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RTR
Hi, Bob & Igor – I started my subscriptions to Energy Strategist and MLP Profits in February and March 2015, and so far, I have seen no mention of Cheniere Energy (LNG) or Enbridge Energy Partners (EEP) in your recommendations. A top notch energy expert, who has his own energy newsletter, has been recommending LNG as his top pick. I own several hundred shares of LNG and EEP. Would you please provide your current assessment of these MLPs and recommendation to Buy, Hold, or Sell. I also own shares in your recommended MLP, ETE. Should I sell my shares of EEP and purchase additional shares of ETE? LNG is supposed to be a solid long term investment in liquid gas exports for years to come. Thanks very much for your time and consideration!
Robert Rapier
Sorry for the slow response; I have been traveling for several days. Keep in mind that LNG and EEP are very different kinds of investments. EEP is a solid midstream pick that should be stable over time. LNG is overvalued by just about every measure you could imagine, but it keeps going up. But I also feel like the downside risk for LNG is quite high. They have a first mover advantage in getting their LNG exports started, but the market isn’t looking as lucrative as it was a year or two ago. It has gone up on the back of very high expectations, and should it stumble at all it could slide sharply. Be sure you have the risk tolerance for it.
Bob – OK. Thanks very much for your response and assessment regarding LNG and EEP!
Would you please provide me your current assessment of Suncore Energy [SU]. I purchased 200 shares @ $42.75 last year and the price is now down to $31.40. Some analysts are saying SU is a Buy, but without much upside projected in the next 12 months. I think I should Sell my shares. What are your thoughts? Thanks again for your time and assistance!!
RTR
Robert Rapier
Back to LNG for a second, I just saw this story come across my feed: “Short Interest in Cheniere Energy Expands By 6.1% (LNG)”
I would agree that there probably aren’t a lot of catalysts over the next 12 months to drive SU, but you probably don’t have a lot of downside at this point either. When we break out of this trading range on oil prices, I believe it will be to the upside. It just may take more than a year.
RTR
Bob – OK. Thanks very much for the update on LNG and for your assessment of SU!!
RTR
According to Bloomberg Shell is considering a takeover of BG Group. Would that have implications for ETE?
Igor Greenwald
Sorry I missed this question earlier. I think it’s definitely good for the odds of the Lake Charles project at the margin, but still leaves Energy Transfer in a relatively weak negotiating position for the final go-ahead unless oil prices improve significantly from here.
Mr. Rapier,
One of your predictions for 2015 is that BP does not survive this year. If so, why do you continue to rank BP as a hold in the energy strategist?
Robert Rapier
I don’t think they are going to go bankrupt by any means. But I think there is a good chance they are bought out or merged. I know major oil companies are looking at them now, weighing their undervalued assets against the remaining legal liabilities. But from BP’s perspective, the brand is pretty damaged. It would probably be in their best interest to continue under a different name, but there is a lot of pride and history behind the BP name. In any case, whether it happens this year or in 3 years, I think the odds favor them continuing business as something other than BP.
Guest User
Mr. Rapier,
Have you penciled out any back of the envelope calculations about what BP might be valued at in a potential takeover, considering the undervalued assets versus the potential liabilities? If so, could BP actually qualify in your estimation as a potential buy?
Robert Rapier
Ignoring the liability, it is trading at a 10-25% discount to the other supermajor integrated oil companies — which are themselves trading a lot lower than they were due to the oil price crash. I just don’t have a feel for how much more legal liability they have, or whether an ExxonMobil could get comfortable enough that the worst is behind them. There is a lot of value there, but not very many companies with the scale to swallow them. Shell is probably out of the picture now with their acquisition of BG.
Hello, Bob – I do not see any recommendations to invest in companies providing uranium. Other energy experts are stating there is, or will be, a definite shortfall in the supply of uranium to support global demands. Are there any uranium companies you would currently recommend as a solid, long term investment? Also, do you know if LNG or any other company (at the Lake Charles export terminal complex) is going to start exporting liquefied natural gas to Japan later this year? You stated that, by your assessment metrics, LNG is over-valued. I have investments in most of your Top Picks, but if I wanted to focus on just the top 2 or 3 companies and MLP’s that will benefit from future liquefied natural gas exports, which ones would you recommend. Also, do you foresee that NOV will eventually recover and see good profits in the future, or should I sell my shares at this time? Thanks very much for your advice and recommendations!!
RTR
Robert Rapier
We had Cameco (NYSE: CCJ) and Denison Mines (NYSE: DNN) as recommendations at one time, and while I still believe the uranium miners will recover, it could take a few years to work through some oversupply.
Cheniere is supposed to start exporting LNG as early as late this year, but I figure it will probably be early 2016 before it actually happens. I really think the most overlooked companies that will benefit from the start of LNG exports are the gas producers themselves. They have been depressed in response to low gas prices, but LNG exports will be one of the factors that helps put upward pressure on gas prices.
Yes, we do feel like NOV will recover. We still have a Buy on it at the current price.
Can you comment on the refiners VLO and WNR?.
I do not understand the losses TODAY.
Robert Rapier
I think it’s just profit-taking. Valero just reported a record quarter. Very little went wrong. But there are investors who like to sell after such a record quarter, reasoning that all the good news has been reported for now.
Stock Talk
RTR
Hi, Bob & Igor – I started my subscriptions to Energy Strategist and MLP Profits in February and March 2015, and so far, I have seen no mention of Cheniere Energy (LNG) or Enbridge Energy Partners (EEP) in your recommendations. A top notch energy expert, who has his own energy newsletter, has been recommending LNG as his top pick. I own several hundred shares of LNG and EEP. Would you please provide your current assessment of these MLPs and recommendation to Buy, Hold, or Sell. I also own shares in your recommended MLP, ETE. Should I sell my shares of EEP and purchase additional shares of ETE? LNG is supposed to be a solid long term investment in liquid gas exports for years to come. Thanks very much for your time and consideration!
Robert Rapier
Sorry for the slow response; I have been traveling for several days. Keep in mind that LNG and EEP are very different kinds of investments. EEP is a solid midstream pick that should be stable over time. LNG is overvalued by just about every measure you could imagine, but it keeps going up. But I also feel like the downside risk for LNG is quite high. They have a first mover advantage in getting their LNG exports started, but the market isn’t looking as lucrative as it was a year or two ago. It has gone up on the back of very high expectations, and should it stumble at all it could slide sharply. Be sure you have the risk tolerance for it.
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RTR
Bob – OK. Thanks very much for your response and assessment regarding LNG and EEP!
Would you please provide me your current assessment of Suncore Energy [SU]. I purchased 200 shares @ $42.75 last year and the price is now down to $31.40. Some analysts are saying SU is a Buy, but without much upside projected in the next 12 months. I think I should Sell my shares. What are your thoughts? Thanks again for your time and assistance!!
RTR
Robert Rapier
Back to LNG for a second, I just saw this story come across my feed: “Short Interest in Cheniere Energy Expands By 6.1% (LNG)”
I would agree that there probably aren’t a lot of catalysts over the next 12 months to drive SU, but you probably don’t have a lot of downside at this point either. When we break out of this trading range on oil prices, I believe it will be to the upside. It just may take more than a year.
RTR
Bob – OK. Thanks very much for the update on LNG and for your assessment of SU!!
RTR
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Peter
According to Bloomberg Shell is considering a takeover of BG Group. Would that have implications for ETE?
Igor Greenwald
Sorry I missed this question earlier. I think it’s definitely good for the odds of the Lake Charles project at the margin, but still leaves Energy Transfer in a relatively weak negotiating position for the final go-ahead unless oil prices improve significantly from here.
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Guest User
Mr. Rapier,
One of your predictions for 2015 is that BP does not survive this year. If so, why do you continue to rank BP as a hold in the energy strategist?
Robert Rapier
I don’t think they are going to go bankrupt by any means. But I think there is a good chance they are bought out or merged. I know major oil companies are looking at them now, weighing their undervalued assets against the remaining legal liabilities. But from BP’s perspective, the brand is pretty damaged. It would probably be in their best interest to continue under a different name, but there is a lot of pride and history behind the BP name. In any case, whether it happens this year or in 3 years, I think the odds favor them continuing business as something other than BP.
Guest User
Mr. Rapier,
Have you penciled out any back of the envelope calculations about what BP might be valued at in a potential takeover, considering the undervalued assets versus the potential liabilities? If so, could BP actually qualify in your estimation as a potential buy?
Robert Rapier
Ignoring the liability, it is trading at a 10-25% discount to the other supermajor integrated oil companies — which are themselves trading a lot lower than they were due to the oil price crash. I just don’t have a feel for how much more legal liability they have, or whether an ExxonMobil could get comfortable enough that the worst is behind them. There is a lot of value there, but not very many companies with the scale to swallow them. Shell is probably out of the picture now with their acquisition of BG.
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RTR
Bob – OK. Thanks very much for the prompt response!!
Regards, RTR
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RTR
Hello, Bob – I do not see any recommendations to invest in companies providing uranium. Other energy experts are stating there is, or will be, a definite shortfall in the supply of uranium to support global demands. Are there any uranium companies you would currently recommend as a solid, long term investment? Also, do you know if LNG or any other company (at the Lake Charles export terminal complex) is going to start exporting liquefied natural gas to Japan later this year? You stated that, by your assessment metrics, LNG is over-valued. I have investments in most of your Top Picks, but if I wanted to focus on just the top 2 or 3 companies and MLP’s that will benefit from future liquefied natural gas exports, which ones would you recommend. Also, do you foresee that NOV will eventually recover and see good profits in the future, or should I sell my shares at this time? Thanks very much for your advice and recommendations!!
RTR
Robert Rapier
We had Cameco (NYSE: CCJ) and Denison Mines (NYSE: DNN) as recommendations at one time, and while I still believe the uranium miners will recover, it could take a few years to work through some oversupply.
Cheniere is supposed to start exporting LNG as early as late this year, but I figure it will probably be early 2016 before it actually happens. I really think the most overlooked companies that will benefit from the start of LNG exports are the gas producers themselves. They have been depressed in response to low gas prices, but LNG exports will be one of the factors that helps put upward pressure on gas prices.
Yes, we do feel like NOV will recover. We still have a Buy on it at the current price.
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LeeR
Is there a readily available on line reference for suez max spot rates? Thank you.
Robert Rapier
Hi Lee,
I think this is the most comprehensive free site out there for spot rates: http://www.dryships.com/pages/report.php
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C. Fisher
Can you comment on the refiners VLO and WNR?.
I do not understand the losses TODAY.
Robert Rapier
I think it’s just profit-taking. Valero just reported a record quarter. Very little went wrong. But there are investors who like to sell after such a record quarter, reasoning that all the good news has been reported for now.
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