If you think oil will bottom out in the low $100's then a nice opportunity to purchase WPL might be in the making. If oil drops another $10-15/barrel I can see WPL in the mid $40's.
I reckon that would be a great medium term entry point for WPL. Lower risk LNG exposure than the spec coal seam gas plays.
Looking at a 12 month chart a TA novice like myself sees a bit of support in the mid $40's as well
Bought into WPL today @ $38. Only bought 25% of my 'target holding' for WPL for the moment. Market thinks oil is going to $50, maybe it is but it won't be for the long-term in my view.
Market has also ignored the cushion WPL is getting from the lower AUD. When oil was US$140 and AUD was 0.96 the AUD oil price was A$146. Now at US$83 and AUD at 0.67 the A$124. Only down 15% in AUD terms.
Oil went up on US$ weakness and fears of high demand/low supply. Now oil is going down on US$ strength and fears of lower demand. We're in the shoulder season at present and with northern winter approaching oil demand may pick up again.
WPL may go lower but at $37-38 I think it presents a great opportunity to buy an energy company with long life assets and growing production on a PE of around 10-11 and yield of 5%. When WPL can be bought on such attractive metrics why bother with the mid cap oilers, the majority of which have short life assets and spend all their cash flow trying to replace reserves?
Bought into WPL today @ $38. Only bought 25% of my 'target holding' for WPL for the moment. Market thinks oil is going to $50, maybe it is but it won't be for the long-term in my view.
Market has also ignored the cushion WPL is getting from the lower AUD. When oil was US$140 and AUD was 0.96 the AUD oil price was A$146. Now at US$83 and AUD at 0.67 the A$124. Only down 15% in AUD terms.
Oil went up on US$ weakness and fears of high demand/low supply. Now oil is going down on US$ strength and fears of lower demand. We're in the shoulder season at present and with northern winter approaching oil demand may pick up again.
WPL may go lower but at $37-38 I think it presents a great opportunity to buy an energy company with long life assets and growing production on a PE of around 10-11 and yield of 5%. When WPL can be bought on such attractive metrics why bother with the mid cap oilers, the majority of which have short life assets and spend all their cash flow trying to replace reserves?
Mark, you still in WPL? Seems to break the support of $36. Could this spell $29 in the near term for WPL? We'll see.
No I sold on the spike in early November and don't feel inclined to buy back in at the moment. WPL released production guidance last week which was below my expectations and also that of the market. The other thing that has started to concern me with WPL is the massive amount of capex that they have to spend in the next few years. A large portion is being funded by debt and WPL's gearing ratios are going to be getting a bit on the high side for my liking.
I much prefer STO in comparison however don't even hold them at present as I also sold them in the early Nov spike. STO has net cash rather than net debt and is more likely to be bid for. Plus the PNG LNG project holds a lot of as yet unrecognised value. I would like STO below $12 but may be tempted around current prices in the market stabilises.
fair value for WPL
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Originally Posted by mark100
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