share prices
share prices
Do you have any kind of handle as to why so many of your faves have been so weak lately? Oil goes down. They get killed. Oil goes up. They remain flat or go down a bit. I understand that no one day means anything, but oil is about $53 and sm is down about 30% from its recent high, gpor ditto, and so on. I simply do not understand the dynamic that is taking place. Do you?
Re: share prices
the market is just not buying energy. i think they are waiting for that long rope (oil supply) hits the end of it slack and we get a spike in oil. jmo, fwiw. also, volume across the sector is very low.
Re: share prices
I agree. The market is just not sure where oil prices are heading. The Big Money piled in right after the OPEC / Russia production cuts were announced. U.S. crude oil storage reports are bearish, but info coming from OPEC and IEA is very bullish. For example, per IEA "OECD total oil stocks (which includes the U.S.) fell nearly 800,000 b/d in 4Q16, the largest fall in three years. End-December inventories were below 3,000 million barrels for the first time since December 2015."
Think about that for a minute, Q4 was BEFORE OPEC CUT PRODUCTION.
Sweet 16: XEC, DVN, FANG, GPOR, NBL and PXD have all reported Q4 results that were close to my forecast and they all provided detailed guidance. The thing that's jumped out to me the most is the big increase in realized NGL prices. Propane is up more than 100% since Q1 2016. See: https://ycharts.com/indicators/mont_bel ... spot_price
On the Crude Oil front the speculative traders (who set the current price) seem to react to each headline, but then the price works its way back to a rather tight range ($52 to $54). OPEC compliance keeps me bullish on this sideways market that is looking for a breakout. However, I think we need to be patient. February and March are the two lowest months for crude oil demand. Lots of refineries do maintenance this time of year. Demand picks up in April and then spikes in June. In 2016, demand for oil spiked by 1,260,000 bbls per day from Q2 to Q3. You can confirm this at the chart on: https://www.iea.org/oilmarketreport/omrpublic/
On the Natural Gas front the warm weather across the Plains and Mid-west continues to stifle any rally. Technically the charts show support at $2.75. IMHO there is to much importance put on the weather related demand and not enough attention being paid to production (down from the peak in 2015), industrial demand and exports. Oddly enough, it should become clear this summer that the U.S. gas market is much tighter than a year ago.
One of the GREAT TOOLS you have at EPG are my forecast/valuation models for each company. They are "macro driven", which means that most of the line items in the Income Statement are driven by production volumes and realized commodity prices at the bottom of each spreadsheet. You can download the spreadsheet to Excel and play around with different commodity price forecasts to see how EPS, CFPS and my valuation are impacted. Don't worry, you cannot screw up the models.
Keep in mind regional price differences and each company's hedges.
For example, Laredo Petroleum (whose forecast I updated this morning) has over 75% of their 2017 natural gas hedged with collars that have $2.75 floors. So, if I assume the Henry Hub ngas price drops to $2.00 for Q2 though Q4, it only dropped my valuation by $0.14 per share. Obviously, if you take one of our "gassers" realized gas price down by $1.00/mcf it will have a much larger impact. Just review their hedges carefully.
Think about that for a minute, Q4 was BEFORE OPEC CUT PRODUCTION.
Sweet 16: XEC, DVN, FANG, GPOR, NBL and PXD have all reported Q4 results that were close to my forecast and they all provided detailed guidance. The thing that's jumped out to me the most is the big increase in realized NGL prices. Propane is up more than 100% since Q1 2016. See: https://ycharts.com/indicators/mont_bel ... spot_price
On the Crude Oil front the speculative traders (who set the current price) seem to react to each headline, but then the price works its way back to a rather tight range ($52 to $54). OPEC compliance keeps me bullish on this sideways market that is looking for a breakout. However, I think we need to be patient. February and March are the two lowest months for crude oil demand. Lots of refineries do maintenance this time of year. Demand picks up in April and then spikes in June. In 2016, demand for oil spiked by 1,260,000 bbls per day from Q2 to Q3. You can confirm this at the chart on: https://www.iea.org/oilmarketreport/omrpublic/
On the Natural Gas front the warm weather across the Plains and Mid-west continues to stifle any rally. Technically the charts show support at $2.75. IMHO there is to much importance put on the weather related demand and not enough attention being paid to production (down from the peak in 2015), industrial demand and exports. Oddly enough, it should become clear this summer that the U.S. gas market is much tighter than a year ago.
One of the GREAT TOOLS you have at EPG are my forecast/valuation models for each company. They are "macro driven", which means that most of the line items in the Income Statement are driven by production volumes and realized commodity prices at the bottom of each spreadsheet. You can download the spreadsheet to Excel and play around with different commodity price forecasts to see how EPS, CFPS and my valuation are impacted. Don't worry, you cannot screw up the models.
Keep in mind regional price differences and each company's hedges.
For example, Laredo Petroleum (whose forecast I updated this morning) has over 75% of their 2017 natural gas hedged with collars that have $2.75 floors. So, if I assume the Henry Hub ngas price drops to $2.00 for Q2 though Q4, it only dropped my valuation by $0.14 per share. Obviously, if you take one of our "gassers" realized gas price down by $1.00/mcf it will have a much larger impact. Just review their hedges carefully.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: share prices
To All Members: While the market is in limbo, think about rebalancing your portfolio. Be realistic about your risk tolerance. Are you avoiding great companies like the Elite Eight just because their shares trade over $100/share?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group