Author Topic: PWE - Penn West Petroleum  (Read 446572 times)

nodnub

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Re: PWE - Penn West Petroleum
« Reply #1370 on: November 05, 2018, 06:54:18 PM »
It's called obsidian energy these days :)
OBE:TSX

TSX closing price, Nov-01, $C 0.97
Sep-2018 PP, p 20; NAV of $C 1.58, 2P NPV(10) of $C 1.18, Net Debt of $C 0.38

At $C 0.97 you are collateralized at 122% of 2P NPV(10), and it is though the two 'pending' asset sales had allready taken place, and there was zero debt. Then add to it that a year from now; the Enbridge Line 3 will be coming on-line, and OBE's existing hedges will have rolled off - delays and screw-ups excepted. Still think it's a terrible buy?

Step away from your screen, throw it in your sock drawer, and go do something else.
Isn't that what value-investors do?

SD

People have been saying things like this since the very first page of this thread (I know, I've read it all as a project last year). It's been "cheap" or "turning the corner" all the way down 90%+.

It could very well spike up tomorrow, but at this point it's clear that this wouldn't be because the value was predictable but rather a gamble on volatility/noise/luck. Some things belong to the "too hard" pile, IMO.

I agree. I remember saying something similar in early 2017 when it was like $2. Has the name changed? I can't even find the name.


Joe689

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Re: PWE - Penn West Petroleum
« Reply #1371 on: November 12, 2018, 11:37:08 AM »
The dip continues.  It is being priced for insolvency.   If the diffs stay where they are, it will become insolvent.

Where is the government?  How can they led money bleed out of the country to benefit of the US?  All we need is shovels in the ground

Liberty

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Re: PWE - Penn West Petroleum
« Reply #1372 on: November 13, 2018, 10:50:17 AM »
Eyeballing it, it's about as low as it's been since the early 1990s, but adjusted for inflation, it's probably all-time lows.

That's the thing with commodity stocks. You can analyze and price it as much as you want based on some commodity price, or a probability distribution of prices, but you or management have no control over what the actual commodity price will actually be in the future (and for how long), and there's usually a bunch of operating leverage to it and fixed costs that have to be paid even when you're not making money, so the equity tranche can get squeezed pretty quickly.
« Last Edit: November 13, 2018, 11:04:37 AM by Liberty »
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SharperDingaan

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Re: PWE - Penn West Petroleum
« Reply #1373 on: November 13, 2018, 01:38:14 PM »
Eyeballing it, it's about as low as it's been since the early 1990s, but adjusted for inflation, it's probably all-time lows.

That's the thing with commodity stocks. You can analyze and price it as much as you want based on some commodity price, or a probability distribution of prices, but you or management have no control over what the actual commodity price will actually be in the future (and for how long), and there's usually a bunch of operating leverage to it and fixed costs that have to be paid even when you're not making money, so the equity tranche can get squeezed pretty quickly.

Which is also the reason why you put it in the sock drawer .....
At a per share cost that is < 1/2 the cost of a cup of coffee - it's not much of a risk.

SD

nodnub

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Re: PWE - Penn West Petroleum
« Reply #1374 on: November 13, 2018, 09:35:21 PM »

At a per share cost that is < 1/2 the cost of a cup of coffee - it's not much of a risk.

SD

Are you implying that A) an investor should only buy one share or B) that stocks with a low-price per share are not risky?  ;D

Using this logic Berkshire A shares would be one of the riskiest investments in the world  :D

bizaro86

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Re: PWE - Penn West Petroleum
« Reply #1375 on: November 13, 2018, 10:53:56 PM »
Eyeballing it, it's about as low as it's been since the early 1990s, but adjusted for inflation, it's probably all-time lows.

That's the thing with commodity stocks. You can analyze and price it as much as you want based on some commodity price, or a probability distribution of prices, but you or management have no control over what the actual commodity price will actually be in the future (and for how long), and there's usually a bunch of operating leverage to it and fixed costs that have to be paid even when you're not making money, so the equity tranche can get squeezed pretty quickly.

Which is also the reason why you put it in the sock drawer .....
At a per share cost that is < 1/2 the cost of a cup of coffee - it's not much of a risk.

SD

I have some great oil stock to sell you. It's only $0.01 per share. They don't even make Canadian pennies anymore, so barely any risk at all. Less than the cost of a piece of gum!

JRH

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Re: PWE - Penn West Petroleum
« Reply #1376 on: November 14, 2018, 03:38:35 AM »
I have some great oil stock to sell you. It's only $0.01 per share. They don't even make Canadian pennies anymore, so barely any risk at all. Less than the cost of a piece of gum!


It's even better than that, though. You can only lose half a cup of coffee (I could probably do with less, anyway), but upthread he said that if the investment works out you'll be able to buy a house with the proceeds! Talk about asymmetric!  ::)
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Liberty

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Re: PWE - Penn West Petroleum
« Reply #1377 on: November 14, 2018, 03:40:29 AM »
Eyeballing it, it's about as low as it's been since the early 1990s, but adjusted for inflation, it's probably all-time lows.

That's the thing with commodity stocks. You can analyze and price it as much as you want based on some commodity price, or a probability distribution of prices, but you or management have no control over what the actual commodity price will actually be in the future (and for how long), and there's usually a bunch of operating leverage to it and fixed costs that have to be paid even when you're not making money, so the equity tranche can get squeezed pretty quickly.

Which is also the reason why you put it in the sock drawer .....
At a per share cost that is < 1/2 the cost of a cup of coffee - it's not much of a risk.

SD

This makes no sense.
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Cigarbutt

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Re: PWE - Penn West Petroleum
« Reply #1378 on: November 14, 2018, 05:24:38 AM »
Will expect to see more "color" from SD as I doubt that his comments should be read on a first degree level.
FWIW, I think that OBE managed the difficult 2015-6 period painfully but was able to come out with at least some potential.

To the question, how worse could it get? I would say potentially a lot worse but, perhaps, what Sharper Dingaan is referring to is the notion of "beta" risk that Mr. Buffett described when he bought Washington Post stock. To compare Washington Post to "Penn West" is a risky proposition but the principle behind the thought process is that once one has determined an intrinsic value for a company, the simple fact that the market price significantly goes down does not automatically mean that your investment is more "risky". In some selected circumstances, it may actually mean that one should buy more then.

Bias disclosure: in my humble and limited experience, shares reaching new lows have been a reasonable source of profits.

Joe689

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Re: PWE - Penn West Petroleum
« Reply #1379 on: November 14, 2018, 08:34:06 AM »
I will not speak for SD either but I understand to some extent what he is getting at.   There are hard assets here. Commodity assets.  These assets will always have value.   This company's commodity is oil.  Oil is consumed, finite commodity that happens to be the largest source of consumed energy in the world maybe besides the sun with plants.    It is fair to suggest that these assets are not worth zero.    So the question is, if they are above zero, what are they worth?   We can value these assets by several different techniques.   Several techniques/metrics suggest this is at a extreme level of value.   Lowest of peers metrics, lower than peer transactions, well curves above average.    Just like all stocks, this stock price represents current sentiment.  We all know the current sentiment is at all time low with Canada oil & gas.    Value buyers should be drooling over some of these oil & gas names in Canada.  Doesn't have to be this one. 

BTW, Investor day is tomorrow.  What a perfect day to pitch investors when your stock currently has more debt than market cap.