fair value
fair value
Thx for the latest View; invaluable as always. Question: When you say the fair value of a company is X, I understand that that is the break-up (or buyout?) value predicated on today's approximate WTI boe price but, aside from a buyout, how often do the shares actually reach their fair value, and under what circumstances? Thx.
Re: fair value
In a normal market (which we do not have today) the share price will move toward the fair value. In prior years, we've seen Sweet 16 companies move over my Fair Value Estimates.
Unless you believe oil & gas prices are going to stay down forever, these stocks are grossly oversold.
Take a look at what SLB paid for CAM today. That is an example of how undervalued energy sector stocks are.
BTW in the 4th quarter of 2009 the Sweet 16 gained over 50% when oil prices started moving back toward the long-term trend line. There are forces at work today that could have the global oil markets balanced within a few months. Take a look at the top line of the report at this link ( http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm ) and you will see what I mean. U.S. oil production is on decline and the rate of decline will accelerate to 200,000 barrels of oil per day each month in the 4th quarter.
Unless you believe oil & gas prices are going to stay down forever, these stocks are grossly oversold.
Take a look at what SLB paid for CAM today. That is an example of how undervalued energy sector stocks are.
BTW in the 4th quarter of 2009 the Sweet 16 gained over 50% when oil prices started moving back toward the long-term trend line. There are forces at work today that could have the global oil markets balanced within a few months. Take a look at the top line of the report at this link ( http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm ) and you will see what I mean. U.S. oil production is on decline and the rate of decline will accelerate to 200,000 barrels of oil per day each month in the 4th quarter.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group