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 FP Trading Desk submits: Oil companies are flush with cash thanks to the recent period of high energy prices. At the same time, reinvestment in their core business has lagged. This could put Calgary in the middle of a consolidation wave for the sector. The world’s top five oil companies finished the third quarter with C$62-billion in cash and annual cash flow of C$232-billion, according to Canaccord Adams. As a result, it expects an increased focus on M&A in the coming year. Canada and the oil sands in particular, could get a lot of attention since it offers meaningful reserve and production growth in a reasonably stable fiscal environment. Complete Story »
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Mike Havrilla submits:
The accompanying chart presents an 8-week analysis of global coal futures prices as a follow-up to my previous 5-month analysis last month of Market Vectors Coal ETF (KOL), PowerShares Global Coal ETF (PKOL), S&P 500 ETF (SPY), U.S. Natural Gas (UNG) + Oil (USO) Funds, and the Energy Sector ETF (XLE). The global price of coal is tracked by the near-month coal futures contracts from the U.S. (QL – Central Appalachian NYMEX Coal Futures), South Africa (AFR – Richards Bay ICE Coal Futures), and Europe (ATW – Rotterdam ICE Coal Futures) – posting a decline of 38% on an equally-weighted average of the three coal futures contracts. Complete Story »
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Michael Fitzsimmons submits:The wires are reporting that Warren Buffett's Berkshire Hathaway (BRK.A) has increased its stake in ConocoPhillips (COP) to 84 million shares, or close to 6% of the company. ConocoPhillips has contracted from $90 earlier this year to under $50 and is now currently yielding around 4%. COP should earn close to $12/share in 2008 for a current P/E of 4 (that is not a typo). When was the last time a quality company like COP traded with its yield equal to its P/E? I have disagreed with some of Buffett's consumer related picks in the past, but this choice was excellent (and not just because I own it). Complete Story »
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Michael Fitzsimmons submits:Gasoline has fallen to $1.99 a gallon here in my neck of the woods. Everyone seems to be really happy about this. However, it will come as no surprise to my faithful readers that I can even find problems with cheap gasoline! Cheap oil and gasoline will simply reinforce the uninformed American public's opinion that they have an inalienable right to oil which is both plentiful and cheap. Read some of the editorials in the latest financial magazines and you will see that $145/barrel oil and $4.50/gal gasoline have already been long forgotten (it was only 6 months ago). So what do I propose? Well, at a time when the US government is printing trillions of US dollars to, as Jim Rogers says, "transfer money from the competent (the US tax-payer) to the incompetent (bankers, Wall Streeters, insurance & automotive execs)", and since the US dollar is strong (?), why not use some of these paper dollars to fill up the Strategic Petroleum Reserve? I mean, if Bush thought buying oil at over $100/barrel was a good idea, it must be a real steal under $60. Besides, the next oil crisis is going to be a real doozy! Don't believe me? Just look at all the canceled production projects recently as the credit crunch and cheap oil take their toll. Meanwhile, the skeleton-in-the-closet (oil reservoir depletion rates) keeps knocking most mature oil reservoir yields at about a 6% a year clip. Complete Story »
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Engineering and construction firm Fluor Corp. (FLR) reported solid earnings and guidance for Q3. It’s sitting on about $2.2 billion in cash as well. The global company noted uncertainty around the world, and gave a nice snapshot of what the company was expecting from the different market segments it serves. From Fluor Corp.’s Q308 conference call: Complete Story »
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Michael Fitzsimmons submits:Last week, US automakers went to Congress with their hat in hand. The auto executives were all smiles, as was Nancy Pelosi and others. As a US taxpayer, I can tell you that I was not smiling, and I resented their happy demeanor. The automakers' insistence on building non-competitive SUVs and Hummers and the like hurt the US in two major ways: first, it helped increase our reliance on foreign oil. Second, it allowed Toyota (TM) and Honda (HMC) to eat their lunch. Of course Congress is to blame as well by not raising the CAFE standards, legislating tax-breaks to encourage business purchases of SUVs (?), and by caving to automotive lobbyists on every possible occasion. Net-net, the US imports 70% of its oil, many jobs have been lost, and the economy has suffered as a result. So, now the middle class taxpayer has yet another sector to bailout. Since no one is going to bail me out, I want to insist that Congress get something out of these auto executives for my money: Complete Story »
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Fat Prophets submits: In our last review of ConocoPhillips (NYSE:COP), we took the opportunity to reduce our exposure to the company. This was primarily due to a diminishing risk reward profile following the stock’s price gains and the outlook for generally flat production. Given that the stock price has since pulled back considerably, however, the risk reward profile is beginning to look more favorable. This week we review the company’s third quarter production report and consider whether the time has come to increase our exposure. Complete Story »
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Michael Fitzsimmons submits:The biggest mistake the United States could make right now is to assume recent weakness in oil and gasoline prices means the energy crisis is over and the US can go back to our old energy habits and policies. An editorial in Friday's edition of The Wall Street Journal inferred that high oil prices were solely the result of weak US dollar policies which caused a speculatory oil price bubble. The author conveniently neglected to point out that while the dollar did drop roughly 40% since Bush got elected, oil prices went up 500%. The author then recommended US auto companies not use their tax-payer bailout dollars to manufacture fuel efficient automobiles because there would be no market for them with oil under $50/barrel, which is coming (according to him). Notably, the author neglects to mention the role high oil prices played in the current automotive manufacturing crisis as the US big three focused on gas guzzling Hummers and SUVs as opposed to fuel-efficient intelligent design. Complete Story »
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Zignals submits: By Dr. Declan Fallon In September I took a look at Warren Buffett's stock holdings. In this post I will look at George Soros's stocks. The information was pulled from Stockpickr and is ehhh... not the most up to date given his third greatest holding was that bastion of financial security, Lehman. The 13F on which the holdings were pulled were current for June 20th of this year - I suspect things have changed a little since.... Complete Story »
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 Kurt Wulff (McDep Associates) submits: Five buy recommendations, ConocoPhillips (COP), StatoilHydro (STO), PetroChina (PTR), Devon Energy (DVN) and Canadian Oil Sands Trust (COSWF.PK) are financially strong, geographically diverse and well-represented in North American Natural Gas, Rest of World Natural Gas, Oil Production and Downstream. Related stocks in each group that have low McDep Ratios and low debt could substitute for, or supplement, the buys. Amidst the storm of change for financial companies, recommended oil and gas stocks meet the test of growth, inflation protection and deflation resistance. We define growth as a 7% real return on investment expected for stocks priced at a McDep Ratio of 1.0. By definition, real assets, such as oil and gas, offer inflation protection. Low debt offers deflation resistance. Complete Story »
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Stockerblog submits: The first oil well in Texas was discovered in 1901. Texas is today the largest oil producer in the US. But this state’s economy has evolved greatly during the last few years, signaling a transition towards a service industry, and beginning to research for alternative energy sources.
These are some interesting facts about Texas: Complete Story »
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C.S. Jefferson submits: We all know and heard of the tired analogy “don’t try to catch a falling knife” to describe the temptation of jumping into a declining market. There are certainly too many analysts or money managers that have been completely eviscerated and butchered by calling the bottom prematurely in the financials and housing market since fall of 2007. Don’t like playing with knives? Here’s a better analogy to use instead of the requisite kitchen cutlery. Remember when you were a kid and your smart-ass uncle would wave a dollar in front of you and say: “If you can catch the dollar as it falls between your fingers, it’s yours.” Complete Story »
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