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Stocks I like in O&G

nigelpm
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Stocks I like in O&G

#1055

Postby nigelpm » November 6th, 2016, 11:40 am

Fabulous. Feels like this board is going to be really useful.

Let's kick off with a few ideas.

SIA - needs no introduction but at £1.32 - market cap - £440m it's my current preferred play.

Lots to like - Great assets, should do well out of Sterling weakness with no debt - so only taking the positive elements of currency back to £'s.

Issues around what level of capital investment PV are willing to put in but in summary cheap.

OPHR - Again, lots of good assets and little debt - more a long term view on LNG and oil prices.

BLVN - Huge cash position but burn at last RNS did concern me - jury's out on this one for now.



I hold the above and also run a short position on crude oil - with the contango this has shielded me somewhat over the past year and a bit.

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Re: Stocks I like in O&G

#1129

Postby Asagi » November 6th, 2016, 1:51 pm

OK, a thoroughly unimpressive maiden post on this board from me but how about.... Genel (GENL).

There is a lot of negative sentiment toward the company currently, due to the massive delays in getting paid by its host government in Kurdistan, which isn't really a government and isn't really a country. There is also the war within Iraq against Daesh.

However, there are signs that Daesh is being rolled back permanently, meaning that the Kurdish administration may soon have more cash available to pay Genel, as it will not need to pay its own security forces so much. So the security risk reduces (raising share price), payments increase (improving income & balance sheet) and risks that Genel won't get paid reduce (also increasing the perceived value of the stock).

You can tell I'm a shareholder!

Asagi (long GENL)

nigelpm
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Re: Stocks I like in O&G

#1148

Postby nigelpm » November 6th, 2016, 2:25 pm

Yup, GENL has huge potential but huge political risk - have a position there but not adding - and kind of written it off in my mind.

PeterGray
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Re: Stocks I like in O&G

#1194

Postby PeterGray » November 6th, 2016, 3:36 pm

Hi Asagi

There is a lot of negative sentiment toward the company currently, due to the massive delays in getting paid by its host government in Kurdistan, which isn't really a government and isn't really a country. There is also the war within Iraq against Daesh.


Yes, there's certainly potential if the political situation stabilises and payments start coming regularly. However, while I don't follow Genel closely, I'd also be worried by the recent large reserves write down - which seems to be due some of the wells going into decline earlier than expected - that won't be fixed by politics.

Peter

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Re: Stocks I like in O&G

#1283

Postby petroleum1 » November 6th, 2016, 6:33 pm

The flowrate of their field had dropped from 280,000 b/d to 80,000 b/d within 4 months period. To me this indicate that the field require water injection. To do water injection will require a huge capital expenditure to build water injection facilities and water injection wells. If they are struggling with payment to keep going how are they going to do pressure maintenance?
I refer you to Nimrod previous post.
http://www.telegraph.co.uk/business/2016/10/26/genel-energy-shares-tumble-on-lower-production-guidance/

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Re: Stocks I like in O&G

#1529

Postby Asagi » November 7th, 2016, 8:14 am

This will likely read as a bit naive/dilettante but I have taken PeterGray and petroleum1's 'advice' and sold my GENL.

The investment case here is obviously even simpler than not getting paid, security in Iraq and even the oil price. The assets aren't up to it. The rest just makes life even harder for the company.

I will go and try and find a better company, trading under better circumstances at a decent price. Thanks PeterGray and petroleum1 for helping me see the light.

Asagi (no position)

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Re: Stocks I like in O&G

#2223

Postby emptyend » November 8th, 2016, 2:53 pm

The stocks in my portfolio haven't changed hugely in name, but the cash invested has.

In particular, I have a substantially larger stake than I used to have in a company I am supposed to know a bit about. Full details are in RNSs etc, but I've quadrupled my stake over the last 2-3 years at 20-30% below current levels. I won't be commenting further about this one, so don't ask.

My SIA stake is little changed in terms of shares. Fortunately I've had the 74p in distributions but, even so, the cash value has nearly halved since 2014. Relative to others in the sector, I still see this as pretty safe.

Having substantially sold out of GBP in 2012 or thereabouts at 22p+, I raised my stake in GBP again last year in anticipation of a deal to make use of their dwindling cash pile. Too early! They still have 4p per share in cash but there is little sign of any deal, though the revolving door of possible deals continues unabated. Shares are 1.62p mid, having had a major flurry last Friday on the back of some developments in Italy. Note that both in Italy and Namibia, the company's acreage appears to contain large-scale leads in the 1bn bbls area.....but both are quite deepwater and will need more seismic etc. Nevertheless, there are many worse places to be politically - and I wouldn't be surprised if a major took them out on the basis that they are a cheap option (especially if the oil price looks likely to turn or if geopolitics get even more tricky!). Note that the free float here is very limited indeed.....only about 110mn shares (worth $2mn in round numbers), so if things start to happen (as they did last Friday) you need to be aware of the risk of spikes. I've made a number of comments on the ADVFN board for the company.

I also have some CNE, though I cut my stake in the summer on one of the highs. Small beer relative to the others, but the Senegal position is interesting and the Indian stake lock-up should free up at some point.

Other than those, I'm pretty sceptical.......there are plenty of "cheap" shares about but they are usually "cheap" for very good reason!

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Re: Stocks I like in O&G

#2304

Postby JonnyT » November 8th, 2016, 5:02 pm

I'll offer a few less conventional ones that I'm invested in:

Sound Energy - Possibility that using fracking they have unlocked a Super Giant gas field in Morocco, though it's going to need a very fair wind to get anywhere close to that. Every TCF gross is going to be worth approx 100p per share.

Providence Resources - Funded to go it alone on a well in the Atlantic Margin that could hold 500m barrels with a target below that could also materially add to that figure. They planning to drill in June 2017 and are looking for a farminee but will go alone if one doesn't come along.

Roxi Petroleum - Been drilling deep 4500m plus post salt wells since 2014. All have found oil but technical problems have stopped them testing any. The latest one A6 looks like they might and I mean might actually test one. The oil logged to date is over twice the depth used in a CPR a few years ago, no OWC has been located.

Savanah Petroleum - Unlike Soco I think these actually might find some oil in Africa, in this case Niger. Several wells to be drilled in 2017. All in proven basins so not wildcat.

Aminex - The share where Emptyends a none executive Director. To date they have been awful eroding shareholder value. This time they are looking to drill two new wells starting anytime soon (December more likely IMHO as they get nothing right) to appraise the Ntorya discovery. The first is updip from the discovery well so SHOULD be low risk, the second is to try and unlock much bigger resources the other side of a fault. I have a theory that this is drilling sands that gave a kick and caused the abandonment at Likonde. This would be company making though currently I see no market for the gas without Infrastructure being built

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Re: Stocks I like in O&G

#3390

Postby Tymeric » November 10th, 2016, 5:44 pm

Serica Energy

SQZ share price 14p

Market cap 38M

Current production from Erskine(18%), above 2500 boepd net to SQZ

Estimated profit this year could be £8.8M (according to TMF ironically) despite blockage.

http://money.aol.co.uk/2016/11/08/these-cash-rich-oil-stocks-could-be-a-life-changing-buy/

New maintenance regime in place

SQZ decommissioning costs of Erskine carried by BP

Around £10M cash in bank in Sept(excluding Sept sales)

Reserves upgraded to 4.2 M boe net to SQZ

2 carried wells due 2017/18

No debt (apart from below)

UK ring fence tax losses of £131M

BP still holding 5% of SQZ at a decent profit

Shell have Lomond up for sale...binding bids went in 3 weeks ago ?
Dana want access to Lomond for the Arran field ?
Serica want access to Lomond for fully appraised Columbus Field(50%) ?

Dana leading project backed by the Oil and Gas Authority

https://www.energyvoice.com/oilandgas/114772/114772/

2 payments in July'17 and July'18 due to BP of £2.2M

Other offshore interests including Ireland, Morocco and Namibia

Interim results here
http://www.serica-energy.com/downloads/releases/Interim%202016%20Report%20&%20Press%20release%20-%20FINAL%20-%2029%20September.pdf

I've done well with SQZ, but I've also lost on some real howlers so needless to say, take it with a pinch of salt.

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Re: Stocks I like in O&G

#3456

Postby Rhomboid1 » November 10th, 2016, 7:57 pm

Some thought provoking posts , i'm not able to see past Hurricane as an investment at the moment, they've proven that they're barking up the right tree with their geological model, the only Q is how big is the GLA resource and how will its production be financed & by whom. The only reason the share price is around these levels is fractured basement is still treated as a lottery in terms of rate of decline, running counter to that is every time industry funding sources are taken inside they pony up, most recently £70m at 34p. IMHO this is a major step change for WoS exploration and we will look back at this as a Forties Mark 2 emerging into clear view.

nigelpm
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Re: Stocks I like in O&G

#3527

Postby nigelpm » November 10th, 2016, 10:07 pm

Rhomboid1 wrote:the only Q is how big is the GLA resource and how will its production be financed & by whom..


That's a pretty damn big and important question!

Without financing it's dead in the water - just look at the difficulties Ophir have had with the FLNG project - finally getting a deal today on terms which aren't great.

I get the investment case but it's not a given.

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Re: Stocks I like in O&G

#3545

Postby Rhomboid1 » November 10th, 2016, 10:32 pm

Hi Nigel

Yup they're big questions but my guess is they're soluble, hence my holding, Ophir is an interesting example but I sold my position after listening to Nick Cooper present & then looking at his remuneration, very much out of kilter imho

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Re: Stocks I like in O&G

#3553

Postby nigelpm » November 10th, 2016, 11:08 pm

Rhomboid1 wrote:Hi Nigel

Yup they're big questions but my guess is they're soluble, hence my holding, Ophir is an interesting example but I sold my position after listening to Nick Cooper present & then looking at his remuneration, very much out of kilter imho


Yup, he's not a great presenter but he's a bright guy. I'd rather have a guy in charge who gets the business and numbers over being a great presenter.

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Re: Stocks I like in O&G

#3564

Postby Rhomboid1 » November 10th, 2016, 11:51 pm

My problem was he he had a sense of entitlement and was paid way too much , plus he did a sh*t presentation

nigelpm
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Re: Stocks I like in O&G

#3618

Postby nigelpm » November 11th, 2016, 9:03 am

Rhomboid1 wrote:My problem was he he had a sense of entitlement and was paid way too much , plus he did a sh*t presentation


That may be the case but they've worked bloody hard to get the Fortuna deal over the line - must give them credit where it's due.

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Re: Stocks I like in O&G

#3825

Postby Rhomboid1 » November 11th, 2016, 3:57 pm

nigelpm wrote:
Rhomboid1 wrote:My problem was he he had a sense of entitlement and was paid way too much , plus he did a sh*t presentation


That may be the case but they've worked bloody hard to get the Fortuna deal over the line - must give them credit where it's due.


Yup it looks a neat solution to move the project forward.

PeterGray
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Re: Stocks I like in O&G

#4164

Postby PeterGray » November 12th, 2016, 1:39 pm

i'm not able to see past Hurricane as an investment at the moment, they've proven that they're barking up the right tree with their geological model, the only Q is how big is the GLA resource and how will its production be financed & by whom. The only reason the share price is around these levels is fractured basement is still treated as a lottery in terms of rate of decline


I like Hurricane to, and have a holding - though well short of my largest O&Gs. However, I tend to agree with a lot of what Nigel says. One reason that fractured basement is still treated as a lottery is because in may ways it is! They won't be sure about exactly what they've got till they've produced a fair amount. In a different price and investment environment HUR would be worth multiples of its current price, but in the current environment, and combined with it being basement, offshore W of Shetland there's going to be a lot of caution in the pricing. Quite possibly, that's too much though - hence my investment, and my (smallish) increase in the offer.

Peter

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Re: Stocks I like in O&G

#4288

Postby petroleum1 » November 12th, 2016, 8:52 pm

TLW share price mirror that of the oil price. When OPEC met in Algeria in September and agreed on production cut the oil price as well as TLW share price started to rise. But when Iran and Iraq started to disagree on the oil cut in mid Oct the oil price and TLW share price started to fall. So if you keep an eye on the oil price and can foresee the direction you can bank on TLW to follow suite.

http://uk.advfn.com/cmn/chrt/chrt_wrap. ... 3=&ind2_3=

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Re: Stocks I like in O&G

#4405

Postby thebuffoon » November 13th, 2016, 10:18 am

It's very interesting reading the posts on this thread. TMF oilies have always been the most educated and informed. The one thing they have never been, and I say this as someone who used to be a TMF devotee, is very welcoming to those who have a higher risk strategy.

I met a guy three months or so ago, let's call him Warren, a friend of my brother. Its not the first time we have seen each other, but we've never spoken at length before. He invests in small O&G and mining companies. Over the last four to five years he has been solely invested in this area of the market. He wades through the detritus on the ADVFN and LSE boards for ideas. Unlike most of us, he actually keeps a copy of the posts that sparked the initial research into a company, and of course, he follows those posters. I asked him why he keeps the posts. He said it serves as a reminder that leads come in a variety of guises. It's not always a 'you must buy this' type of post. Sometimes it's a post criticising one of those type of posts, by comparing them to other companies.

Being a cost accountant, Warren has a pretty ordered mind, and keeps extensive records of all transactions (including when read the PST that game him the lead, and when he decided he would invest, thus showing how long he spent thinking about the investment and how long before he actually bought), together with a quite amazing diary of his investment thoughts. He started this three years ago, and it records his thoughts on all mining and oil companies he reads about. It included initially the companies discussed on TMF, but he quickly made the assumption that many of the posters must have pretty large portfolios, as they nearly always discussed bigger mid caps or large caps. He then focussed on the other boards.

He was prepared to show me his investment record, but asked me not to discuss specifics. He genuinely wasn't boasting. He's not that type, he merely wanted to illustrate some principles when I pushed him on them. His record showed that he has invested in 28 mining companies and 19 oil and gas exploration companies, the majority pure exploration. He has a set of rules for when to sell. These crystallisation events are meticulously logged, and he continues to follow the companies he sells, and in a very few cases reinvests.

I know most people here want to see tips, or perhaps it would be more palatable to call them, 'ideas for further research', but I found it fascinating how ordered his mind was, and also seeing his returns, which I calculated as a CAGR of just over 73%, so I feel it worth mentioning his record without being specific.

I post all this, because I received the usual mocking response when I raised the issue of SOU. (By the way, I find it interesting that JohnnyT, or TMFJohnny, as some knew him, decided to invest. He initially said he was investing for a short term trade. When the stimulated flow was announced he was going to exit. We knew they were going to find plenty of hydrocarbons, it was a case of how much it flowed unstimulated and then stimulated. The downside to this trade was reasonably limited. This trade has now morphed into a longer term holding (not because of a 'bad' RNS!) as he feels more confident they may have a giant field, and (like me) won't be surprised if we get a 'constrained by equipment' RNS when the TE7 results are announced).

Anyway, I digress; I want to discuss how people treat posters here. In a constructive way of course. I'm only posting because I think some here, perhaps readers who didn't post much, if at all, on TMF might appreciate the input, even if the regulars might not.

Everybody has a different strategy. Of course some have properties, and some hold metals, and others invest in bonds, and therefore their wider portfolio balance may be different from others with the same number and value of their share portfolio.

Some have a portfolio that comprises a handful of companies (I believe EE is a well known example), while others have tens of shares (Carmensfella has a huge number I believe, although the top 10-15 comprise a significant percentage of the portfolio value).

If you have a larger number of shares then you can take more risk with each company you invest in. I guess if you have a portfolio worth in excess of a million, you'd need to invest in a lot of small companies, and perhaps this is why people talk about larger midcaps and large companies here. Interestingly Warrens portfoilio is now at that level, and he seems comfortable.

We're told the market is forward looking, and to some degree this is true. The City boys do seem to have a shorter horizon than I do, seemingly more focussed on the next 12 months or so. This is where we have an edge, surely.

Let's take what, for the TMF board, is a risky share, Hurricane. It's trying to prove up fractured basement plays in the West of Shetland. Nobody doubts they have secured some terrific hydrocarbon flows, but the two big unknowns are whether they can obtain sufficient funding, and whether the hydrocarbons flows can be sustained. This brings back fond memories for those of us who got into Soco because of their basement play in Vietnam. In fact now I think about it, EE was a bit of a maverick in those days, wasn't he? Did he get any other challenging posts?

I got out of Soco and have done well, although it's been a hairy ride. EE stayed in, and has ridden it all the way down. We all have our own strategy. Perhaps the next time someone posts on a small exploration company, someone might enquire as to his or her strategy, and why that particular share forms part of it. That way this board will grow, not wither as the TMF board has done.

I really hope it does thrive.

Buffy

nigelpm
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Re: Stocks I like in O&G

#4408

Postby nigelpm » November 13th, 2016, 10:29 am

thebuffoon wrote:It's trying to prove up fractured basement plays in the West of Shetland. Nobody doubts they have secured some terrific hydrocarbon flows, but the two big unknowns are whether they can obtain sufficient funding, and whether the hydrocarbons flows can be sustained.

Buffy


For me it's the funding in this environment and I gave the good example of Ophir and how challenged they have been to do a deal on an asset that has been proved up already.

My comments had nothing to do with anything else.


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