Oil related companies

[hendi_alex]

I sold April 17 $55 puts for BPT at $5.50 yesterday. After today, the sell is looking very good, with almost a $5 buffer. Break even is all the way down to $49.50, and with expiration in just over 3 weeks. Of course there is the dividend declaration that should include a cut of over 60%, to near a dollar quarterly, but IMO that is mostly factored in already. Also, the stock will likely go ex. dividend in front of the expiration date, so some downside risk there as well. I'll likely sell puts until the shares come to me, but would like that to end up being closer to $40 than to $50. If these $55 shares get put to me, I'll immediately sell either $50 or $55 calls, probably going out to about October or November.

[Dundey]

I agree Eric, have been feeling that way for a couple weeks now and the market looks like its going in that direction. I was a big buyer of energy and MLP's Dec. - Feb., so here's hoping we're both right! But really at the levels I got in at there should not be a ton of downside risk from here. Don't know if we'll see $100 / b anytime soon but do think we're on the way to $70.

[rayray]

My oil related companies are

BRK.B
BBL
COP
XOM
GE
HAL
HP
KMI
NOV
RDS.B (new purchase as of 4-10-15)
WMB


Long ALL

[Be Here Now]

My oil related companies are:

CVX
EPD (non-qualified account only, beware of putting an MLP in an IRA)
KMI

[EricL]

My oil companies are:

COG in cash account
CVX, OXY, EOG, PSX, KMI in my 401k
COP, BP, HP in rollover IRA
WLL in investment club
CVX, XOM, COP, EOG, OXY, HP, KMI, NOV, PSX in a Motif

[EricL]

5% surge in oil today, WTI now over $56.

[KenBob]

I was reducing my position in oil prior to the price collapse. I can't say this was due to special knowledge about the collapse in price. Rather I was getting more and more concerned about how to value these stocks. When doing my valuation calculations, the oil companies seemed to be outliers.

I am now thinking that oil companies should be treated as a hybrid of a normal company and a royalty trust. In a royalty trust, you are paid for the resources that extracted, which eventually go to zero. The payments can be viewed as return of capital. For an oil company, if the oil reserves are maintained, the company should be treated as a normal company; however, if the oil reserves decline, any earnings or dividends that correspond to this decline should be treated as return of capital.

For Chevron, the only oil company I still own, the oil reserves declined 1% last year. After adjusting for return of capital, Chevron is worth about $100 based on forward PE and $103 based on comparison with corporate bond yields.

[Dividend Watcher]

KenBob, interesting comment and, at first glance, may be a factor that should be taken into account when looking at valuation. How do you handle it when a well proves itself and boosts the company's reserve balance? Go back to valuing it as a regular company?

I always assumed that as proven reserves kept dwindling, the majors would branch out more into alternative energy sources. Maybe they have to some extent but it really isn't large enough right now to have a noticeable affect on the income statement or the balance sheet.

[EricL]

(04-15-2015, 01:48 PM)EricL Wrote: 5% surge in oil today, WTI now over $56.

Add another 3.4% so far today and WTI crude has now passed the $60 mark.

We still haven't seen the effects of the huge cut in drilling in regards to production, but that will be coming in the second half of the year.

You haven't missed the boat yet, but its starting to pull away from the dock.

[Foodstamp]

If you have balls of steel, NOV is your company

[doomsardine]

I think Kinder Morgan and The Greenbrier Companies are good to invest in. Kinder Morgan with it's pipeline and storage business and The Greenbrier producing oil railcars are expected to show even good growth ahead.

[hendi_alex]

I've been slowly adding long term energy positions. Currently am overweight energy holding the following positions: CCJ COP ESV KED KMF KMI MRO OXY TNK. My investing plan assumes that lows will be hit in the October/November period. Will continue slow accumulation at least through then.