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Started By
Message
Thoughts on the Oil & Gas sector
Posted on 6/21/17 at 8:33 pm
Posted on 6/21/17 at 8:33 pm
Looking for thoughts and outlook on the Oil and Gas sector.
With the recent pullback in oil prices and resulting decline in stocks in this sector, is now a good time to begin or average down a position?
For Gas (natural gas) we've just shipped the first shipment of American LNG to Europe (Poland). Continental Europe has been very reliant on Russian natural gas for a very long time which is obviously not desirable to most in Europe. If American gas can gain a foothold on the European continent that would be huge for American Oil and Gas companies.
As an industry Oil and Gas majors have made great strides to increase efficiencies with technology and drilling longer laterals. Most carry heavy debt loads from the recent oil crash. This has improved some in the past few quarters with the rebound in prices, but that now appears to be reversing some.
I'm a relatively new investor, I've been at it for about a year now. I'm also a smaller investor, $1,000 to learn/grow with. I'm 27 with 3 years worth of 401k contributions and I have been fortunate enough to see significant increases to my salary over this time, I currently make a little more than 40% more than what I did 4 years ago. My previous employer had a profit sharing plan that went directly to 401k that added a decent boost to my total invested. IMO I am off to a pretty good start for retirement because of this combination of factors. I have a total of 9% of my annual salary going to my 401k between employee contribution and employer match with 8% growth over the last year. This $1,000 is to take educated chances with to grow wealth to add on to 401k upon retirement.
TIA for your thoughts.
With the recent pullback in oil prices and resulting decline in stocks in this sector, is now a good time to begin or average down a position?
For Gas (natural gas) we've just shipped the first shipment of American LNG to Europe (Poland). Continental Europe has been very reliant on Russian natural gas for a very long time which is obviously not desirable to most in Europe. If American gas can gain a foothold on the European continent that would be huge for American Oil and Gas companies.
As an industry Oil and Gas majors have made great strides to increase efficiencies with technology and drilling longer laterals. Most carry heavy debt loads from the recent oil crash. This has improved some in the past few quarters with the rebound in prices, but that now appears to be reversing some.
I'm a relatively new investor, I've been at it for about a year now. I'm also a smaller investor, $1,000 to learn/grow with. I'm 27 with 3 years worth of 401k contributions and I have been fortunate enough to see significant increases to my salary over this time, I currently make a little more than 40% more than what I did 4 years ago. My previous employer had a profit sharing plan that went directly to 401k that added a decent boost to my total invested. IMO I am off to a pretty good start for retirement because of this combination of factors. I have a total of 9% of my annual salary going to my 401k between employee contribution and employer match with 8% growth over the last year. This $1,000 is to take educated chances with to grow wealth to add on to 401k upon retirement.
TIA for your thoughts.
5
Posted on 6/21/17 at 9:11 pm to DabosDynasty
I mean since that money doesn't seem to be super necessary, go ahead and take a chance if you're feeling it. I'd want no part of that industry for funds I needed long term sustainable growth. People with less income than you blow a 1000 bucks at the casino routinely and still survive.
Posted on 6/21/17 at 9:19 pm to DabosDynasty
If I was jumping into O&G right now to take a gamble, I'd put a small investment in a company like Whiting Petroleum to make some nice capital gains.
Posted on 6/21/17 at 10:31 pm to DabosDynasty
I wouldn't touch it, personally. There are other markets with much better fundamentals than this. The oversupply is only going to continue for a long while.
Posted on 6/22/17 at 7:59 am to DabosDynasty
Netflix
Posted on 6/28/17 at 10:06 pm to TheBoo
(no message)
This post was edited on 7/23/20 at 4:58 am
Posted on 6/29/17 at 12:52 am to RadThibodeaux
Please send some work back to lafayette. K, thanks
Posted on 6/29/17 at 9:46 am to RadThibodeaux
quote:
RadThibodeaux
You hiring? I'll be a PETE grad soon.
Posted on 6/29/17 at 11:51 pm to RadThibodeaux
I work in the O&G business, but not in the US. I'm seeing more companies revise their oil price forecasts downward and are adjusting to the "lower for longer" operating model.
This means that operating plans are requiring projects to be economical at lower prices to get approved (which means fewer projects). So there is a bit more downside potential in the market.
This means that operating plans are requiring projects to be economical at lower prices to get approved (which means fewer projects). So there is a bit more downside potential in the market.
Posted on 6/30/17 at 4:53 am to Spirit of Dunson
Interesting. I know it's speculation but you think a bit more is 20%? Closer to 50%?
Posted on 6/30/17 at 7:39 am to dirtsandwich
quote:This is just my opinion, but I don't see a high probability of a 50% drop. What I meant in that last post was that I am not seeing the same expectation of a near-term recovery. I think throughout 2015 and 2016, people assumed that they could just "hold tight" and ride it out until oil bounced back to >65 or so.
I know it's speculation but you think a bit more is 20%? Closer to 50%?
They were even willing to operate at a loss for a period until they made it through the downturn. Now, they are realizing that sub 60 may be the price for longer, and they need to adjust their current operations and development plans in order to be profitable.
Posted on 6/30/17 at 7:57 am to Spirit of Dunson
Thanks. Interesting stuff. I guess the real question is what is the likelihood of a sustainable rebound in price in the near term. I know next to nothing but your opinion makes sense to me.
Posted on 6/30/17 at 10:56 am to Spirit of Dunson
Thanks for the input. My objective is a buy low and wait for the recovery or a combination of continued efficiency increases and a less vibrant recovery.
Posted on 6/30/17 at 11:00 am to DabosDynasty
quote:
buy low
you might be on to something
Posted on 6/30/17 at 11:13 am to FunroePete
I missed what may be the actual bottom, but this retread lower has intrigued me as I've watched a few of these companies for a little while and actually do own one of the more depressed companies. I have a small stake in CHK as they got themselves into quite a mound of debt before and during the bottom in oil, but I believe in the comeback strategy and they are more exposed to Nat gas than oil. They also appear to be the most efficient of the drillers.
This post was edited on 6/30/17 at 11:26 am
Posted on 6/30/17 at 11:56 am to DabosDynasty
I am in DW in GOM, I wouldn't be surprised to see it touch the 30s next yr. Trying to make my way to land or thinking of getting out all together, holding tight for now.
I love O&G but anyone coming out of school would be taking a big chance on trying to make it a lifetime career.
I love O&G but anyone coming out of school would be taking a big chance on trying to make it a lifetime career.
Posted on 6/30/17 at 3:08 pm to DabosDynasty
The Permian is going to have us low for long...I see it touched $46 today, but I'm bracing for a move back to $40.
Posted on 6/30/17 at 3:26 pm to cwill
Dont forget about the SCOOP and the STACK either, iirc they are around the same break even as the Permian.
However the Saudis have finally come to the realization that they are screwed and have lost all control of the price of oil. With this being said they have very few recourses and I think we will see them instigate a regional war in the area to help prices rebound. Their oil fields are protected by the US and they know it, I think we are already seen the groundwork being laid with the tough talk they have been throwing around lately in regards to Iran.
However the Saudis have finally come to the realization that they are screwed and have lost all control of the price of oil. With this being said they have very few recourses and I think we will see them instigate a regional war in the area to help prices rebound. Their oil fields are protected by the US and they know it, I think we are already seen the groundwork being laid with the tough talk they have been throwing around lately in regards to Iran.
This post was edited on 6/30/17 at 3:40 pm
Posted on 6/30/17 at 3:55 pm to cwill
quote:
The Permian is going to have us low for long...I see it touched $46 today, but I'm bracing for a move back to $40.
This, I just can't see oil demand spiking without some sort of blackswan event. I'd be more bullish long term (5 years) with LNG exportation coming online over the next few years.
Posted on 6/30/17 at 7:01 pm to GREENHEAD22
quote:
However the Saudis have finally come to the realization that they are screwed and have lost all control of the price of oil. With this being said they have very few recourses and I think we will see them instigate a regional war in the area to help prices rebound. Their oil fields are protected by the US and they know it, I think we are already seen the groundwork being laid with the tough talk they have been throwing around lately in regards to Iran.
I'm right there with you on this, most middle eastern countries have high breakeven costs and are burning through their war chests.
The new heir to the Saudi "throne" is the proponent of the Saudi Vision 2030 revitalization of their economy and the bank roll for that is the Aramco IPO. And right now Aramco isn't worth shite what they think it is at $40 oil.
If it goes to New York, I don't see it going over 6-700 billion.
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