A call for energy (oil-related) investment ideas

mattduke · Light Sweet Crude Joined: Oct 28, 2005 Posts: 1168

I am in the process of moving away from the oil majors and into the more niche players that have the ability to increase their production. Penn West is the obvious play, but I'd appreciate hearing your ideas too. I am looking specifically for oil, tar sands players versus alternatives. Thanks!

sirrom

the oil majors are still able to increse their production,so it's best to stick with them as they are going to be raking in more and more billions of dollars
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If everybody became a vegan, peak oil will not be a problem,nor will global warming,deforestation,water shortages,expensive food,famine etc.

Starvid · Last edited by Starvid on Mon Oct 22, 2007 9:05 am; edited 1 time in total

Drillers maybe?

Pride International (PDE) seems undervalued to me as they are turning themselves into a pure deep offshore driller, but the markets still value them as an onshore driller. Furthermore, they have lots of contracts ending pretty soon which when renewed should rake in far more cash.

I don't own Pride, but I have a buy order in the market at $34. (Hey, now I do own Pride)

I'm looking at Petrobras too, and Transocean.

By the way, I don't think the oil majors are able to increase their production. They have been at a rough plateau for I don't know, 5-10 years. Often declining by 1-2 % annualy.

Still, that doesn't make them bad investments. I own all of the big ones except BP.

Yeah, and I just sold PetroChina.
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Peak oil is not an energy crisis. It is a liquid fuel crisis.

rockdoc123 · Light Sweet Crude Joined: May 16, 2005 Posts: 1671

For Penn West you have a 3 year period where some money could be made but then run into the unknown with the royalty trust tax rules changing.

The multi-nationals should have a place in your portfolio but I believe mainly as dividend stocks. Their growth is limited to that what oil prices can achieve....they are not going to grow production to any great extent.

Many of the larger independants are undervalued. Do a simple calculation of share price/cash flow/share. What you will find is the multiple is now around 3-4 for many of these companies whereas it has been as high as 7 in the past. Some of these are good long term holds IMO, they will either grow organically, merge or get taken over all of which are good for share price.

The small independants have the greatest potential bang for the buck. They are also the riskiest investment. For a company that is producing a couple of hundred barrels a day it is not that hard to get to a coupld of thousand barrels a day with a little luck. The risk comes in that these companies are often "one play wonders" with little in the way of a good prospect portfolio and certainly not enough cash flow to whether a period of bad luck. To my mind the only people who make lots of money investing in these are those with a bit of inside knowledge.