Investing

is now the time to invest in oil stocks?

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Deal Fanatic
Jul 23, 2007
5114 posts
4890 upvotes
KEY was down well over 2% this morning and had some extra cash so added more common shares.
Deal Guru
Aug 17, 2008
10943 posts
13445 upvotes
The US election is still 8 days away and maybe more for a definitive outcome. Why stand in front of the market Sell train or trying to catch a knife?

Morningstar Equity Analyst Report | Report as of 07 Oct 2020 06:02, UTC
The Fate of Canada's Pipelines Could Hinge on the U.S. Election

Excerpts;

"If Democratic candidate Joe Biden is elected, it's almost assured that he will revoke the project's presidential permit, shelving the project indefinitely. The Keystone XL also faces opposition from federal lawsuits that question the validity of its permits and challenges to obtaining water crossing permits after Nationwide Permit 12 was ruled invalid for new pipeline projects."

"President Barack Obama was supportive of the replacement, and Biden has been mum on his stance on the project, in contrast to his public opposition to the Keystone XL. Line 3 does face opposition from pending litigation, but a negative outcome is more likely to delay construction than cancel the project altogether. Accordingly, we assign an 80% probability that Line 3 will be replaced. Fortunately for Enbridge, safeguards are in place if the project is not built that allow the company to recoup expenses and earn a return on the capital that has already been spent."
Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Guru
Aug 17, 2008
10943 posts
13445 upvotes
MEG ER posted.

MEG Energy announces third quarter results including successful completion of major plant turnaround, increased production guidance and further cost reductions
CALGARY, AB, Oct. 26, 2020

https://www.megenergy.com/news-room/art ... tion-major

"approximately 80% of WTI exposure on fourth quarter forecast sales hedged at average WTI price of US$45.76. MEG's $800 million modified covenant-lite revolver remains undrawn."
Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Expert
User avatar
Sep 19, 2004
26752 posts
9315 upvotes
where I belong
MrMom wrote: MEG ER posted.

MEG Energy announces third quarter results including successful completion of major plant turnaround, increased production guidance and further cost reductions
CALGARY, AB, Oct. 26, 2020

https://www.megenergy.com/news-room/art ... tion-major

"approximately 80% of WTI exposure on fourth quarter forecast sales hedged at average WTI price of US$45.76. MEG's $800 million modified covenant-lite revolver remains undrawn."
and stock prices will probably still drop (with WTI or overall market), no ER can save any energy name, so sad :P
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Deal Addict
Jul 30, 2012
2141 posts
3198 upvotes
jerryhung wrote: and stock prices will probably still drop (with WTI or overall market), no ER can save any energy name, so sad :P
Unfortunately, O&G mergers in the current environment (in fact the last few years), don't/haven't provide(d) any benefit to retail holders (i.e. CVE / HSE being the latest). Share swaps/ offers have simply moved the deck chairs. No discernible benefit to shareholders or employees. The real issue remains no universal Institutional investment coming into the sector. Mega mergers provide corporate synergies for survival but little else right now.

Valuations have made no difference in attracting public equity over the last 5 years. Get your crystal ball out for the next 5.
Member
Feb 13, 2017
369 posts
350 upvotes
toronto, ontario
Bought very large position SU @ 16.00 today. First oil investment in months.

Potential long-term play with price target of 20.00 or more. Stop loss limit of 15.50.

EDIT: Stop loss @ 15.15 of entire position on October 30.
Last edited by Guest5666777784 on Oct 30th, 2020 10:16 am, edited 1 time in total.
Deal Addict
Sep 2, 2004
3130 posts
2282 upvotes
At this point I'm starting to think I'm a sucker for pain because the O&G value trap is calling me again, even though I'm down huge on VET and underwater on BIR, CNQ, ENB, and IPL. Looking at my entire Canadian watchlist, SU is the the most undervalued on my simple valuation model and CNQ is 4th most undervalued. These are the largest cap players in the industry and they're trading around 1x sales and 4x cash flow! But the question I'm asking myself is do I really want to go further down this road?!
Deal Guru
Aug 17, 2008
10943 posts
13445 upvotes
PhotoSmurf wrote: Bought very large position SU @ 16.00 today. First oil investment in months.

Potential long-term play with price target of 20.00 or more. Stop loss limit of 15.50.
+1 for getting back in. Refiner with access to cheap supply. Your recent batting average though ... Winking Face
Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Addict
Jul 30, 2012
2141 posts
3198 upvotes
Capt. wrote: At this point I'm starting to think I'm a sucker for pain because the O&G value trap is calling me again, even though I'm down huge on VET and underwater on BIR, CNQ, ENB, and IPL. Looking at my entire Canadian watchlist, SU is the the most undervalued on my simple valuation model and CNQ is 4th most undervalued. These are the largest cap players in the industry and they're trading around 1x sales and 4x cash flow! But the question I'm asking myself is do I really want to go further down this road?!
CNQ / SU are not trading at those Cashflow multiples on current 2020 estimates (more in the 6>7X's range) These ratios are largely in line with 20 year averages. To get to your 4X Cashflow ratio(s), the Cashflow estimates (reported) would have to increase 75%>100% in 2021. Careful on Analyst(s) projections. They are far too optimistic for 2021 (given known Macro to date). One should assume a significant multiple discount to long-term averages (at least thru 2021).
Deal Addict
Jul 30, 2012
2141 posts
3198 upvotes
DealRNothing wrote: Unfortunately, O&G mergers in the current environment (in fact the last few years), don't/haven't provide(d) any benefit to retail holders (i.e. CVE / HSE being the latest). Share swaps/ offers have simply moved the deck chairs. No discernible benefit to shareholders or employees. The real issue remains no universal Institutional investment coming into the sector. Mega mergers provide corporate synergies for survival but little else right now.

Valuations have made no difference in attracting public equity over the last 5 years. Get your crystal ball out for the next 5.
et voila
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Deal Addict
Sep 2, 2004
3130 posts
2282 upvotes
DealRNothing wrote: CNQ / SU are not trading at those Cashflow multiples on current 2020 estimates (more in the 6>7X's range) These ratios are largely in line with 20 year averages. To get to your 4X Cashflow ratio(s), the Cashflow estimates (reported) would have to increase 75%>100% in 2021. Careful on Analyst(s) projections. They are far too optimistic for 2021 (given known Macro to date). One should assume a significant multiple discount to long-term averages (at least thru 2021).
Yes, that's a good point. These are backwards looking multiples that I'm referencing. The forward estimates likely need to be a lot more conservative as you've mentioned.
Deal Addict
Apr 27, 2015
3051 posts
1745 upvotes
Mississauga
MrMom wrote: So Yes, plus 6 warrants. See above for the math.
I still don't understand regarding warrants... Is this wawrrants gonna be displayed with some ticker in my discount brokerage account (that I can sell)?
What will be the strike price if I decide to buy those warrants?
"All animals are equal but some animals are more equal than others" George Orwell
Deal Guru
Aug 17, 2008
10943 posts
13445 upvotes
gibor365365 wrote: <1> I still don't understand regarding warrants... Is this wawrrants gonna be displayed with some ticker in my discount brokerage account (<2> that I can sell)?
<3> What will be the strike price if I decide to buy those warrants?

<1> Warrants - https://www.investopedia.com/terms/w/warrant.asp (Google wants to be your friend).
<2> I've posted this already
<3> I've posted the strike price in a update post or you can read the PR or you can go to the respective company websites to answer any questions about the M&A specifics.
Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Guru
Dec 20, 2018
10051 posts
10129 upvotes
divx wrote: hold forever, would be nice to have a USD account in wealthsimple
i remember doing that with nortel lol

but i'm going to do that again with SU, PPL, ENG and XOM lol
Deal Addict
Apr 27, 2015
3051 posts
1745 upvotes
Mississauga
MrMom wrote: <1> Warrants - https://www.investopedia.com/terms/w/warrant.asp (Google wants to be your friend).
<2> I've posted this already
<3> I've posted the strike price in a update post or you can read the PR or you can go to the respective company websites to answer any questions about the M&A specifics.
OK... "The warrants carry a CAD 6.54 strike price" , the current price is $4.77 and warrant are for 5 years. So, my understanding is to use warrants when the price will be above 6.54 . right?
"All animals are equal but some animals are more equal than others" George Orwell
Member
Feb 13, 2017
369 posts
350 upvotes
toronto, ontario
MrMom wrote: +1 for getting back in.
-1 as timing sucked, should have waited another day.Disappointed But Relieved Face

Suspending my stop loss for tomorrow (only) as expect SU to gap down at opening before---hopefully---rebounding after earnings report.
Deal Guru
Aug 17, 2008
10943 posts
13445 upvotes
PhotoSmurf wrote: -1 as timing sucked, should have waited another day.Disappointed But Relieved Face

Suspending my stop loss for tomorrow (only) as expect SU to gap down at opening before---hopefully---rebounding after earnings report.
Hard to imagine that SU is sold lower. Good luck.
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Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Addict
Sep 2, 2004
3130 posts
2282 upvotes
PhotoSmurf wrote: -1 as timing sucked, should have waited another day.Disappointed But Relieved Face

Suspending my stop loss for tomorrow (only) as expect SU to gap down at opening before---hopefully---rebounding after earnings report.
One more day might have done it. The whole sector is getting beat up today. Such is life on the O&G rollercoaster I guess...

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