with such insightful analysis, it's a wonder you aren't completely broke.
Back in 08? Was that when it was 70 or 80/sh? I had it way back when it was very hi, and some guy on the MB identified himself as a broker of dry bulk loads, the Baltic Index was something like 2700, and this guy said sell!! And posted for a couple weeks about the declining index.
I listened, I have no courage, I'll sell any drop! Thank God, DRYS went to 10 in about a few months, a real brutal beating!!
says SLB and others in the know. They point the the number of active rigs in this country, down from 1600+ to something like 400 or less.
That drop in production will, in time, drop WW production, and while production drops, demand increases every year.
I have no idea of what the price will be at any point, I just know that less supply, with increasing demand, will raise prices.
"I like insider ownership"
This is a 2 sided fraud foisted on the US shareholder. I personally hate insider ownership. Here's why.
First, a good portion of those shrs are probably from the exercise of options, and it could be those options were about to expire, or they were on a sell schedule. Nothing wrong with that, is there?
yes, there is.
First, the BoD grants options. What right do they have to give away chunks of the business that I own part of? They do it bcse, on many boards, they directors have very large option grants themselves.
Every time one of those options are exercised, the stock pool is diluted. The exercise of options is the #1 contributor to the diff between "GAAP" and "non-GAAP" earnings.
In some extreme cases, like new tech companies and biotechs, that dilution can be a very silent 10-20%/yr.
That means a company needs to grow eps 10-20% before a dime flows to the shareholders.
My second complaint is that mgmt shd be compensated for their best efforts in their comp plan, not in stock options. The greatest mgmt mind of the 20th century (peter Drucker) wrote a book (he was a Harvard guru) called Managing for Success, and it outlined how to align goals and get results. His methodology worked for many companies in the 70s and 80s, but by then, stock options took over.
Now, they all manage for ST stock option targets.
Why are execs given such huge awards? Bcse the BoD approves them, and they get them too.
I once knew many people who say on boards of hi tech companies. They all told me they were making more on the stock options of the companies they did the BoD work for, than they were making on their full time job. That was back in the mid to late 90s. But they were pulling in 7 figures by exercising grants of companies other than the one they worked for.
Disgusting, the whole mess.
can you read a balance sheet? I know the answer, bcse if you could, you would not make posts like this.
The first sand co to go will be EMES, then HCLP. From a balance sheet perspective 9ie, the strength of a company), SLCA is about 100 times stronger than EMES.
Here's another thing to consider, the guys who are buying that sand are actually selling their oil at very hi prices, bcse of the hedges they have in place. Most frac companies are hedged anywhere from 30-70% thru 2016 at about 58-70/bbl (read some, you will find this to be true). Few have any significant hedges in 2017.
So, if oil does not recover this yr, the drillers will go from realizing about 60/bbl to about 30/bbl by a year from now.
How much sand do you think they will need?
if you think oil will recover, i invite you to go to the CME website, and look at the oil futures.
are you not paying attention? Iran is already offering their oil to the Euro countries at 13/bbl, and the Sauds say they won't lose mkt shr on price. So brent may be where it is, but in the mktplace, it looks like 15 is history.
the problem with what you say, is that to us, in a free enterprise system, eliminate the competition means something entirely different than what it means to the Iranians. They mean it literally.
Plus, the WW economy depends on oil, and all this disruption is a huge problem for everyone, many countries want it to end, what if they all gang up on Iran?
Last, there never was free enterprise in oil, OPEC was a cartel, the exact opposite of free enterprise. Many want OPEC to come back into the forefront of oi price strategy. That seems unlikely right now.
I don't think oil has been at 20 since SLCA became a public company. Someone needs to check that out, bcse I am guessing.
You guys all need to learn how to read a balance sheet.
EMES is precarious. Way too much debt, way too little equity. HCLP is barely hanging on. SLCA will be the LT winner. I am not sure winning will be of much value for at least a couple yrs.
If you learn to read a balance sheet, remember that if your debt is BBB or better, the terms are pretty std. If you are at junk, there are covenants in the loan agreements that allow the bondholders to force certain actions, whatever they agree on, usually a liquidation to get their loans paid. btw, I don't know how you find out those hidden covenants...
And, assets on the books are meaningless, what is their worth in an auction that runs tomorrow, not on a market that may exist 2 yrs from now.
gmess, I don't think you have a clear grasp on the relationship between SA and Iran. Iran is a large, rich (in many areas) country, SA is much smaller in population, and only has oil resources.
SA knows that Iran will attack the min they think they can get away with it.
So, today Iran says they will offer discounts off Brent to the Euro countries to try to take business away from SA and Russia.
SA said they will not lose mkt share on price, which really means they don't want Iran to have a penny.
This ends very badly. While no one knows for sure the extent of the damage that will be done, I feel confident that no one has imagined how bad it will get.
EMES will be consumed by the bond holders.
Just FYI, I sold mt EMES above 100, and my HCLP at 66, then posted madly telling people to sell, and was attacked viciously.
Right now, I am telling everyone to be very cautious, and imagine what could happen if oil is under 20. Just a peek, China now all but owns the future of Cuba and Venezuela, they lent V the money to pay sovereign debt, in return for oil flow over the next huge number of yrs. The bought an option on oil, but really an option on a country. Think about where this is all heading.
I'm not sure what you mean when you ask how far the S and I will go.
They are only 2 of the many that are contributing to this mess. Our domestic production has only recently begun to drop.
But can I make 2 points?
One, the mess that exists is bcse 98% of the world's oil reserves are controlled by governments. That has created a parable about the right way to run a country, and the wrong way. Most of the oil rich countries financed their entire sovereign budget on oil. The Saudi's are at 100%, Venezuela is closer to 100 than 80, Russia is 70%, etc, etc. Bcse all their spending was predicated on 100/bbl oil, and they can't stop spending, be assured we are heading to a huge debt crisis, where sovereign debt is restructured, defaulted on, etc.
Two, some of the problem has been caused by Obama, he has supported Iran, and the Saudis are trying to deny Iran the money they need by pumping oil. They are practicing economic warfare. In that process, our domestic oil industry is getting murdered.
When the Chinese shipped solar panels here real cheap, we were fast to impost tariffs. Obama loves solar.
I would like to see oil import tariffs. Our domestic industry could survive, and no one would be hurt any more.
Obama would not do that, he would never support the fossil fuel industry. But such a move, admittedly very protectionist, would reverse the oil price drop, and supercharge our markets. In 5 yrs, we would be independent of foreign oil.
What can't we do that? Bcse BO hates fossil fuel, and it's OK with him that he is part of what is making this mess a lot worse.
The govt support is the cause of the low panel prices.
2-3 yrs ago, I would have told you that the solar plays had to consolidate at some point, too many players, there's many that are not even public companies.
Without consolidation, there are too many competitors, and prices stay very low.
But no one wants to give in, they all are waiting for more govt handouts.
So the low price carnage continues, and I don't know how or when it will end.
I forgot to mention that low oil destroys the economy of many countries that totally depend on oil revenues. Russia gets 70% of their sovereign revenue from oil.
What does that have to do with our economy? Russia spends their money across the globe, but a lot is spent in Europe. When Europe suffers, they devalue th Euro, and our good get more expensive. So any company, in any segment, that sells to Europe is having a harder time being profitable.
Lower oil is a good thing, oil too low is a very bad thing. It's too low.
That is BS that is flaunted on CNBC, they are a bunch of talking head commies.
Here's what the current price of oil gets us:
The average fill up is cheaper, so many people have a little more money.
Hundreds of thousands are losing jobs and businesses as things collapse. Everyone from the oil company employees, to the trains that move the oil, to the people who provide services onsite, from drivers to food service. All that is lost wages in this economy, and people onto UE.
Hundreds of millions, into the billions, of bad debt that will collapse some banks that made too many loans, and hurt the entire debt sector.
All that lost financial productivity is bad for every sector, and the market is showing you that.
I hate the BS that CNBC spews, they are a mouthpiece for the lib govt we have. Why do you think Dylan Ratigan, Maria Bartiromo, and many other have left?
could I also point out that the BO admin would protect the soalr energy business in a heartbeat, it fits with his politics. And the opposite is true for the O%G industry, despite the fact that they pay such huge taxes, and employ so many people...
I hear that everywhere. While no one knows the exact intentions of the Saudis, when they make that assumption, maybe they shd also suggest that, just maybe, the Saudis are forcing the price of oil down to hurt the Iranians and the terrorists. The Sauds hate Iran, they know Iran is a very big problem for them.
As to our production, here's what I COMPLETELY don't understand:
We have a bunch of solar panel makers in this country. they do a reasonable job. When the Chinese price their panels under our company's ability to compete, we file trade charges, and have, just last yr, instituted very high (28%?) import tariffs.
Oil is much more strategic, and the Saudis et al are pricing it below our ability to compete. It stuns me, and I must be missing something, that there is no call for import restrictions and tariffs.
At $50/bbl, the US can have a healthy domestic energy market, and be self sustaining. It would seem to me that the govt shd do something to NOT let that opportunity slip away.
As for the Sauds, they are already losing money every day. They need $80 oil to be cash flow neutral. The diff for them is that they have enormous reserves. Who is really suffering is the people of Venezuela (the election is a good consequence of the low price of oil) and any energy dependent state. While we are all quick to note Russia, and a few African countries, including Egypt, we forget Norway, who depends on energy from the North Sea.
Here's a last thot, with this global warming thing in Paris, BO is committing us to about 300B in contributions to the WW efforts (ie, money we will give away...). Plus, he is committing a lot of financial aid going fwd to the alternative energy segment. Did you know that of the major market groups, energy paid the most taxes (largely bcse few of them have any opps outside the US, as you may know, GE pays no US taxes). So he is, once again, spending like crazy and destroying the sources of revenue.
Long CHK? When you buy any security, look at the balance sheet. As prices dropped, CHK got into the disastrous position where the amt of debt is much greater than the mkt cap.
That puts the bond holders in total control. All they want is their money back at any cost. That means the people in control don't care about you.
I try to get a short in every day, and have been doing that since CHK was at 10. The big boys short at will, but I can't get a borrow, and even if I did, the stock would get called away before I could make very much.
But CHK is going BK. The only thing that saves that is a rally in energy, and that just isn't in the cards.
HCLP and anything to do with the frackers is getting ready for the real bad times. You thot it was tuff so far? Most the small players have hedges that close out around now, a few are hedged into next yr.
Things have been tuff with the hedges in place, what do you think will happen when they have to sell the oil and gas at current mkt prices??
Analyst estimates for eps for 2016 are currently at a mere 13 cents, down from 1.83 just 90 days ago. I suspect that 13 cents is wayyyy too hi, they will be losing money thru all of 2016.
Here's your only chance of coming out a winner, the Saudi's decide to cut their production by a LOT! Because no one else is going to cut, not Russia, not any of the African guys, not Venezuela. Certainly not Iran, which is just now cranking it up.
I just don't see that happening. It is very bad for oil investments, but also bad for the WW economy, so much depends on oil prices.
But, I would sell now, and close my eyes for at least 60 days...
Huh? Bios were strong in Aug? In Aug, 2015? According to my charts, IBB fell more than 10% in August.
It's not just the direction, it's the level. At 45 or so, many companies survive, and govts can scuff by. At 35, things break.