Crude Oil

[Mick100]

quote:Originally posted by Packersoldkidney

Fair enough, Mick. My data says that when the sharemarket tanks, so does everything else. Commodity or non-commodity. When the sharemarkets tank, cash is the only place to be.

In the short term (couple of months) you may well be right packer.
,

[Packersoldkidney]

I may be wrong, Mick, but at least my view is up here on the forum for you to pick at down the track. That is if I don't edit it first. (!)

[port hills]

Packers and Mick,

Good intelligent debate/opinions, thanks for that it makes good reading, unlike much of what is written on these forums.

Packers regarding your debate perhaps the difference between this bull market for shares and the 1942-1966 one is the weight of investment money around in the developed nations due to the baby boom.
More demand for retirement savings vehicles making shares more expensive.

As an aside to say that shares are historically massively overvalued by comparing with just one other bull run holds no more
water than to say that shares from 1942-1966 were massively undervalued.

ps I'm approximatly 60% cash but expecting to do some buying of more resource stocks over the next month. Unlike MICK however I'm more of a short term trader.

[skinny]

If you are bullish long-term about oil, or think that there is still a bounce or two left in the energy sector, I think there are some real bargains currently on US markets. Multi-billion dollar E&P cash cows with long-lived reserves and/or exploration activities in all the right spots (West Africa, Caspian, tar sands, etc) are sitting on current p/e's averaging around 8 and 2007 fwd p/e's around the same ammount or lower! The snapshot below for Apache corp is typical - low debt, huge free cash flow, and a PEG ratio that is particularly low. Others to look at include: Devon Energy, Conoco Phillips and Apache.

As soon as I see this current sell off turn, I know where my CFD trades are going

Apache Corp. (APA)

VALUATION MEASURES

Market Cap (intraday): 19.78B
Enterprise Value (12-Jun-06)3: 22.17B
Trailing P/E (ttm, intraday): 7.35
Forward P/E (fye 31-Dec-07) 1: 6.92
PEG Ratio (5 yr expected): 0.67
Price/Sales (ttm): 2.62
Price/Book (mrq): 1.81
Enterprise Value/Revenue (ttm)3: 2.87
Enterprise Value/EBITDA (ttm)3: 3.702


FINANCIAL HIGHLIGHTS

Fiscal Year
Fiscal Year Ends: 31-Dec
Most Recent Quarter (mrq): 31-Mar-06


Profitability
Profit Margin (ttm): 35.27%
Operating Margin (ttm): 57.99%


Management Effectiveness
Return on Assets (ttm): 15.44%
Return on Equity (ttm): 27.41%


Income Statement
Revenue (ttm): 7.72B
Revenue Per Share (ttm): 23.437
Qtrly Revenue Growth (yoy): 16.00%
Gross Profit (ttm): 6.44B
EBITDA (ttm): 5.99B
Net Income Avl to Common (ttm): 2.72B
Diluted EPS (ttm): 8.14
Qtrly Earnings Growth (yoy): 17.90%


Balance Sheet
Total Cash (mrq): 504.02M
Total Cash Per Share (mrq): 1.526
Total Debt (mrq): 2.35B
Total Debt/Equity (mrq): 0.208
Current Ratio (mrq): 1.104
Book Value Per Share (mrq): 33.778


Cash Flow Statement
Operating Cash Flow (ttm): 4.54B

[JBmurc]

IMO-crude oil more likly to go to $75 than $25 or even $55



WASHINGTON (AP) - Tight oil markets and little spare production capacity worldwide make the United States more vulnerable today to a cutoff of Venezuelan oil than three years ago when a strike curtailed Venezuelan supplies, a congressional study warns.

The report by the Government Accountability Office says a Venezuelan oil embargo against the United States would cause oil prices immediately to jump by $4 to $6 a barrel and increase gasoline prices at the pump by 11 to 15 cents a gallon.

A six-month loss of 2.2 million barrels a day of Venezuelan production -- about what was lost during the strike by Venezuelan oil workers during the winter of 2002-03 -- could cause a price spike of $11 a barrel and cut U.S. economic output by $23 billion, the report said, citing an Energy Department computer model analysis.

Venezuela, the world's fifth-largest oil exporter, ships 1.5 million barrels a day of oil and petroleum products to the United States, accounting for 11 percent of U.S. imports. Most of Venezuela's oil that is not domestically consumed is shipped to the United States. Venezuela's government oil company owns or partly owns nine refineries in the United States.

Diplomatic relations between the two countries have been strained. Venezuelan President Hugo Chavez occasionally has threatened to cut off oil shipments to the United States and pursue other customers including China.

That caused Sen. Richard Lugar, R-Ind., chairman of the Senate Foreign Relations Committee, to ask the GAO, Congress' auditing agency, to examine the impact of a potential Venezuelan oil cutoff.

U.S. officials have minimized the likelihood of such a cutoff because Venezuela relies heavily on oil revenues from the United States to pay for its domestic programs.

Administration officials told the GAO investigators that "they do not have contingency plans to deal with oil losses specifically from Venezuela or any other single country" other than tapping the U.S. Strategic Petroleum Reserve or using diplomacy to get other countries to boost production, the draft report, obtained Wednesday, said.

When a strike by Venezuelan oil workers in the winter of 2002-2003 reduced the country's production by some 2.2 million barrels a day, the U.S. succeeded in getting other producers, especially Saudi Arabia, to fill the gap, the GAO study said.

"However, such diplomacy may be less effective today because there is currently very little spare production capacity" worldwide, and most of what there is -- about 1 million barrels a day -- is in Saudi Arabia.

The GAO report noted that Venezuela has continued oil imports into the United States at about the same level averaging 1.5 million barrels a day since the 2002-03 strike.

But it also cites U.S. government estimates that Venezuelan production has fallen from about 3.1 million barrels a day in 2001 to an average of 2.6 million barrels a day. Venezuela disputes those numbers and maintains that production has increased.

Nevertheless, the GAO report says that the United States has no long-term strategy to address a permanent drop in Venezuelan supplies.

"Although the U.S. government has options to mitigate impacts of short-term oil disruptions on crude oil and petroleum product prices, these mitigating actions are not designed to address a long-term loss of Venezuelan oil from the world market," said the report.

[skinny]

Well, I am not so sure that oil prices will stay up long-term as outlined before, but short-term oil companies look oversold. In the end I bought CFD's on a couple of drillers on the NYSE (NE amd RIG).
Both trade on very low forward expected p/e multiples and have already signed-off contracts for their equipment so the revenue stream is more certain than with the oil explorers. In addition, the charts look super. Up 40% so far on the margin invested so not complaining

http://finance.yahoo.com/q/co?s=NE

[JBmurc]

Oil Gains

Crude oil futures rose close to $70 a barrel in New York on signs that the economies of the U.S. and China are growing fast enough to sustain demand for fuel.

The Paris-based International Energy Agency said this week that 2006

global oil consumption would be 70,000 barrels a day more than it estimated in May.

``We'll see $80 by the end of the year,'' Boone Pickens, the Dallas hedge-fund manager who has made billions of dollars betting on higher oil prices, said in an interview today in New York. ``If demand is going up, and you're capped out on supply, it's got to go up.''
Oil for July delivery rose 38 cents, or 0.6 percent, to $69.88 a barrel. Prices are up 14 percent this year.
-TAP,ARQ,HDR,STX greAT buying IMO

[kittydashwood]

i also hold RIG, UNT and recently took positions in PKD Parker Drilling which was oversold before the May correction.


Overall there appears to be weakness building in the oil services sector and we could see another shakeout at the end of the US summer.

[JBmurc]

just finished a great book by- sonia shah
THE STORY OF CRUDE highly recommened IMO very informative


-Shell was interviewing three potential employees, a geologist,a geophysicist,and a petroleum reservoir estimation engineer.the test question asked was `what is two times two? The geologist mumbles for a while and announces that it is probably more than three,maybe less than five.The geophysicist punches it into his calulator and announes 3.9999.When the reservoir engineer is asked,he jumps up, locks the door,closes the shades,unplugs the phone,and whispers,What do you want it to be?.

[airedale]

Good one JB, LOL