn the spigot off that fast. My guess is that Q2 will still be up slightly from Q1, but by Q3 we shd be pumping about the same as Q2. All just my guess.
If that plays out, I just don't see oil popping until the summer, and I don't see 60/bbl until at least late Q3. Again, just my guess.
Do you think LPI can get to 14 if oil is still in the 50 range?
Look at the vol, already more shrs than the average daily vol, someone is unloading very fast...
My other energy plays, like PE, are doing great, what is going on with LPI?
New to this MD, but my thots on SD:
There are a number of O&G E&P companies that might not survive. If oil does stay at 40 for a yr, no sense in trying to outsmart the Saudis.
But if oil recovers, I would rather have a few of the terminally ill players, like SD, like GDP, like MHR, and not put all my shekels into just one.
I have not been thru SD's balance sheet, but I have been thru GDP's. They borrowed heavily to lease some really good acreage. At 40, it is not good acreage, at 70 it's a winner.
Again, my only point is that if you insist on speculating now, speculate of a few, not just one.
I hope you aren't asking when will a NYC bartender buy you a drink! I worked in NYC for 25 yrs, entertained regularly, ate in all the hi end places, drank in all the low end places, never had a drink bot for me, except at the very low end places after 2 AM...
Russia backing off from the Ukraine? Let me introduce you to a Mr Putin, he does not have a reverse gear....
But, PLUG is stupid cheap at these levels...I am not adding, simply bcse oil is dropping, and the shorts own the table.
oil is dropping, no one will #$%$ engines anymore, not for years at these oil prices. Take what you have and live to fight another day.
The much bigger issue, imo, is what happens with those "marginal" governments? It is a social devastation issue, I think Venezuela and some of the African countries could go from civil war to total anarchy as factions fight for the bread crumbs. What happen when that plays out? Will the Islamist terrorists move in? Not so bad in Africa, where they are already, what about having them with a strong toehold in So Amer??
Very low oil is a bad thing. What would happen here if we cut our social pgms by 25 or 50%? Anarchy. I am stunned they didn't see this coming, I personally hope they wake up, but so far, their stupidity says there's a lot more trouble to come...
TPLM down 7%...that tells us all we need to know...ps, I don't own any O&G E&P, haven't for 3 months, sold GDP at 14, AXAS at 5, etc, etc, and so glad I did!
" If Pickens is right and oil rebounds to $100 in 12 to 18 months.."
I don't think Pickens, or anyone, knows when oil will recover. Consider my reasoning:
Oil is controlled by large government, in fact, 98% of the worlds reserves are on land controlled by govts.
Govts do not act rationally. OPEC declined to cut production 5% (ie, 1.5M bbl/day from a 30M bbl/da current target.
For that, the price of oil has dropped about 12-13%.
Even a grammar school child can figure out that 28.5M x 75 is better than 30M x 65.
But they chose to keep production up.
The bigger issue is why they did that. Most the countries that produce and export oil are socialist, or close to socialist societies. In Saudi Arabia, every citizen gets "stuff" from the govt that is unheard of elsewhere, and in Venezuela, we know how socialist things are there. And how bad things are.
Those OPEC countries that are overspending their revenue can't stop pumping oil, they have bills to pay. And those bills are not rational, many have destabilized currencies, etc.
So, my thots are that the OPEC crowd can't, and won't stop pumping, and Russia will be the worst offender. Iran will also pump way over their limit.
I would like to think Pickens is right, that rational thought will return, but given the underpinnings of the problems, I have little hops for oil prices for quite a while. In fact, I expect some kind of soverign debt collapse before any oil sanity happens.
It's a sad outlook, I hope Pickens is right, but I see no way that happens.
of course, the question is if the current price is irrational or not...could it be that CBI does not get back above 50 for months? I hope not. Part of this selling could be early tax selling, but if tax selling persists, we could go into 2015 with CBI under 50.
May I jump in?
"why you see oil stabilizing in early 2015?"
It's a guess, based on a theory that is off the wall...but has anyone considered that the talk about US shale oil is a narrative to throw the world off the real issue?
Pls note that the drop in oil started right around the start of sanctions. It could be that the Saudis don't like Iran having nukes, and don't like Russia becoming too powerful again, and are cooperating with a WW effort to restrict those countries from the revenue they need.
So, my theory is that these sanctions will get to be less, but it will take time, and when that comes about, it will be with an agreement that is OPEC-like about prod volumes, etc.
Wild guess, oil is close to a bottom, won't see a 5 handle, and will start to rise in early Q2 next yr.
Again, a guess based on a crazy theory that I never believe the public narrative from almost any government.
Just came to this MB, and opened the first post.
I sold my AXAS, and all my oil stks, about 4 weeks ago. Now, they are all slaughtered. What to buy, even if to buy?
No company like AXAS will be acquired, my guess. My guess is that there will be lots of acreage, and wells, available from companies trying to avoid BK. GDP for one, but many small cap E&Ps are way over extended for a time with low oil prices. A better question might be, will there even be a market for additional acreage or more wells?
If you lost money, and voted for BO, it is your fault. There are lots of ways to confront the Russia issues, he chose the go with sanctions, and those sanctions have been killing Europe, and now are killing some US investors. ps, I admit his policies are not the only issue, but his policies are killing a lot of economies.
Oil comes back when the sanctions are lifted, and when OPEC gets some unity. But, some OPEC countries want to raise their production by as many bbl as they need to cut production.
So there's a lot of time (again, my guess) before this settles out. At the min, wait for 60 days after the first distressed asset sales.
If this is related to the price of oil? IF???
I started selling when TRN was off 2, and I am out already. You all shd be too,it just takes a click to get back in, but right now, oil could stay low for months...and TRN too...