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Don D.
It seems that the middle east has a significant amount of issues with a announcement of Iranian nuclear issue, Saudi Arabia seems not happy with our oil production so drops pricing to the US. So I wonder and knowing costs to bring in new wells is lower than a few years ago how long do you feel this battle on production by price cuts will continue. Also I assume it will hurt this qtr. and future qtr. earnings until some sort of agreement is reached. Yes, bargain hunting is nice and I did reduce some positions earlier and I am a long term thinking just wondering how long this will possibly continue.
Igor Greenwald
These things can always continue much longer than anyone expects them to, but it’s clear to me that many small cap and midcap E&P stocks are discounting a global recession and 2008-style energy crash that’s just not in the cards. As for the Saudis, far from manipulating the market they’re just responding to market signals like everyone else. Here’s a good take on the Saudi story: http://www.reuters.com/article/2014/11/05/saudi-oilprices-kemp-idUSL6N0SU49520141105
i got 1000 shares of WES on a secondary deal @ 70.85 was wondering your thoughts on holding it or getting out thanks
Igor Greenwald
WES is obviously no longer cheap but it has the growth to justify the unit price and I like the long-term potential of the recent deal. It’s a comfortable hold for us here.
IGOR – I was wondering what your perspective is on SUNE now that earnings have been released. Now that it has pulled back I was thinking of taking a position because it doesn’t look as if the value proposition has really changed. I was wondering if you had any updated thoughts?
Karl
GST – any updated thoughts? Q3 call sounded like they are executing nicely. What dows the street not like?
Rich
Igor Greenwald
The Street still doesn’t like that they’re a leveraged small-cap E&P stock, but as we indicated in the 10/25 upgrade we feel those sins are fully priced in at this point.
In the latest TES newsletter, both CRZO and JONE are ranked #12. I assume one is #14. Correct?
Also, why didn’t you stick to a list with just the top 15 instead of expanding to 18?
Thomas
Igor Greenwald
Yes, CRZO should be No. 14; thank you for catching that. As for expanding the length of the list the truthful answer is that when recently adding EOX and WPX I couldn’t think of a prior Best Buy I wanted to drop from the list given the implication that we now felt less confident in its prospects. And I’m glad we didn’t since based on the rankings that would have meant dropping SUNE as well as FSLR.
I want to see an analysis of cost to produce a barrel of oil. What companies are going to bankrupt us if oil continues to drop? At what price points? As the price of oil drops, which extraction techniques [shale, deep water, conventional] become uneconomical and at what oil price points?
For a specific stock, but secondary to the above, where does recent recommendation REXX fit?
Robert Rapier
Paul, it largely depends on location. Eagle Ford costs are much lower than Bakken or most Permian Basin plays. The costs themselves are mostly cost of the lease, the exploration, development and production costs, logistics costs to move the oil to market, sales and marketing, general and administrative costs, and production taxes. Location impacts strongly upon logistics and the cost to develop and operate the wells.
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Don D.
It seems that the middle east has a significant amount of issues with a announcement of Iranian nuclear issue, Saudi Arabia seems not happy with our oil production so drops pricing to the US. So I wonder and knowing costs to bring in new wells is lower than a few years ago how long do you feel this battle on production by price cuts will continue. Also I assume it will hurt this qtr. and future qtr. earnings until some sort of agreement is reached. Yes, bargain hunting is nice and I did reduce some positions earlier and I am a long term thinking just wondering how long this will possibly continue.
Igor Greenwald
These things can always continue much longer than anyone expects them to, but it’s clear to me that many small cap and midcap E&P stocks are discounting a global recession and 2008-style energy crash that’s just not in the cards. As for the Saudis, far from manipulating the market they’re just responding to market signals like everyone else. Here’s a good take on the Saudi story: http://www.reuters.com/article/2014/11/05/saudi-oilprices-kemp-idUSL6N0SU49520141105
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Robert Vujovich
i got 1000 shares of WES on a secondary deal @ 70.85 was wondering your thoughts on holding it or getting out thanks
Igor Greenwald
WES is obviously no longer cheap but it has the growth to justify the unit price and I like the long-term potential of the recent deal. It’s a comfortable hold for us here.
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Peter
The CEO of EOX says due to lower oil prices they are dropping one of 3 rigs in the Bakken (see here:
http://www.bloomberg.com/video/emerald-oil-ceo-mcandrew-rudisill-oil-prices-production-tcDsNDeUQPmFKuEsyXIfbw.html ). Was that already factored into your assessment of the company when you made it a best buy?
Igor Greenwald
This was not information available when I was researching this story: http://www.investingdaily.com/energy-strategist/articles/21424/a-gem-priced-as-zirconium/ but I did discuss it in a follow-up portfolio update: http://www.investingdaily.com/energy-strategist/articles/21474/low-gas-prices-are-not-a-plot/
This looks like a prudent move in the current price environment that preserves rather than undermines the company’s long-term value.
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Karl Eser
IGOR – I was wondering what your perspective is on SUNE now that earnings have been released. Now that it has pulled back I was thinking of taking a position because it doesn’t look as if the value proposition has really changed. I was wondering if you had any updated thoughts?
Karl
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Richard Greenwald
GST – any updated thoughts? Q3 call sounded like they are executing nicely. What dows the street not like?
Rich
Igor Greenwald
The Street still doesn’t like that they’re a leveraged small-cap E&P stock, but as we indicated in the 10/25 upgrade we feel those sins are fully priced in at this point.
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Thomas Lewis
In the latest TES newsletter, both CRZO and JONE are ranked #12. I assume one is #14. Correct?
Also, why didn’t you stick to a list with just the top 15 instead of expanding to 18?
Thomas
Igor Greenwald
Yes, CRZO should be No. 14; thank you for catching that. As for expanding the length of the list the truthful answer is that when recently adding EOX and WPX I couldn’t think of a prior Best Buy I wanted to drop from the list given the implication that we now felt less confident in its prospects. And I’m glad we didn’t since based on the rankings that would have meant dropping SUNE as well as FSLR.
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Paul Kelley
I want to see an analysis of cost to produce a barrel of oil. What companies are going to bankrupt us if oil continues to drop? At what price points? As the price of oil drops, which extraction techniques [shale, deep water, conventional] become uneconomical and at what oil price points?
For a specific stock, but secondary to the above, where does recent recommendation REXX fit?
Robert Rapier
Paul, it largely depends on location. Eagle Ford costs are much lower than Bakken or most Permian Basin plays. The costs themselves are mostly cost of the lease, the exploration, development and production costs, logistics costs to move the oil to market, sales and marketing, general and administrative costs, and production taxes. Location impacts strongly upon logistics and the cost to develop and operate the wells.
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Robert Vujovich
Robert was wondering your thoughts on picking up some KMI here. Thank you
Robert Rapier
Yes, we think KMI is a good value at the current price.
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