VBIN's oil stock thread.

[fenders53]

(07-09-2021, 11:41 AM)EricL Wrote:

(07-09-2021, 11:11 AM)fenders53 Wrote: Is this investment advice? 

Not at all. Just passing along information as I come across it... =)

OK good because my recent EOG play is upside down and I'd hate to have to subtract one of the lunches I owe you.    

Gasoline finally shot up 15 cents overnight here.  I have found few things in life that make less sense than commodity price vs  stock prices vs retails price for end products.   Lumber is about the only thing crazier right now.

[EricL]

From the energy board I follow.

Quote:Not sure if anyone else is at the DUG Permian and Eagle Ford conference, but I figured I add some tidbits that I pick up. I’m typing this from my phone, please excuse the typos.
 
First Speaker was Mark Mills. His talk was about how much the “transition” away from fossil fuels (100%) is a physically impossible. He had a bunch of interesting charts, but the most interesting to me was his chart on battery growth. We currently have enough battery storage in the US to power the grid for 20 seconds. With a growth rate of 10,000%, we will attain 20 minutes of storage by 2050. Also spoke at length about the transition is really about going from liquid fuel to solid. Physical material extraction from the Earth is 10x fossil fuels (by weight) to go in this direction.

Diamondback’s CFO spoke. He was the first speaker to say “return capital to the shareholder” and “capital discipline”, which have been repeated at least 50 more times from the rest of the speakers. My interesting takeaway from his talk was that their drill times are down to 11 days for a 2 mile lateral. Put another way, the drill time is less than the completion time. That’s pretty wild. Here is where capital discipline comes in. Instead of running their planned 9 rigs with the improved efficiency, they dropped down to 7 rigs to drill the same quantity of wells.
 
Last speaker of note for this board was Marshall Adkins from Raymond James. Main gist of his talk was oil price is going higher (supply/demand fundamentals, fed policy, capital starvation). My biggest take away from this talk was this Saudi - UAE spat is meaningless. By mid-2022, OPEC will need to be producing at max capacity to meet demand. There will be 0 spare capacity, and that will be with no hiccups.

[fenders53]

Thanks for posting Eric. I mostly avoid the articles because oil bulls have cost me a lot if I get too comfortable with their bullish hopes the past 25 years. They've been overly optimistic before every crash because they are invested deep. They generally post outdated stats on competitive energy sources. My thesis hasn't changed a lot, though I accepted I guessed wrong on 2021 max oil prices in time to capitalize. I still have zero doubt OPEC can feed supply in the near-term. They will soon but they surely know they better let oil prices stay highish. If they let it go crazy high I will cash out half my port because they will wreck the economic recovery in a lot of emerging countries. I would love to know OCT oil prices. I am very unsure. Oil isn't going anywhere for sure. What year demand ceases growing is the big question. I was thinking late this decade but I'm just guessing. Frackers can drill and so can OPEC. We'll see if they do in time to avoid a huge spike.

[vbin]

Thank you @EricL. Is anyone talking about another covid wave and impact of that?

Some ASEAN countries locked down certain parts due to Delta varient spread recently, I think market is getting spooked by that a little. Otherwise going by oil at $74, xle should be trading above $60. Its not able to break $55 so far.

Is EOG the only play in ur book for oil?

[EricL]

(07-13-2021, 02:26 PM)vbin Wrote: Thank you @EricL. Is anyone talking about another covid wave and impact of that?

Some ASEAN countries locked down certain parts due to Delta varient spread recently, I think market is getting spooked by that a little. Otherwise going by oil at $74, xle should be trading above $60. Its not able to break $55 so far.

Is EOG the only play in ur book for oil?

I'm not too concerned about Delta. I think it's more fear mongering from media and government than anything. Between vaccinations and people who've already had covid, I just don't see that big a spike happening the third time around.

I am long CVX, EOG, KMI, XOM and have some EGY as a smaller speculative play.

I think CNQ are SU interesting for Canadian names as well, but I don't own them.

[fenders53]

(07-13-2021, 02:26 PM)vbin Wrote: Thank you @EricL. Is anyone talking about another covid wave and impact of that?

Some ASEAN countries locked down certain parts due to Delta varient spread recently, I think market is getting spooked by that a little. Otherwise going by oil at $74, xle should be trading above $60. Its not able to break $55 so far.

Is EOG the only play in ur book for oil?

It will have some affect in certain locals.  I'll be quite surprised if some of the unvaxxed red states in the US don't struggle by fall.  They don't add up to Florida GDP so we'll see.  I take the Covid very seriously but IMO it is mostly noise to the world economy unless it escalates.

[EricL]

(07-13-2021, 02:36 PM)fenders53 Wrote:

(07-13-2021, 02:26 PM)vbin Wrote: Thank you @EricL. Is anyone talking about another covid wave and impact of that?

Some ASEAN countries locked down certain parts due to Delta varient spread recently, I think market is getting spooked by that a little. Otherwise going by oil at $74, xle should be trading above $60. Its not able to break $55 so far.

Is EOG the only play in ur book for oil?

It will have some affect in certain locals.  I'll be quite surprised if some of the unvaxxed red states in the US don't struggle by fall.  They don't add up to Florida GDP so we'll see.  I take the Covid very seriously but IMO it is mostly noise to the world economy unless it escalates.

Roughly 50% of the US is fully vaccinated and another 10% has already had it. Add in that most of the vulnerable population is vaccinated, and I just don't see there being a big spike like the last two. There will be ebbs and flows, but there just isn't tinder left for their to be a wildfire anymore.

Everything is 99% back to normal in South Dakota, and our cases haven't spiked much at all.

[vbin]

The problem is we are still getting 5-20k cases a day the virus can evolve and attack back in 6-12 months it might not be as bad as previous waves but it will hinder the full re-opening and might even force social distancing measures in place again.

What reasons otherwise for oil to not realize the potential yet. Stocks still trading at big discounts.

[fenders53]

(07-13-2021, 09:09 PM)vbin Wrote: The problem is we are still getting 5-20k cases a day the virus can evolve and attack back in 6-12 months it might not be as bad as previous waves but it will hinder the full re-opening and might even force social distancing measures in place again.

What reasons otherwise for oil to not realize the potential yet. Stocks still trading at big discounts.

What you say is true if it gets a lot worse.  We won't be 100% risk free from the virus for a long time.  It's likely the full re-opening will be slowed in places.  I don't think we will be locking states down again at current levels.  This fall probably presents our next risk if the damage from the July 4th holiday is now know.  Other countries will open as a few close down.  There are still a lot of people to vaccinate around the world that desire it. 

ESG accounts for some of the discounting.  There are huge funds that will not touch an oil stock and that likely won't change.  

XOM was about risk free at $40.  While still undervalued at $60 there is now risk it won't outperform the SPY or other sectors.

There are a lot of investors that think EVs are going to make fossil fuels obsolete.  We know that is laughable anytime soon.  Some year renewables will stifle oils growth IMO.  Politics may have more influence than economic reality.

OPEC+ risk will definitely affect discounting.  

I did think oil stocks had at least another 10-15% to run but we shall see.

[vbin]

Surge: US Covid cases have doubled in recent weeks as the Delta variant continues to spread and Americans socialize more freely

[fenders53]

(07-14-2021, 11:13 AM)vbin Wrote: Surge: US Covid cases have doubled in recent weeks as the Delta variant continues to spread and Americans socialize more freely

It had to happen.  Especially in states where the Vaxx rate is 30%.  The spread potential should be limited and we'll know within a few weeks.  My state does not have an increasing Covid rate.  We haven't been locked down other than dining rooms.  Our dining rooms are now packed and the masks came off a month ago.  We do have a decent Vaxx rate for being a somewhat red state.  We will have useful stats soon concerning how important the vaxx rate is.

[vbin]

I feel it's too soon. People are being utterly irresponsible. Everyone just wants to jump in the water without a life jacket. If they have a life jacket they don't care if the water can still freeze them.