Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 167565 times)

tombgrt

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Exactly. Hindsight is 20/20. We can repeat this ad nauseum but we'll never look at these things completely rational.

Congratz on BTE. I was foolish enough to sell my position for a small profit a few months back. Don't remember why exactly. Think I thought I found something better. ;)

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Definitely a short squeeze going on now in CRC. For all I know we are back sub $30 next week.


LR1400

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Exactly. Hindsight is 20/20. We can repeat this ad nauseum but we'll never look at these things completely rational.

Congratz on BTE. I was foolish enough to sell my position for a small profit a few months back. Don't remember why exactly. Think I thought I found something better. ;)

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Definitely a short squeeze going on now in CRC. For all I know we are back sub $30 next week.

I 100% agree on having a mental sell price and mental trailing stop loss % of the high. I know that is more moderate term investor or momentum investor mentality, but I have had my ass bit multiple times adhering to an "own it forever" mentality exclusively. 

tombgrt

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https://www.wsj.com/articles/oil-costs-how-much-how-the-oil-rally-took-forecasters-by-surprise-1525608000

Lol!

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Oil now above 70 and 75. Clear skies ahead, ladies and gentlemen!

WCS now USD $55, >$20 above 2018 lows I believe.
GXE on track to print cash like crazy the next few years. If they don't increase capex considerably, they will have tens of millions in cash and no debt before YE 2020.

SafetyinNumbers

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FWIW, Based on GMP FirstEnergy numbers, they have a 2019E of cash flow per share at $0.45 for GXE with a net cash position of $16m at the end of 2019E. It's important to note that they are using a WCS of $61.57 (and WTI of US$67.57) next year to create that estimate. WCS was $68.88 on the close Friday.
Top 5 positions: ELF IAM GCM.NT/GCM PIF EFR.DB

tombgrt

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Another fun day! And API numbers =  8)

FWIW, Based on GMP FirstEnergy numbers, they have a 2019E of cash flow per share at $0.45 for GXE with a net cash position of $16m at the end of 2019E. It's important to note that they are using a WCS of $61.57 (and WTI of US$67.57) next year to create that estimate. WCS was $68.88 on the close Friday.

That's... a lot of money! Earnings afer close tomorrow. Don't expect too much given low prices, bottlenecks (and continued hedges). But Q2 (and hopefully beyond) should be a blast!
« Last Edit: May 08, 2018, 01:43:40 PM by tombgrt »

Cardboard

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Look at that:

https://www.marketwatch.com/topics/organizations/american-petroleum-institute

And Trump puts an end to the stupid Iran deal. Go to hell Obama!!!

Cardboard

sculpin

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https://seekingalpha.com/article/4173007-2018-best-ideas-update-headed

Gear Energy (GXE.TO) (OTCPK:GENGF)

Gear was a favorite pick of ours in 2017 and in 2018. The stock didn't fare well in 2017 due to negative investor sentiment surrounding oil and energy equities. But that's starting to turn, and as the fundamentals of the business continue to improve unabated, we think this year could be the year for when the stock inflects higher.

The first 3-months of the year saw Canadian investors stampede out of the energy sector due to concerns over constraints in takeaway capacity. In addition, the Transmountain drama has further negatively impacted investor sentiment. The stock price was so discounted that we wrote a piece in March titled, "This Small-Cap Oil Producer Is Too Cheap To Ignore." Since then, the stock is up more than 50%.

But our analysis indicates Gear is still trading at a fraction of where it's supposed to trade. For example, if WTI averages at $70/bbl next year, we have Gear trading at 1.9x EV/DACF 2019 estimates. That's 1/3rd of the multiple peers trade at, and the stock would have to rerate to C$3.50 per share to close the valuation gap.

Similar to our CRC analysis, we have an expected value of C$7.55 per share for Gear using 2022-2023 price targets.

With WTI now above $70/bbl, even if oil prices were to stay flat from here, we see Gear growing at ~25%+ a year while spending within cash flow. We think this is still one of the cheapest energy names in the market today with possibly one of the best management teams in the industry.

tombgrt

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Thanks. I'd surely retire (at 33 in 2023 haha) if his Gear bull case became reality.  :P A lot can happen in that timeframe so not yet celebrating just yet.

Paarslaars

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Out of curiosity, what does the oil basket look like for you guys?

My two biggest positions are OBE & GXE, followed by BTE & PPR. Not very satisfied with OBE that took no advantage of the oil rally due to their hedge and it does not appear to be in a better position than other companies to do so in the near future (yes Cardboard, you warned us :) ).

SafetyinNumbers

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Out of curiosity, what does the oil basket look like for you guys?

My two biggest positions are OBE & GXE, followed by BTE & PPR. Not very satisfied with OBE that took no advantage of the oil rally due to their hedge and it does not appear to be in a better position than other companies to do so in the near future (yes Cardboard, you warned us :) ).

I have PPR, GXE, ATU, IPO, CPG and ZAR.DB.A in that order although the first three are all of similar size.

PPR has catalysts for this year with the NAFTA lawsuit and QC regulations even if oil didnít turn. 6-12 months was supposed to be the time line for a decision on the lawsuit and we are 6 months post the final arbitration hearing. It also has the most financial and operational leverage but the stock is certainly not reflecting that. Hopefully Q2 will demonstrate that leverage in cash flow.

ATU seems primed to increase their capital spend and guidance given realized pricing they must be experiencing right now. With almost no leverage and high capital efficiency it seems like a great idea but their full year guidance was very conservative so perhaps they will wait to the second half to do that. They will report this week.

ZAR.DB.A is about a 25% YTM with a real kicker with a $1.25 conversion price if oil stays strong. There is a good argument to own the common instead but I like the income and return potential with the equity as a buffer. The YTM could be even better if they do an asset sale that helps them refinance the debentures early. They report this week, as well.
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