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is now the time to invest in oil stocks?

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  • Mar 4th, 2024 9:55 am
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Deal Addict
Jul 30, 2012
2151 posts
3218 upvotes
MrMom wrote: I don't think @craftsman's criticism on the geographical pricing divide is entirely accurate. For a short period, when the UK and Europe feared a large NG shortfall, HH NG prices moved in sympathy to the European demand. I'm pretty sure if Russian boots step into the Ukraine, the front Henry Hub based contract is going higher. Mkts don't have to be logical. Maybe NA producers don't get a long term "benefit" from that, but I'm sure most of us regular participants in here are aware of that.
Up until Nov 26, HH was actually % wise outperforming TTF on the year. My point as yours is about pricing "sympathy". Of course, geopolitical events are usually "transitory" but prior to "the" event one never knows the magnitude of price change or duration. LNG consortium partners would likely benefit and would have a window to lock in hedges.

I think longer term investors here actually "bank" on irrational behaviours to capitalize on market inefficiency. The European Oil conversion discussions are occurring in anticipation of TTF remaining high. I expect US is planning on benefiting from an Oil export arrangement. Of course, Canada, because of (lack of) political will, won't be an active participant.
Last edited by DealRNothing on Dec 9th, 2021 12:55 am, edited 1 time in total.
Deal Addict
Jul 30, 2012
2151 posts
3218 upvotes
CDNPatriot wrote: At fair value better plays out there in this space.
TBH, few are at fair value... I have a (current) Internal PT of $8.51 on WCP... At that, it's unlikely I would reduce as it remains part of my cores. If I could have a "redo", I would have over-weighted ERF instead of an equal weight. That said my OBE underweight is the percentage gain winner. Would have never been a core, though, lol.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
DealRNothing wrote: Thanks for the NG geography lesson, I'm aware, Winking Face Oil switching is already being discussed in Europe due to NG oil price equivalency to approx $200+ WTI per barrel.
The discussion was about North American gas companies and you are throwing in European issues and oil. You may be well versed in the topic but many of the people following this thread aren't! So keeping discussions on topic would benefit the entire discussion.

Also, why talk about WTI for Europe? West Texas crude prices aren't that relevant to Europe. Brent would be the number to use not WTI.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
MrMom wrote: I don't think @craftsman's criticism on the geographical pricing divide is entirely accurate. For a short period, when the UK and Europe feared a large NG shortfall, HH NG prices moved in sympathy to the European demand. I'm pretty sure if Russian boots step into the Ukraine, the front Henry Hub based contract is going higher. Mkts don't have to be logical. Maybe NA producers don't get a long term "benefit" from that, but I'm sure most of us regular participants in here are aware of that.
If anything, the HH pricing move was little more than a knee-jerk reaction to the European price movement rather than any concerns about supply in North America plus the move was rather muted in comparison to the European numbers. To put the moves into context, HH price moved from $3.76 back in July 2nd, 2021 to a recent high of about $6.40 on October 5th, 2021. In comparison, during that same time frame, the prices in Europe moved from $10.30 to $22.84 and continued upwards to $30+ through the end of October. What did the HH pricing do in October? It dropped from $6.40 to $5.22 as the European gas price went up.

I'm sure someone out there will point out that the HH price still doubled over that time frame so surely the price was due to the European situation. So, let's look at what happened in 2020 at the HH! For that same July to October period, the HH price went from $1.69 to $1.92. Or how about 2019? The HH price went from $2.32 to $2.31. On the surface, it does look like some flexing in the price was due to European until continue through October - $2.73 for 2019 and $3.03 for 2020. The trend seems to be that HH gas prices goes up as the weather gets colder and the only thing that the European situation did was to pull forward those price increases which the market is now giving back.
Deal Addict
Aug 16, 2015
1201 posts
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What's wrong with the pipes my TC, keyera and pembina are leaking red ink all over the place.
Deal Expert
User avatar
Sep 19, 2004
26763 posts
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where I belong
kilburn305 wrote: What's wrong with the pipes my TC, keyera and pembina are leaking red ink all over the place.
I own some also, at least know that they're in Globe's article
https://www.theglobeandmail.com/investi ... 5-or-more/

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1 Enbridge Inc. ENB-T Highest 11 7.1 97.9 13.6 48.65
2 TC Energy Corp. TRP-T Highest 11 5.9 57.8 2.4 58.90
3 BCE Inc. BCE-T Highest 11 5.3 60.2 13.6 65.69
4 Pembina Pipeline Corp. PPL-T Above Average 9 6.6 20.8 11.5 38.23
5 Great-West Lifeco Inc. GWO-T Above Average 9 5.2 35.0 28.4 37.82
6 Keyera Corp. KEY-T Above Average 8 6.7 6.1 20.2 28.68
7 Suncor Energy Inc. SU-T Above Average 8 5.4 45.3 34.1 31.33
8 TransAlta Renewables RNW-T Above Average 8 5.0 4.9 5.1 18.87
ENB TRP BCE PPL GWO KEY SU RNW
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Deal Addict
User avatar
Oct 14, 2015
2116 posts
2515 upvotes
"How dare you"?
"oil demand will grow by 4.15 million bpd in 2022"
Deal Addict
Aug 26, 2004
3723 posts
869 upvotes
Toronto
IrwinW wrote: "How dare you"?


Yep, if OPEC says Omicron is of little concern then it's of little concern because OPEC says so!
Deal Addict
Jan 5, 2018
2725 posts
2535 upvotes
I think that the great gains of oil equity are over. I believe that the oil industry is in for a long consolidation period and will grow dividends on a constant basis.

I think that if you are a long-term dividend investor, the oil sector is going to be one of the safest sectors out there. The great crash of 2020 has completely destroyed oil investments for years to come and existing producers are no longer interested in investing their capital into expansion. They are more focused on returning value to their shareholders and growing their profitability.

That is awesome news for all kinds of investors. Terrible news for consumers.
NOT A WOMAN. JUST GOT A WEIRD NAME. I AM A MAN. THANKS.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
jenneth wrote: I think that the great gains of oil equity are over. I believe that the oil industry is in for a long consolidation period and will grow dividends on a constant basis.

I think that if you are a long-term dividend investor, the oil sector is going to be one of the safest sectors out there. The great crash of 2020 has completely destroyed oil investments for years to come and existing producers are no longer interested in investing their capital into expansion. They are more focused on returning value to their shareholders and growing their profitability.

That is awesome news for all kinds of investors. Terrible news for consumers.
You sound like you are sitting on both sides of the fence - one stating that large gains in oil equity are over and the other saying that large gains are just the beginning. What are you actually trying to say here?
Deal Addict
Jan 5, 2018
2725 posts
2535 upvotes
craftsman wrote: You sound like you are sitting on both sides of the fence - one stating that large gains in oil equity are over and the other saying that large gains are just the beginning. What are you actually trying to say here?
That I am a buyer and not a seller :)
NOT A WOMAN. JUST GOT A WEIRD NAME. I AM A MAN. THANKS.
Member
Aug 15, 2016
213 posts
378 upvotes
I'm still quite optimistic on the outlook for oil over the next few years. Once OPEC is back to full capacity we will see the naked truth of supply vs. demand and my money is on there being less supply. The volatility in the equities can be tough to stomach at times but the clean balance sheets, low cost structure and free cash generation makes the companies easier to hold through the noise.
Deal Expert
Jan 27, 2006
21844 posts
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Vancouver, BC
Brewmaster7 wrote: I'm still quite optimistic on the outlook for oil over the next few years. Once OPEC is back to full capacity we will see the naked truth of supply vs. demand and my money is on there being less supply. The volatility in the equities can be tough to stomach at times but the clean balance sheets, low cost structure and free cash generation makes the companies easier to hold through the noise.
We are actually seeing the naked truth... According to various reports, even though OPEC is supposed to increase supplies by 400,000 barrels, they have only been able to supply about 60% of that number when oil prices were over $80 per barrel. I believe one of the reasons for the slow increases by OPEC is not necessarily that they don't want to pump more oil in order to drive up the price but rather they may not be able to do so and need the time to put in more infrastructure to support their outputs. After all, if you were OPEC and was facing a huge reduction in demand suddenly for an unknown length of time (ie when COVID first started), wouldn't you take that opportunity to do some heavy-duty maintenance on your oil facilities so that they work better when things get back to normal? Of course you would. But what happens if demand returns faster than anyone expected...
Banned
Oct 28, 2015
2166 posts
1229 upvotes
Vaughan, ON
craftsman wrote: We are actually seeing the naked truth... According to various reports, even though OPEC is supposed to increase supplies by 400,000 barrels, they have only been able to supply about 60% of that number when oil prices were over $80 per barrel. I believe one of the reasons for the slow increases by OPEC is not necessarily that they don't want to pump more oil in order to drive up the price but rather they may not be able to do so and need the time to put in more infrastructure to support their outputs. After all, if you were OPEC and was facing a huge reduction in demand suddenly for an unknown length of time (ie when COVID first started), wouldn't you take that opportunity to do some heavy-duty maintenance on your oil facilities so that they work better when things get back to normal? Of course you would. But what happens if demand returns faster than anyone expected...
nope, the simple truth is that, the oil in middle east is getting harder to pumping out of ground....
Deal Expert
Jan 27, 2006
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xuanzh wrote: nope, the simple truth is that, the oil in middle east is getting harder to pumping out of ground....
Which is due to infrastructure issues. The middle east has tons of oil in the ground - getting that oil onto tankers is the problem.
Banned
Oct 28, 2015
2166 posts
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Vaughan, ON
craftsman wrote: Which is due to infrastructure issues. The middle east has tons of oil in the ground - getting that oil onto tankers is the problem.
Not really, I have been analysing oil for decades and the problem is that a lot of oil fields in middle east had been long lost their own pressure and require water injection methods which is very slow and energy hungry for pumping out oil. Saudi had been overstating their capacity for decades btw

eta: long term Suncor stockholder....
Deal Fanatic
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Dec 21, 2005
5865 posts
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London, ON
Nice +5% intraday swing for MEG

SU, CNQ & ERF even managed to have an up day (barely)
💡😃😂😄

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