Thoughts on your energy stocks?

[Robandcindy2]

What a change...

Not that long ago I never would have been concerned with this sector.

Just curious what everyone is doing here....

Cheers

[hendi_alex]

Made a first round of accumulation in Mid December. Sold about half of the winners and sold calls against most of the rest, outside of core positions. Am in the patient accumulation mode. This weakness could last a quarter or two, but could last for ten years, like in the 90's. So my plan is slow and steady, but I'm holding at current overweight of around 43% sector exposure. Exposure is spread over many areas including shipping, mid stream MLP or GP, integrated oil, rig lease.

Current holdings with no calls: EPD KMF MRO SFL SSL TNK
Current holdings covering calls: COP ESV KMI MRO OIH TNK
Current short puts: KMI Feb $41 GE Feb $34 ESV Feb $28

I am now waiting on puts to play out. After February, will assess future action, but will likely be consistent with incremental buying at fairly wide price points. Next buy for SSL is down near $30, EPD under $30, KMF undeer $29

[hendi_alex]

As an added note: TNK and KMI are both solidly in the green with TNK non optioned shares sitting at +49% not counting dividends and KMI at +17% from purchase price. Cumulatively the other positions are overall break even plus or minus 2%. I'm expecting much lower prices before any kind of long term bottom and rebound. Hopefully those lower prices don't come until April/May giving my more transient plays a chance to work out before any further strong down drafts.

[Kerim]

This is a GREAT time to buy quality energy companies at good prices, if you have a long-ish time horizon. I'm adding to XOM as new money comes available, and have been eyeballing PSX this morning.

[hendi_alex]

My only caution is for patient, gradual accumulation. IMO, XOM could easily see $75 per share, so there is no reason to be overly aggressive in thinking that today's price might be a bargain. Most of my energy bet is fairly aggressive, and is also intended to be transient. The buys for the long term pile are accumulating at a very slow rate, as this energy collapse is likely just getting started. Crude output in the U.S. is supposed to grow dramatically through this year, with no real slowing before 2016 at the earliest.

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At some point we may also have to consider a contagion effect, as all of the oil producing countries are getting hammered day after day. There is the risk of sovereign default, of political instability, banking risks, and lots of other possible pitfalls tied to the energy collapse.

[ChadR]

I am also slowing adding to my energy holdings. Currently hold COP, KMI, and BP. Look to slowly add to COP and KMI while also introducing a new position to XOM and CVX and possibly RDS. I see this downturn lastly for probably the next two years. Late 2016/early 2017 before a real huge upswing (take with a grain of salt since most of my predictions have turned out wrong).

[hendi_alex]

There are oceans of crude just waiting to be tapped, but with extraction costs mostly between $40-$50, it would seem that would put a floor under the price once this excess production gets mopped up. I agree, probably one and a half to two years. Most of the land based wells deplete very rapidly during the first couple of years, and require an aggressive drilling rate to keep production steady or growing.

[Vincenzo]

(01-14-2015, 02:28 PM)hendi_alex Wrote: My only caution is for patient, gradual accumulation...

That is advice I wish I had followed. I was overly-aggressive in my oil/energy investments and now find myself too overweight in the sector to take advantage of these attractive prices. Oh well. Live and learn.

[Robandcindy2]

Excellent article over at SA by Chuck Carnevale on the energy sector. (Sorry no link...on a layover with DSL like speeds and my old iPad giving me fits).

Contemplating NTG (CEF) again for a broad exposure to MLP's as well as slowly adding new money to my COP, CVX, XOM, RDS, and maybe BP to bring the sector percentages back up. The big question is where is the bottom? I'm not a timer so I just would like to be close.

Cheers!

[EricL]

I just had an article posted on Seeking Alpha with my thoughts on the oil sector.

Searching For Stability In A Volatile Oil Market

I also put some more money to work this morning with my first investment at motifinvesting.com. Works great for me as I have limited funds to invest and allows me to buy a diversified group of stocks.

I went with EOG, COP, OXY, CVX, XOM, HP, PSX, NOV and KMI.

Here is the motif.

[crimsonghost747]

I'm slowly starting to warm up to the idea of buying shares in one of the big names in the oil industry. I've started looking at different possibilities yesterday and obviously I'll keep at it for a few more days before I can make any sort of decisions. While I'm generally not in favour of the oil industry I think that the current oil price is close to bottom so this might be the time to buy in for the long haul.

[crimsonghost747]

After an initial round of going through the basic numbers I've selected Chevron, Exxon and Suncor to be worth a deeper look. Suncor is significantly smaller than the two others but based on a quick read about them I've included them for futher analysis. I'm not going to dig into the financial reports now as all of these companies will be releasing their full 2014 earnings within a week or so. So time to put this oil business on hold for another week and check back when the reports are released.