GREY:STPJF - Post by User
Comment by
nikeherculeson Jan 30, 2015 12:07pm
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Post# 23382153
RE:Oil
RE:Oil
Are you looking for a quick trade or a 1-5 year time horizon?
I addition to your logic, I'd be watching the US rig count and stockpiles for action. The shalers may have congtributed to the problem so they might be the catalyst to fix it.
When stockpiles drop, we'll get a feeling for a bottom. Will it come back right away? Maybe, maybe not!
I'd recommend buying slowly into a large intergrated oil company (HSE) if you're a cautious type.
For more risk/upside - COS. Their breakeven is around $55 USD/bbl and they have enough staying power to ride this cycle out. Don't forget Syncrude produces light oil, not bitumen.
COS debt - $1.7 billion on 103,000 bbls/day - breakeven around $55USD/bbl.
STP debt - $0.7 billion on 3,000 bbls/day
COS is losing approximately $300 million per year if prices stay where they are. So the real gamble is on WTI/Brent since COS has an untapped 1.5 billion credit line and $100+ million in cash.
If the oil price stays low, alot of overleveraged juniors oil execs will be in the unemployment line - I'm staying away from those. No need to risk $$$ on a junior when the majors are down.
Meanwhile, SPY continues it's upward climb as our CAD $$$ tanks. A nice basket of 20 or so REITS should provide income while you wait for oilmaggeddon to end. I think interest rates are going nowhere but down.
Remember, 90% of what you read on Stockhouse is BS.....
Also, the COS board is a zoo, so I like posting here. Better feedback.