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is now the time to invest in oil stocks?

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Deal Addict
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May 31, 2018
1207 posts
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SK
Yeah, it’s so easy to say the oil/gas days are over but nobody (and I mean nobody) has found a way to realistically replace it with “renewable” energy in the near term.

Solar, wind, tidal, geothermal etc. all seem great on paper but really only if capital expenditures and future maintenance costs are suppressed. Nuclear is probably a better answer, but it has the whole radioactivity stigma attached to it.

And the real elephant in the room is the simple fact that our power grid is in no way capable of handling the charging requirements of 2.7 electric vehicles per household plus heating/cooling every building.

As much as some people would simply wish it otherwise, without some technological breakthrough we’ll be using oil and gas at a steady rate for the foreseeable future.
Deal Addict
Jul 30, 2012
2150 posts
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Stryker wrote: I own a couple of companies that are partly into renewable ENB, CPX and one that is full blown renewable energy AQN. Even so, I can't see the pipelines disappearing anytime soon. I'm still pumping my car with gas (albeit once every six weeks) and the natural gas for our furnace is still supplied by Enbridge. Reading a report from a few months ago that national sales of electric vehicles in Canada are only 3.5%. Sorry if I'm far from impressed. Perhaps fusion power, although I won't hold my breath waiting.
"one that is full blown renewable energy AQN". 1/3 of AQN's revenue comes from Natural Gas Winking Face. Profile is more similar to EMA / FTS. The common thread among "renewable" utilities is that they rely on NG for power generation & significant revenue. Institutional money has basically anointed these type of companies as having much better ESG than Enbridge even though 1/2 of ENB ebidta Cashflows comes from Natural Gas distribution, transmission, & Power lol (post-Spectra acquisition). Pundits consistently focus on the liquids side to chastise the company.

Retail investors have generally been misled by "Green" investment funds on what constitutes a true ESG/renewable investment.

All that to say, I agree, the planet is a long ways off of exclusive non-hydrocarbon energy but should definitely work towards that balance.
Deal Guru
Aug 17, 2008
10989 posts
13539 upvotes
TY @FarmerHarv and others. A reliable renewable energy storage system is required. All you needed to see was that the fires and smoke on the US west coast blocking out the sun.

Solar power plunges as smoke shrouds Calif. - https://www.eenews.net/stories/1063713459,
California’s Wildfire Power Eclipse - https://www.wsj.com/articles/california ... 1599864717
Vancouver has second-worst air quality in the world as smoke shrouds B.C. - https://www.nsnews.com/news/vancouver-h ... 1.24202432


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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
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May 31, 2018
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SK
MrMom wrote: TY @FarmerHarv and others. A reliable renewable energy storage system is required. All you needed to see was that the fires and smoke on the US west coast blocking out the sun.

Solar power plunges as smoke shrouds Calif. - https://www.eenews.net/stories/1063713459,
California’s Wildfire Power Eclipse - https://www.wsj.com/articles/california ... 1599864717
Vancouver has second-worst air quality in the world as smoke shrouds B.C. - https://www.nsnews.com/news/vancouver-h ... 1.24202432
Wow, I've never thought much about weather and other environmental effects on solar power generation, that's scary how much output has dropped from the fires. Storage facilities would be the answer, but the current (no pun intended) energy costs to build and maintain battery banks (much the same as electric vehicles) are high enough that the actual green payback is almost too far in the future to see.

Similarly I have watched the wind turbine farm between Palm Springs and San Bernardino along I-10 grow steadily over the last 15 years, and that's when I realized that wind power just wasn't gonna work. On any given day it seems over half of the propellors in the field are feathered or simply not turning, either from low wind speed or mechanical issues, and given how much energy is required to build, ship, install and maintain a huge turbine unit I don't see them coming out on the positive side of that equation for a long long time either (if ever).

Lots of good ideas out there, but we're just not far enough along with the tech to make any of this work reliably on a massive scale without expending as much or more overall energy than is actually produced renewably.
Deal Addict
Jul 30, 2012
2150 posts
3216 upvotes
FarmerHarv wrote: Wow, I've never thought much about weather and other environmental effects on solar power generation, that's scary how much output has dropped from the fires. Storage facilities would be the answer, but the current (no pun intended) energy costs to build and maintain battery banks (much the same as electric vehicles) are high enough that the actual green payback is almost too far in the future to see.

Similarly I have watched the wind turbine farm between Palm Springs and San Bernardino along I-10 grow steadily over the last 15 years, and that's when I realized that wind power just wasn't gonna work. On any given day it seems over half of the propellors in the field are feathered or simply not turning, either from low wind speed or mechanical issues, and given how much energy is required to build, ship, install and maintain a huge turbine unit I don't see them coming out on the positive side of that equation for a long long time either (if ever).

Lots of good ideas out there, but we're just not far enough along with the tech to make any of this work reliably on a massive scale without expending as much or more overall energy than is actually produced renewably.
The main issue with true renewable source is energy "storage" (that can be accessed during "offline" hours - lack of daylight for solar, lack of wind for turbines). Storage technology needs to advance well beyond current lithium, cobalt, based battery technologies that can 1) dramatically increase energy storage capacity and 2) Not create another negative environmental impact that current battery technology produces.
Deal Addict
Jun 13, 2009
1209 posts
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Toronto
IrwinW wrote: 5 words mean there is still plenty of time: demand - broadly - flat - two - decades
If Canada didn't have a problem with executing large projects, I would agree with you.
Deal Expert
Jan 27, 2006
21844 posts
15619 upvotes
Vancouver, BC
DealRNothing wrote: The main issue with true renewable source is energy "storage" (that can be accessed during "offline" hours - lack of daylight for solar, lack of wind for turbines). Storage technology needs to advance well beyond current lithium, cobalt, based battery technologies that can 1) dramatically increase energy storage capacity and 2) Not create another negative environmental impact that current battery technology produces.
I would add a third thing -> the energy can be stored for long periods of time without little or no loss in power. Currently, any battery will self-discharge and the act of charging a battery will create some level of loss as well. Otherwise, energy storage would only be good for short periods of time (ie time-shifting for load demands) and not for when a large weather event happens.
Member
Sep 23, 2016
284 posts
143 upvotes
WTI +5%
SU +1.9%
HSE +0.8%

Only notable one was VET+11% (but it got beat up so much more in the past 3 weeks than the others...)

Should buy SNOW instead, +113% lol.
Deal Guru
Aug 17, 2008
10989 posts
13539 upvotes
On a rare day when O & G aka Energy outperformed, BTE closed unch. 2 big block trades at 60 cents. Someone making for the exit?

Unrelated;

Calgary oil patch waits for confirmation of its first significant IPO in years
September 16 at 6:45 PM ET

https://www.theglobeandmail.com/busines ... icant-ipo/
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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 Guru
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Sep 21, 2007
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...
MrMom wrote: On a rare day when O & G aka Energy outperformed, BTE closed unch. 2 big block trades at 60 cents. Someone making for the exit?

Unrelated;

Calgary oil patch waits for confirmation of its first significant IPO in years
September 16 at 6:45 PM ET

https://www.theglobeandmail.com/busines ... icant-ipo/
Mind posting that article?
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Jr. Member
Apr 13, 2019
125 posts
195 upvotes
Posting the entirety of the article breaks copyright rules.

It is by Jeffrey Jones and it talks about how the patch is speculating that a Tourmaline spinoff called Topaz may go to an IPO.
Here's a snippet:
On Monday, a private outfit called Topaz Energy Corp. had been scheduled to give a presentation to a virtual edition of the annual Peters & Co. conference. The Street had been waiting with interest, given that an initial public offering for the hybrid energy royalty and midstream company has been under consideration.

But Topaz, majority owned by Calgary-based Tourmaline Oil Corp., cancelled its spiel, leading analysts and investors to wager it had entered the required quiet period before filing a prospectus for an offering that could raise hundreds of millions of dollars.

If Tourmaline parts with some of its interest alongside an IPO, or sells down its stake later, the proceeds could help chief executive officer Mike Rose build up his own war chest for natural gas acquisitions in Alberta and British Columbia, reducing the need to take on debt for what he’s described as “a generational opportunity.”
Deal Guru
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Sep 21, 2007
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sunnysidesolutions wrote: Save it to Pocket and you can read most articles even if they are behind paywalls. Super useful. getpocket.com
wow thanks!
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Deal Guru
Aug 17, 2008
10989 posts
13539 upvotes
florenntina wrote: 2000@4.29 🥴
I have made a very nice profit on XEG before. I have no idea what was I thinking when I switched to HSE
The upside is that HSE hasn't been this cheap for close to 40 years. Thinking Face
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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
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Nov 27, 2019
357 posts
457 upvotes
MrMom wrote: The upside is that HSE hasn't been this cheap for close to 40 years. Thinking Face
Yes, but I made mistake investing in an individual stock without knowing almost anything about the oil industry. If it’s the case, the best way to invest is to stick with an index. At least, XEG would pay me over 5% dividend while waiting... Ok, lesson learned!
Deal Guru
Aug 17, 2008
10989 posts
13539 upvotes
florenntina wrote: Yes, but I made mistake investing in an individual stock without knowing almost anything about the oil industry. If it’s the case, the best way to invest is to stick with an index. At least, XEG would pay me over 5% dividend while waiting... Ok, lesson learned!
Oh. I was being sarcastic.

Have never held HSE in my PA, but I am familiar with them. Virtually the entire sector has been kicked in the family jewels again this month. Exceptions such as BIR, KEL and WCP, are flat for Sept. Broadly speaking, M&A activity and NG are the minor bright spots.

Go back through this thread and you'll see there's great potential, but nothing imminent. Based on your stated knowledge of this industry, avoid. It's a Value Trap.
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
Member
Sep 23, 2016
284 posts
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lol Based on this video analysis, HSE's intrinsic value is roughly $39, that's 1000% upside based on last friday price!!! But I am not greedy... I only need $15 bucks to break even :P Anyone still hold the HSE bag too??

Member
Nov 27, 2019
357 posts
457 upvotes
Me, obviously, and I plan to hold it for now. Book value per share is $14.55.
Deal Addict
Jul 30, 2012
2150 posts
3216 upvotes
florenntina wrote: Me, obviously, and I plan to hold it for now. Book value per share is $14.55.
Book Value is pretty much a meaningless metric in the O&G sector as this changes with NAV write-downs, asset sales, etc. With most asset/company(s) sales in the sector over the last 5 years, book value is usually written down substantially.

Key metric to look at in the industry is Free Cash Flow yield (net of CapEx) and "the best of the worst" in this regard (large caps) is CNQ currently. Everyone with money in the sector (yes, me too) is a bag holder, although I would expect better beta out of a CNQ, SU on any kind of catalyst than HSE. On that basis alone, XEG should outperform HSE on any upside.

Additionally, HSE is the weak sibling of the large cap group with less Institutional interest. Moneyflows generally go to SU/CNQ first.

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