My comment was more an argument against the off-shore drilling sector, not necessarily RIG itself. RIG may be one of the finer off-shore drillers out there (and I had owned it years ago), but owning any of them right now is risky. People will continue to jump ship on these stocks as dividends get cut, etc,. I would steer clear of this group and the service companies right now. IMO, they will be the last to bottom out.
I think the way you started the thread is a real good way to look at. (i.e. drillers, refiners, service companies etc looking for a combination of div yield, appreciation and long term value).
Off-shore drillers and service companies look particularly bad in this environment.
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My comment was more an argument against the off-shore drilling sector, not necessarily RIG itself. RIG may be one of the finer off-shore drillers out there (and I had owned it years ago), but owning any of them right now is risky. People will continue to jump ship on these stocks as dividends get cut, etc,. I would steer clear of this group and the service companies right now. IMO, they will be the last to bottom out.
I think the way you started the thread is a real good way to look at. (i.e. drillers, refiners, service companies etc looking for a combination of div yield, appreciation and long term value).
Off-shore drillers and service companies look particularly bad in this environment.
My comment was more an argument against the off-shore drilling sector, not necessarily RIG itself. RIG may be one of the finer off-shore drillers out there (and I had owned it years ago), but owning any of them right now is risky. People will continue to jump ship on these stocks as dividends get cut, etc,. I would steer clear of this group and the service companies right now. IMO, they will be the last to bottom out.
I think the way you started the thread is a real good way to look at. (i.e. drillers, refiners, service companies etc looking for a combination of div yield, appreciation and long term value).
Off-shore drillers and service companies look particularly bad in this environment.
I think at 16 from a historical perspective it is pricing in a divi cut and a weaker outlook for a while.
I am looking for more juice/risk than Chevron or Exxon...plus if you compare them even now to a 10 yr chart, none of the heavy hitters are even close to buy range. The divi isnt that appealing yet and valuation is still very high.
I would even imagine say in Jan if RIG came out and sliced the divi in half, the stock probably goes up on that news..it is probably pricing in a 1.50 to 2.00 cut right now.
I was considering RIG because of its long history, strong fleet, reasonable balance sheet and access to capital markets if things get bad. I think it survives so to me I put that one on a list I would want to own.
I'd want XOM or CVX or COP about 20% lower before I would consider...BP is slightly interesting but likely higher beta so if the others go down they will more..but their yield looks interesting.
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Quote Originally Posted by Rush51:
My comment was more an argument against the off-shore drilling sector, not necessarily RIG itself. RIG may be one of the finer off-shore drillers out there (and I had owned it years ago), but owning any of them right now is risky. People will continue to jump ship on these stocks as dividends get cut, etc,. I would steer clear of this group and the service companies right now. IMO, they will be the last to bottom out.
I think the way you started the thread is a real good way to look at. (i.e. drillers, refiners, service companies etc looking for a combination of div yield, appreciation and long term value).
Off-shore drillers and service companies look particularly bad in this environment.
I think at 16 from a historical perspective it is pricing in a divi cut and a weaker outlook for a while.
I am looking for more juice/risk than Chevron or Exxon...plus if you compare them even now to a 10 yr chart, none of the heavy hitters are even close to buy range. The divi isnt that appealing yet and valuation is still very high.
I would even imagine say in Jan if RIG came out and sliced the divi in half, the stock probably goes up on that news..it is probably pricing in a 1.50 to 2.00 cut right now.
I was considering RIG because of its long history, strong fleet, reasonable balance sheet and access to capital markets if things get bad. I think it survives so to me I put that one on a list I would want to own.
I'd want XOM or CVX or COP about 20% lower before I would consider...BP is slightly interesting but likely higher beta so if the others go down they will more..but their yield looks interesting.
"Washington is responsible for the price drops in one way or another. Whether intentional or not, what should not be forgotten is that the last time prices fell dramatically was a few months before the global economic meltdown in 2007. Inadvertently or not, Washington’s push for sanctions could be leading to another international economic crisis."
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"Washington is responsible for the price drops in one way or another. Whether intentional or not, what should not be forgotten is that the last time prices fell dramatically was a few months before the global economic meltdown in 2007. Inadvertently or not, Washington’s push for sanctions could be leading to another international economic crisis."
"Washington is responsible for the price drops in one way or another. Whether intentional or not, what should not be forgotten is that the last time prices fell dramatically was a few months before the global economic meltdown in 2007. Inadvertently or not, Washington’s push for sanctions could be leading to another international economic crisis."
Yeah it is interesting how there is no discussion about how much money that banks and hedgies have in this junk debt arena..and how leveraged they are and the shale industry is. It is also interesting how crimping the credit markets can affect other industries and the economy in general.
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Quote Originally Posted by I_Need_A_Detox:
"Washington is responsible for the price drops in one way or another. Whether intentional or not, what should not be forgotten is that the last time prices fell dramatically was a few months before the global economic meltdown in 2007. Inadvertently or not, Washington’s push for sanctions could be leading to another international economic crisis."
Yeah it is interesting how there is no discussion about how much money that banks and hedgies have in this junk debt arena..and how leveraged they are and the shale industry is. It is also interesting how crimping the credit markets can affect other industries and the economy in general.
Yeah it is interesting how there is no discussion about how much money that banks and hedgies have in this junk debt arena..and how leveraged they are and the shale industry is. It is also interesting how crimping the credit markets can affect other industries and the economy in general.
The junk bond area is interesting right now. There are a couple I am thinking about shorting this week. JNK or HYG. This is no way companies are gonna be able to pay this money back.
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Quote Originally Posted by wallstreetcappers:
Yeah it is interesting how there is no discussion about how much money that banks and hedgies have in this junk debt arena..and how leveraged they are and the shale industry is. It is also interesting how crimping the credit markets can affect other industries and the economy in general.
The junk bond area is interesting right now. There are a couple I am thinking about shorting this week. JNK or HYG. This is no way companies are gonna be able to pay this money back.
"Washington is responsible for the price drops in one way or another. Whether intentional or not, what should not be forgotten is that the last time prices fell dramatically was a few months before the global economic meltdown in 2007. Inadvertently or not, Washington’s push for sanctions could be leading to another international economic crisis."
Washington doesn't control anything, anymore. It is the rich that control everything, including Washington. Oil is one, but mostly the invesment bankers who control policy.
In this case it is neither of them... It is Opec.... They actually control the price by continuing to produce more, and it isnt to stop the smaller oil companies "per say" but to force all the fracing companies in this country out of buisness. THey were losing sales and money to these local guys when we becaume a huge prodcuer a year ago. Whille ruining our water supply to boot.
Anyway, the natural gas guys figured out they could push oil out too and did so. Over supply and local oil became cheaper to buy for the big gas companies and thus they stopped buying from overseas (as much).. Saudi's are not stupid and they will just keep producing so the price drops to a point, and partially correct in saying "small oil" but only the frac guys...
It will be a little while before they are out, but I bet they are not making money now...
Keep trying to guess where to get in.... I do think a company with lots of cash on hand that can weather the storm will be great. Who is that ? I don't know, maybe MDR.
When the frac guys are washed up and they go back to looking for deep pockets of oil in the ocean, a company like that will be super strong... Only thing that worries me is do they go bankrupt first ? Same thing with coal, although I think they all go bankrupt first...
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Quote Originally Posted by I_Need_A_Detox:
"Washington is responsible for the price drops in one way or another. Whether intentional or not, what should not be forgotten is that the last time prices fell dramatically was a few months before the global economic meltdown in 2007. Inadvertently or not, Washington’s push for sanctions could be leading to another international economic crisis."
Washington doesn't control anything, anymore. It is the rich that control everything, including Washington. Oil is one, but mostly the invesment bankers who control policy.
In this case it is neither of them... It is Opec.... They actually control the price by continuing to produce more, and it isnt to stop the smaller oil companies "per say" but to force all the fracing companies in this country out of buisness. THey were losing sales and money to these local guys when we becaume a huge prodcuer a year ago. Whille ruining our water supply to boot.
Anyway, the natural gas guys figured out they could push oil out too and did so. Over supply and local oil became cheaper to buy for the big gas companies and thus they stopped buying from overseas (as much).. Saudi's are not stupid and they will just keep producing so the price drops to a point, and partially correct in saying "small oil" but only the frac guys...
It will be a little while before they are out, but I bet they are not making money now...
Keep trying to guess where to get in.... I do think a company with lots of cash on hand that can weather the storm will be great. Who is that ? I don't know, maybe MDR.
When the frac guys are washed up and they go back to looking for deep pockets of oil in the ocean, a company like that will be super strong... Only thing that worries me is do they go bankrupt first ? Same thing with coal, although I think they all go bankrupt first...
I agree that bankers and corporations control Washington. Seems obvious. It also seems obvious that Washington controls opec and they put a plan together to cripple Russia.
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I agree that bankers and corporations control Washington. Seems obvious. It also seems obvious that Washington controls opec and they put a plan together to cripple Russia.
Washington doesn't control anything, anymore. It is the rich that control everything, including Washington. Oil is one, but mostly the invesment bankers who control policy.
In this case it is neither of them... It is Opec.... They actually control the price by continuing to produce more, and it isnt to stop the smaller oil companies "per say" but to force all the fracing companies in this country out of buisness. THey were losing sales and money to these local guys when we becaume a huge prodcuer a year ago. Whille ruining our water supply to boot.
Anyway, the natural gas guys figured out they could push oil out too and did so. Over supply and local oil became cheaper to buy for the big gas companies and thus they stopped buying from overseas (as much).. Saudi's are not stupid and they will just keep producing so the price drops to a point, and partially correct in saying "small oil" but only the frac guys...
It will be a little while before they are out, but I bet they are not making money now...
Keep trying to guess where to get in.... I do think a company with lots of cash on hand that can weather the storm will be great. Who is that ? I don't know, maybe MDR.
When the frac guys are washed up and they go back to looking for deep pockets of oil in the ocean, a company like that will be super strong... Only thing that worries me is do they go bankrupt first ? Same thing with coal, although I think they all go bankrupt first...
Pipe, this is just a great post. Well said.
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Quote Originally Posted by Pipe-Light:
Washington doesn't control anything, anymore. It is the rich that control everything, including Washington. Oil is one, but mostly the invesment bankers who control policy.
In this case it is neither of them... It is Opec.... They actually control the price by continuing to produce more, and it isnt to stop the smaller oil companies "per say" but to force all the fracing companies in this country out of buisness. THey were losing sales and money to these local guys when we becaume a huge prodcuer a year ago. Whille ruining our water supply to boot.
Anyway, the natural gas guys figured out they could push oil out too and did so. Over supply and local oil became cheaper to buy for the big gas companies and thus they stopped buying from overseas (as much).. Saudi's are not stupid and they will just keep producing so the price drops to a point, and partially correct in saying "small oil" but only the frac guys...
It will be a little while before they are out, but I bet they are not making money now...
Keep trying to guess where to get in.... I do think a company with lots of cash on hand that can weather the storm will be great. Who is that ? I don't know, maybe MDR.
When the frac guys are washed up and they go back to looking for deep pockets of oil in the ocean, a company like that will be super strong... Only thing that worries me is do they go bankrupt first ? Same thing with coal, although I think they all go bankrupt first...
Wall, pretty new to the market...only started investing this year. Lots of talks with knowledgeable friends along the way has gotten me more keen on things, but still a long way away from feeling "comfortable on everything".
2 of my friends and I have been talking oil and when to get in. Neither have pulled the trigger but might within next 2 weeks depending on what continues.
My friend liked SLB and SLCA...but said SLCA definitely has more risk and couldn't survive as well as SLB in the long haul if things got worse. Same for RIG.
I currently own GasLog and VDE from earlier this year (clearly took a hit, down around 25% and 15% on them)
what are your thoughts on the 2 I own and I see you are big on just the main boys...SLB and SLCA on your radar at all? Thoughts on VDE and Glog?
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Wall, pretty new to the market...only started investing this year. Lots of talks with knowledgeable friends along the way has gotten me more keen on things, but still a long way away from feeling "comfortable on everything".
2 of my friends and I have been talking oil and when to get in. Neither have pulled the trigger but might within next 2 weeks depending on what continues.
My friend liked SLB and SLCA...but said SLCA definitely has more risk and couldn't survive as well as SLB in the long haul if things got worse. Same for RIG.
I currently own GasLog and VDE from earlier this year (clearly took a hit, down around 25% and 15% on them)
what are your thoughts on the 2 I own and I see you are big on just the main boys...SLB and SLCA on your radar at all? Thoughts on VDE and Glog?
I put SLB in the same sort of risk/reward group as CVX, HAL, COP etc etc etc etc...big cap names which have taken a ding on this drop but for sure not a massive buying opp drop. If you look at most of the bigger players across the spectrum you will see many if not most are still way above lows from just a few years ago..not even from 2008-2009 lows..so none of the big names are really screaming buy for me from an investment perspective.
Also if I am going to get into one of these and the upside is sort of limited, then I want a return based on dividend and I also dont see that in these two names. Neither is heavy leveraged, neither pays a good divi. I was looking at RIG (and it has bounced 3 bucks already since our discussion) is because of the divi, the low price, the fact that they are a major long term company and they have some speculators (Ichan) in it so the chances of failure I think are low..and even with a 2.00 divi cut it is still pretty awesome, and I really dont think they cut the divi that far, but if they did it still has several interesting characteristics about it from an investment perspective.
I am not looking to balance a portfolio for myself, so buying these names/industries is more of an investment and sort of speculation within boundaries I feel are good from a risk/reward perspective.
I dont really want a pure play shale because I think there are many that dont make it because they are too leveraged..I dont want a mega large cap that is down 20% from historic highs and still 40-50% higher than lows from a few years ago.
I should have nibbled on RIG below 16, it was there and available...I was hoping for sub 15.
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Crus,
I put SLB in the same sort of risk/reward group as CVX, HAL, COP etc etc etc etc...big cap names which have taken a ding on this drop but for sure not a massive buying opp drop. If you look at most of the bigger players across the spectrum you will see many if not most are still way above lows from just a few years ago..not even from 2008-2009 lows..so none of the big names are really screaming buy for me from an investment perspective.
Also if I am going to get into one of these and the upside is sort of limited, then I want a return based on dividend and I also dont see that in these two names. Neither is heavy leveraged, neither pays a good divi. I was looking at RIG (and it has bounced 3 bucks already since our discussion) is because of the divi, the low price, the fact that they are a major long term company and they have some speculators (Ichan) in it so the chances of failure I think are low..and even with a 2.00 divi cut it is still pretty awesome, and I really dont think they cut the divi that far, but if they did it still has several interesting characteristics about it from an investment perspective.
I am not looking to balance a portfolio for myself, so buying these names/industries is more of an investment and sort of speculation within boundaries I feel are good from a risk/reward perspective.
I dont really want a pure play shale because I think there are many that dont make it because they are too leveraged..I dont want a mega large cap that is down 20% from historic highs and still 40-50% higher than lows from a few years ago.
I should have nibbled on RIG below 16, it was there and available...I was hoping for sub 15.
Lawsuits exist any time a company goes down in value like this. More often than not large companies have insurance policies against shareholder litigation, and also more often they are settled for a pittance of a cost 5 yrs down the road...haha
But no if you look at their balance sheet they have enough cash and cash flow to handle the decline, even with the issues that came up on friday the stock still is SO oversold that it bounced pretty heavy..
They have almost 3B in cash, and even with their debt at 4X cash, their leverage is likely cheap from an interest perspective. Interest expense is 25% of EBITDA and it looks like they refinanced or paid some off in the last few years as liabilities have declined and most debt is long term debt..so no issues of refinancing or needing access to capital markets for a while.
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Quote Originally Posted by CrusCrnshw:
Are you not worried about RIGS lawsuit out there?
Lawsuits exist any time a company goes down in value like this. More often than not large companies have insurance policies against shareholder litigation, and also more often they are settled for a pittance of a cost 5 yrs down the road...haha
But no if you look at their balance sheet they have enough cash and cash flow to handle the decline, even with the issues that came up on friday the stock still is SO oversold that it bounced pretty heavy..
They have almost 3B in cash, and even with their debt at 4X cash, their leverage is likely cheap from an interest perspective. Interest expense is 25% of EBITDA and it looks like they refinanced or paid some off in the last few years as liabilities have declined and most debt is long term debt..so no issues of refinancing or needing access to capital markets for a while.
I guess for me I still would not be able to understand that having 3b in cash is considered enough to overcome decline
The way you can figure it out is see how much the decline in cash flow would be based on current and historical margins, then factor in interest expense and see how long the cash would last.
I think if margins did continue down for several quarters the company (and most) would start cutting capex costs to conserve cash..they would also cut share buybacks and dividends.
I think RIG could last 2-3 yrs with current cash even if oil went to 40 and stayed there..and then they might have to tap credit markets.
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Quote Originally Posted by CrusCrnshw:
I guess for me I still would not be able to understand that having 3b in cash is considered enough to overcome decline
The way you can figure it out is see how much the decline in cash flow would be based on current and historical margins, then factor in interest expense and see how long the cash would last.
I think if margins did continue down for several quarters the company (and most) would start cutting capex costs to conserve cash..they would also cut share buybacks and dividends.
I think RIG could last 2-3 yrs with current cash even if oil went to 40 and stayed there..and then they might have to tap credit markets.
I am actually holding out for 6 more months. As the bottom nears it will go OIL wide and ALL will fall on the fear, like the banks of 08... Just my Opinion... Then, when the frac guys shut down, bankrupts hit, I will watch for them to quite. Price stablize for a month, etc...
Transocean is another scary one and these guys wont make money for 2 or 3 years...
For sure all you guys are on the right path, I think and hope.. Will be money to be made at some point...
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I am actually holding out for 6 more months. As the bottom nears it will go OIL wide and ALL will fall on the fear, like the banks of 08... Just my Opinion... Then, when the frac guys shut down, bankrupts hit, I will watch for them to quite. Price stablize for a month, etc...
Transocean is another scary one and these guys wont make money for 2 or 3 years...
For sure all you guys are on the right path, I think and hope.. Will be money to be made at some point...
Pipe, that makes a lot of sense.. FWIW, analysts still see more pain to come in 2015, since OPEC is not planning on cutting production anytime soon, and global growth is stagnant at best.
I am expecting some of the smaller shale producers to go under in 2015. Some are so heavily indebted and budgeted for oil prices much higher than they currently are. These are small companies, and will be ripe for the picking for oil majors.. Another reason why I like the major oil integrators, who should ride out the storm much better than these small shale drillers.
Some are comparing all this to the housing bust, which I think is a bit of a stretch. The housing debacle effected all segment of the housing market, big & small. The oil debacle that may hit in H1/2015 will more than likely confine itself to the small shale producers, who are heavily indebted and paid ridiculous amounts for their acreage.
Furthermore, many of these smaller companies didn't "hedge" their oil contracts, and will pay a price for that.
The larger oil integrators didn't take on these major risks, and is the reason why I continue to advocate for Big Oil.
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Pipe, that makes a lot of sense.. FWIW, analysts still see more pain to come in 2015, since OPEC is not planning on cutting production anytime soon, and global growth is stagnant at best.
I am expecting some of the smaller shale producers to go under in 2015. Some are so heavily indebted and budgeted for oil prices much higher than they currently are. These are small companies, and will be ripe for the picking for oil majors.. Another reason why I like the major oil integrators, who should ride out the storm much better than these small shale drillers.
Some are comparing all this to the housing bust, which I think is a bit of a stretch. The housing debacle effected all segment of the housing market, big & small. The oil debacle that may hit in H1/2015 will more than likely confine itself to the small shale producers, who are heavily indebted and paid ridiculous amounts for their acreage.
Furthermore, many of these smaller companies didn't "hedge" their oil contracts, and will pay a price for that.
The larger oil integrators didn't take on these major risks, and is the reason why I continue to advocate for Big Oil.
Not enough of a dividend and not enough juice. I want more upside and dividend than that ETF.
I am keyed in on RIG, there are a few others too but I want a company with reasonable debt to cash, either a good divi and or good price with high odds of a good return and low odds of failure.
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I was actually looking at BBEP today.
Check out their cash to debt ratios...
They have no cash and nearly 2 billion in debt..
That alone made me not be interested.
XOP..
Not enough of a dividend and not enough juice. I want more upside and dividend than that ETF.
I am keyed in on RIG, there are a few others too but I want a company with reasonable debt to cash, either a good divi and or good price with high odds of a good return and low odds of failure.
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