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Oil companies worth to invest

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What oil companies are worth to invest even if  the price is 40/bbl mean regardless what the price they will survive 

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In a survival of the fittest scenario for the oil sands suncor would be the last man standing. They have an advantage over the others being very integrated up and down stream. They have the most upgrading capacity and refine 70% of their own oil/bitumen. They dont sell WCS they sell mostly upgraded syncrude sweet premium and refined diesel/gas/petro chemicals at full price. They are not the lowest cost of production player in the oil sands. S.A.G.D is a little cheaper, but the S.A.G.D. players dont have upgraders and are at the mercy of WCS prices and steep price  discounts plaguing the oil sands, and they have to export a lot by train. Suncor does have some S.A.G.D assets namely suncor fire bag (I love some of the site names up here) I wont be surprised if suncor buys up the S.A.G.D. players like a sperm whale feeding on plankton soon. For reference, and these numbers come from an undisclosed source who sits in executive board room meetings who I talk to in smoke pits, suncor can produce a barrel of bitumen for $27. S.A.G.D. can produce for $20. Oil sands is cheaper then shale by a long shot. If not for a lack of pipelines and $20  a barrel discounts (we sell our oil for $25 when we should be getting $45) the oil sands would be rolling in cash. Very powerful entities have been putting the brakes on the oil sands deliberately. When shale goes into decline (soon) and new pipelines come online (keystone XL, trans mountian, line 6 which all can service the usa Markets) the oil sands will replace the decline in American shale oil supply and I will be sitting back watching the table flip and telling everyone I told you so! I predict canada hasn't hit rock bottom yet. There will probably be more consolidations and drama over pipelines, perhaps A crisis event like existing pipelines being attacked and shut down causing a temporary supply crisis and fuel shortages. And people will flip 180 on their opinions of oil and gas and demand that pipelines be constructed RIGHT EFFIN NOW! and the taps come back on some time later and inside investors who bought "stranded" oil sands assets at rock bottom clean house, all according to the plan of course.

TlDR: suncor energy, but not yet. Wait for "the big one" event and buy when there is blood in the streets. 

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Thank you, Sands will come back that located in Canada  

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(edited)

Also perhaps Husky for similar reasons as suncor above.

Baytex is super cheap right now; but I'm currently just waiting and watching closely.

Edited by Enthalpic

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(edited)

On 2/9/2020 at 9:24 PM, Enthalpic said:

Also perhaps Husky for similar reasons as suncor above.

Baytex is super cheap right now; but I'm currently just waiting and watching closely.

 

I like Husky which offers a lock in on a 6% dividend for a low risk name.  Strong insider ownership and the CEO Peabody has been buying substantial amounts with his own money on the open market. 

Buying on the dip until their refinery in the US is back online and the gas project finishes up in Asia.  Integrated name which is not threatened by WCS differentials.

Other names I like are:  WCP, TOG, ARX, TCW, VET is tempting (I confess, I added a bit) and MEG (takeover candidate).  

Mostly dividend paying names which can sustain $50 and have lower debt at lower rates.  

I don't believe in long-term $50 or I wouldn't buy anything except midstream and maybe a Suncor.

This is an opportunity to buy on a dip before shale collapses and prices soar.

 

Edited by Chris Kanaan
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2 minutes ago, Chris Kanaan said:

 

and MEG (takeover candidate). 

 

I was shocked they turned down the last offer; seemed like a good deal to me.

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For canada names.  PXT 30$ Brent break even. Gte 55$ this year 50$ next (also brent), FEC 50$ break even brent, ATH WCS 42$ , MEG as others have said (dont know breakeven), YGR/SGE 56$ WTI break even, ERF looks like 54$ WTI (haven't ran numbers just educated guess) IMO is pretty cheap (but linked to xom might cause trouble) VII seven generations energy is NG/lite oil look close to 50$ wti , CJ is probs 53$ ... something to note is higher the break even the more discounted or cash flow change at higher price . I still prefer saftey so low debt highest netback and nice 5yr is my target ... and my first mention owns that title . VET was the equivalent of PXT 2018 near year end . Earnings, share count, share price ect but a year and a bit of share buy backs, lean smart spending PXT and low NG in europe, debt and too big a dividend have slowed VET to a halt. 

Think I mentioned petro tal tal.v already as a u.s. based company. 

I'd wait till after q1 and mabey even q2 earnings are out . Sector needs love across the board not just any single  name . Or like your post says find lowest cost or most integrated player and wait away.

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(edited)

18 hours ago, Rob Kramer said:

For canada names.  PXT 30$ Brent break even. Gte 55$ this year 50$ next (also brent), FEC 50$ break even brent, ATH WCS 42$ , 

Hey Kramer,

I'd be cautious about your Athabasca Oil Corp at $42.

Firstly, even if that was their breakeven, they need to do much better then breakeven because they have a very large debt (at 10% in USD), several times their current mkt cap due Feb 2022 trading at 83 (even after the two pipelines were approved) in Europe that they will not be able to pay.

Secondly, Athabasca Oil's joint venture with Murphy Oil in the Duvernay expires soon.  It was something like a 7% for 30% working interest.  Athabasca themselves only drilled a few shallow bitumen wells all over last year and has not applied for a single permit in 2020 - cash strapped.  Once the JV with MO expires, I expect you'll see a very ugly situation for the company.

Thirdly, their interest rates are $6 boe and they applied for an NCIB instead of talking refinancing.  The management has questionable priorities given the unsecured notes are an existential crisis and they made no mention of them in the Q1 update.  

Lastly, their CFO recently resigned unexpectedly and none of the insiders buy shares.  Unlike MEG, there has been no large private equity or peer interest in the name.  My friend who works in the industry suggests they have very low tier assets.

I would not touch Athabasca Oil with somebody elses money. 

I think they go under.

Edited by Chris Kanaan

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(edited)

12 minutes ago, Chris Kanaan said:

Hey Kramer,

I'd be cautious about your Athabasca Oil Corp at $42.

Firstly, even if that was their breakeven, they need to do much better then breakeven because they have a very large debt (at 10% in USD), several times their current mkt cap due Feb 2022 trading at 83 (even after the two pipelines were approved) in Europe that they will not be able to pay.

Secondly, Athabasca Oil's joint venture with Murphy Oil in the Duvernay expires soon.  It was something like a 7% for 30% working interest.  Athabasca themselves only drilled a few shallow bitumen wells all over last year and has not applied for a single permit in 2020 - cash strapped.  Once the JV with MO expires, I expect you'll see a very ugly situation for the company.

Thirdly, their interest rates are $6 boe and they applied for an NCIB instead of talking refinancing.  The management has questionable priorities given the unsecured notes are an existential crisis and they made no mention of them in the Q1 update.  

Lastly, their CFO recently resigned unexpectedly and none of the insiders buy shares.  Unlike MEG, there has been no large private equity or peer interest in the name.  My friend who works in the industry suggests they have very low tier assets.

I would not touch Athabasca Oil with somebody elses money. 

I think they go under.

I have to agree it's a massive all or nothing play. Either the pipeline gets built , trains get moving , efficiency is found in the system and overall prices come up or they will flop. I got carried away with writing the names without writing better descriptions. 

Edited by Rob Kramer

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