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Stocks - specifically the liquid energy sector

  • #41
  • Dec 31, 2015 6:20pm Dec 31, 2015 6:20pm
Crude oil is supposed to be oversupplied by 3 million barrels a day, but only 1 million appears on inventory. Which one to believe... inventory supposedly is historically more reliable.
  • #42
  • Jan 1, 2016 1:56pm Jan 1, 2016 1:56pm
Quoting verv
It is going to get uglier I think, but I'm betting big on US oil companies, which is also a bet on Shale. There is some pretty poor application of logic to the industry as a whole, people are always talking about Shale as if it is the end of the good times. My prediction is shale is going to end up the big winner out of all this, with increased market share, and more production than ever before. Why is it I say that? Shale productivity keeps improving and will continue to improve. It isn't even close to being the most expensive oil to extract. Offshore...

You could be along the right track long term, if you have the nerve to sit tight.. but I wouldn't expect Oil to be a great industry to be invested in 2016.. It's not just the OPEC oversupply, it's the fact that Iran is about to flood the market for the first time in 30 years +. My guess is, even if shale becomes the Oil of choice in the end, prices will be a long time working out where the bottom is, before any sustained rebounds in this sector.

I'd be looking at Gold miners first, interest rates will only go up from here, which will help Gold sooner or later.
  • #43
  • Jan 1, 2016 5:43pm Jan 1, 2016 5:43pm
Quoting leeshindig
{quote} You could be along the right track long term, if you have the nerve to sit tight.. but I wouldn't expect Oil to be a great industry to be invested in 2016.. It's not just the OPEC oversupply, it's the fact that Iran is about to flood the market for the first time in 30 years +. My guess is, even if shale becomes the Oil of choice in the end, prices will be a long time working out where the bottom is, before any sustained rebounds in this sector. I'd be looking at Gold miners first, interest rates will only go up from here, which will help...

The supply Iran will bring to the market is much over hyped, it already has oil in the market anyway which not everyone knows. Not everyone accepts the oil embargo that the US put on Iran. People have been paying Iran in gold rather than dollars: Turkey, India, China, all countries doing just that to get around sanctions. Iran probably will have an impact but not nearly of the order people think, the ability of the US to export oil now as of a budget passed late December is probably more important that Iran coming 'back' to the market.

As posted above the inventories which suggest a 1 million oversupply (compared the 3 million touted) indicate that the market is much closer to balance now than it is generally perceived. The overwhelming attitude for oil is going to 20$ and we will have lower for longer, 20$ as a lower price for a time sure, but 20-40$ for much longer doesn't make sense. 20-40$ oil kills pretty much every single player in the market for one reason or another. Even if 2016 is a write off, it will offer the opportunity to cost average lower, investments like this will probably take 3-5 years to pan out in full. My commitment to this is high, as Drunkenmiller said, when you see it bet big and I intend to, if I am wrong I will be able to get out because I am buying at huge discount in a diversified us oil etf.

Gold miners? I'm not with you on that. Gold has a wonderful story, but that is where it ends I feel, to many guys still banging the gold bull drum. Until gold goes below its cost of production I'm not interested in owning it or the miners. Adam Hamilton has done work on this, he is a reknowned gold bull as you probably know. His analysis suggests that the costs of producing gold are in the 600-900$ range, that is the price I would be interested in owning miners. I suspect, Gold has much further to fall, and that hurts margins which hurts bottom lines.
  • #44
  • Jan 1, 2016 6:23pm Jan 1, 2016 6:23pm
It's not so much the actual impact of Iran, it's the uncertainty surrounding it.

That's what spooks the market, and until it works out, I think Oil will be finding a range down here for a while.

Re Gold miners.. yeah you're probably right of needing another shove lower in price. But in general, Gold has had a couple of years to work itself out (unlike Oil), some of the smaller companies have done all the streamlining needed to survive, there are a few (after doing research) who are primed ready for any uptick in this sector. Interest rates will be the catalyst sooner or later. I will be dripping some GDX and a few small cap plays this year to my pension. Maybe a bit of Oil if it does ever dip down to $20.
  • #45
  • Edited 4:59pm Jan 2, 2016 11:31am | Edited 4:59pm
Quoting leeshindig
It's not so much the actual impact of Iran, it's the uncertainty surrounding it. That's what spooks the market, and until it works out, I think Oil will be finding a range down here for a while. Re Gold miners.. yeah you're probably right of needing another shove lower in price. But in general, Gold has had a couple of years to work itself out (unlike Oil), some of the smaller companies have done all the streamlining needed to survive, there are a few (after doing research) who are primed ready for any uptick in this sector. Interest rates will...
If there is a lot of uncertainty and that creates artificially low prices that is a good thing if you are a value investor .

We need to see through this crisis. There is a huge opportunity here, if I am right, I will make 2-3 times my money with relatively low risk. If I am wrong my cost average is going to be some 75-80% lower than the recent highs and because of that I am unlikely to lose much or any money in a year or two or three from now.

The entire market imo is set up to take a huge dump in 2016. I would much rather own oil companies which are trading at 10 year lows because oil of prices which are generally regarded as not being able to sustain any production, than stocks which are at all time highs right now which have been jacked up by the juice from QE and ZIRP.

Just my opinion - hope I'm not wrong lol.
  • #46
  • Jan 11, 2016 4:35am Jan 11, 2016 4:35am
I'm sure that if oil was still around $50 ~ $60 this would have had a much greater impact on the share price.....
http://www.londonstockexchange.com/e.../12652866.html

>>
Falkland Oil and Gas
Oil Discovery at 14/20-2 exploration well
RNS Number : 3718L
Falkland Oil and Gas Limited
11 January 2016

11 January 2016

Falkland Oil and Gas Limited

("FOGL" or "the Company")

Oil Discovery at 14/20-2 exploration well on the Isobel/Elaine Fan Complex



Highlights

· Oil discovery confirmed at Isobel Deep
· Significant oil column of over 480 metres
· Net oil pay 27m
· No oil-water contacts or gas encountered
· Four additional oil bearing F3 reservoirs

Falkland Oil and Gas Limited (AIM:FOGL), the oil and gas exploration company focused on its extensive licence areas to the North, South and East of the Falklands Islands, is pleased to announce the successful results of the 14/20-2 exploration well on the Isobel/Elaine structure (The "Well"). This was a re-drill of the Isobel-1 (14/20-1) well, which discovered oil in the Isobel Deep reservoir but had to be prematurely abandoned for operational reasons.

The Well is located on licence PL004a in which FOGL has a 40% working interest. This will increase to 64% following the merger with Rockhopper Exploration, which is expected to complete on the 18 January 2016.

The Well successfully re-drilled the Isobel Deep reservoir at a location 4 kilometres west of the original Isobel-1 well and reached a total depth of 3014 metres.

Although the Well was principally designed to re-drill the Isobel Deep sands, it was also able to test other sand bodies within the F3 sand system. The well successfully penetrated five separate fans within the complex, including: Isobel Deep, Isobel, Elaine South, Emily and Irene. All five of these fan systems were oil bearing and no gas was encountered. The well did not encounter an oil-water contact in any of the sands. The well discovered totalnet pay of 27m in the Isobel Deep, Isobel and Emily reservoirs.

A very large oil column (in excess of 480 metres) has now been proven between from the crest of the structure to the current location. The location selected for the re-drill of Isobel Deep was not optimal for any of the other fans. As such, most of the fans were penetrated at their margins and FOGL expects that based on analogous systems, better quality reservoir will be present in the main bodies of the fans.

Whilst the data acquired is still to be fully evaluated and integrated, the initial view of the Company is that the Isobel/Elaine complex is likely to contain commercially viable quantities of recoverable oil. The 14/20-2 well will now be plugged and abandoned.

. . . . .


This information is provided by RNS
The company news service from the London Stock Exchange
>>
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #47
  • Jan 11, 2016 4:43am Jan 11, 2016 4:43am
Quoting verv
..... The write downs aren't over, the bankruptcies haven't even began. Shale will consolidate, the smaller companies will get taken over, the technology will move on, Shale will come out the other end leaner and more competitive than ever and the real loser will be offshore oil.
The bankruptcies are beginning. Offshore oil is viable around and above $40, so it will stay in the ground at current prices I feel.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #48
  • Jan 11, 2016 4:45am Jan 11, 2016 4:45am
The reason why oil prices are not at $50 anymore is because of things like this (amongst other reasons obviously) . It's becoming apparent that oil isn't as rare, or in a short supply, as the world thought a few year ago.
  • #49
  • Edited 6:13am Jan 11, 2016 5:20am | Edited 6:13am
Quoting Exodus
{quote} The bankruptcies are beginning. Offshore oil is viable around and above $40, so it will stay in the ground at current prices I feel.
It very much depends on where the offshore is.

Cost of extraction in the Arctic offshore $120 per barrel, North Sea off shore (including Norway) is $50-$60+ per barrel, Brazil offshore cost is $80 per barrel. Gulf of Mexico offshore may be able to function at those levels, some other offshore too, but then you have the break even point of those countries.

Saudi Arabia has even admitted now Shale doesn't seem to be going anywhere.
  • #50
  • Jan 11, 2016 6:48am Jan 11, 2016 6:48am
Wow! That is a lot for Arctic extraction.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #51
  • Jan 20, 2016 6:50am Jan 20, 2016 6:50am
You need a strong stomach for this market right now

We are already in stupid territory, how long can this last for nobody knows.

Lets hope there are no unexpected surprises that we haven't yet thought of... Like China deciding to go fully renewable
  • #52
  • Jan 20, 2016 9:07am Jan 20, 2016 9:07am

Quoting verv
You need a strong stomach for this market right now We are already in stupid territory, how long can this last for nobody knows. Lets hope there are no unexpected surprises that we haven't yet thought of... Like China deciding to go fully renewable
The latest I heard was that China generated less electricity in 2015 than it did in 2014.
This is interpreted as signalling that China industry is slowing.

...or it might mean that they are switching to non-electric renewables.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #53
  • Edited 5:36pm Jan 20, 2016 1:03pm | Edited 5:36pm
Quoting Exodus
{quote} The latest I heard was that China generated less electricity in 2015 than it did in 2014. This is interpreted as signalling that China industry is slowing. ...or it might mean that they are switching to non-electric renewables.
Dam renewables, sure they might save the planet but has anyone thought about saving our port. of stawks???? Ha!

China still uses mostly coal, I believe. Oil usage was reported to be up last year. But who seriously believes any of the numbers out of China - not me lol. They could very well be using 25% less oil and I would well believe it ha
  • #54
  • Feb 5, 2016 2:31am Feb 5, 2016 2:31am
After a longer period than I anticipated we appear to have arrived at the 'watershed'.
Something is going to happen with oil in the next couple of months....


And in other news, the first 'mechanical' solar plant has begun generating electricity in Morocco.
At least I assume it is the first, I have not heard of another around the world.
A system of mirrors heats a steam generator and thereafter the usual generating processes.

Two things worthy of note:
First that the efficiency is less than Photovoltaic generating systems....
Second that the Sun's energy is used to heat salt to 500-degrees, and that acts as an energy store which is used after sunset, allowing generation to continue into the night.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #55
  • Feb 6, 2016 4:00pm Feb 6, 2016 4:00pm
Quoting Exodus
After a longer period than I anticipated we appear to have arrived at the 'watershed'. Something is going to happen with oil in the next couple of months.... And in other news, the first 'mechanical' solar plant has begun generating electricity in Morocco. At least I assume it is the first, I have not heard of another around the world. A system of mirrors heats a steam generator and thereafter the usual generating processes. Two things worthy of note: First that the efficiency is less than Photovoltaic generating systems.... Second that the Sun's...
I heard something about this plant but didn't read into it.

There is another solar plant in Spain which predates that one - here is a picture https://upload.wikimedia.org/wikiped...desde_PS20.jpg
Much the same format?

What do you see coming in the next few months?
  • #56
  • Feb 7, 2016 4:05am Feb 7, 2016 4:05am
Hey.. hope you took a look at Gold miners. Since I posted here January 1st..? Good gains all round. I think there's plenty legs in it too, there will be some obvious dips to buy in on along the way.

http://finance.yahoo.com/echarts?s=G...cking%22:true}
  • #57
  • Edited 8:09am Feb 7, 2016 7:51am | Edited 8:09am
Quoting leeshindig
Hey.. hope you took a look at Gold miners. Since I posted here January 1st..? Good gains all round. I think there's plenty legs in it too, there will be some obvious dips to buy in on along the way. http://finance.yahoo.com/echarts?s=G...cking%22:true}
Been looking at gold recently but not buying for reasons mentioned previously.

I would buy gold miners if it dipped below cost of production, or if negative rates became a thing because you might find people looking to put their assets in gold rather than the bank.

The reason for golds gain seems to be usd weakness however usd is still a safe haven and so long as usd remains a safe haven gold gains will be capped.

I read Adam Hamilton at zealll on gold and silver, though I think some of his logic is flawed, he has great data. His biggest problem as with most gold bugs is he fails to understand that the gold bubble was speculative as a result of people believing the banking system could fail. There is precedent for gold doing this, it did it in the late 70s:
http://www.forexfactory.com/webkit-f...49a3/imagejpeg

Nevertheless I will trade silver if it looks like gold will run.
  • #58
  • Feb 7, 2016 8:09am Feb 7, 2016 8:09am
a lot of the main miners in GDX have cut costs snd can make a profit on $800 -$1000 gold. ABX , SLW etc


so it's been or still is under the cost of production for a long time
  • #59
  • Feb 7, 2016 8:14am Feb 7, 2016 8:14am
oh you mean for gold spot to dip under that $800 production cost? Can't see that with the markets like they are right now.
I misunderstood. Personally I don't like to catch a falling knife, so would look for signs of life/reversal before making a move. It's served me well in my two decades of investing
  • #60
  • Feb 7, 2016 8:22am Feb 7, 2016 8:22am
Quoting leeshindig
a lot of the main miners in GDX have cut costs snd can make a profit on $800 -$1000 gold. ABX , SLW etc so it's been or still is under the cost of production for a long time
It isn't below production cost if they are profitable at 800-1000, how gold be below production cost if they can turn a be profit?

The problem with gdx and other big gold miners is they don't mine just gold. For many of them gold is a secondary product from the mining of copper or iron ore or other things so when you have a gold bull thesis but choosing gdx means you have other things like the price of commodities to take into consideration too. Miners don't look like a great bet with China stuttering. Gdxj is a better gold bet imo.

The major flows into gold are speculative rather than value driven which makes it an incredibly difficult investment to analysis. I would own a max of 10% gold or related assets, and would only ever trade these speculative moves.

If you were to follow the advice of the gold bugs for the last 5 years you would have lost your shirt. I know a couple of guys holding large gold ports down 60% from their highs. A 10% pop is nothing
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