Southern Pacific Resource Corp STPJF

Oil

[ShatnersRug]

Oil price may stay artificially suppressed for quite a while. Russia is relentless in its pursuit of another chunk of the Ukraine, and the US will not enter the conflict directly lest they wish to inflict Cold War part deux unto the world. The US will instead fight a war of attrition against Russia.

The decline in oil price over the last 7 months makes little sense relative to global production vs. consumption. Yeah there's a little tail off, but not enough to justify a 60%+ decrease in oil price. Totally artifical IMO.

See this chart:
https://www.xe.com/currencycharts/?from=USD&to=RUB&view=1Y

Although I'm not 100% sure, 50%+ of Russian's GDP is(was) directly and indirectly reliant on oil. The ruble will continue its plunge until the Park1(sic) hits the fan in Russia.

In the meantime, with oil(WTI) in the $40-$50 range, the US economy is gearing up for its best performance in 10 years. Win-win as far the the US gov't is concerned.

Not sure when to get back on the energy bandwagon, but my feeling is that the best sign would have to be news out of Russia. Perhaps an increased military presence in uncontested areas(Arctic)? Civil unrest? We'll see how it plays out.

Thoughts?

Shat

[nikehercules]

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

[budworm]

Hey Nike - I have been watching COS and thought of getting in.  Not holding COS currently and jumping in now seems safe.  What insight can you give on dividends?  Completely independant of SP or correlated somewhat? 

[nikehercules]

Hi Budworm: I don't expect a meaningful dividend to return until COS management has their debt back in the lower range of their $1-$2 billion target. This may take $65 oil. It's not gone for good, but it will be gone for awhile (months, years??). A couple months back the dividend was 35 cents or $140 million/quarter, so they can pay the debt back in a big hurry if/when oil recovers

[Backwardblade]

Nike...after a major re-arrangment of my portfolio, I am presently holding Chevron at 102.00 US.  It pays a good dividend, and I get more torque out of the rising  US dollar.  I also hold Pembina PPL for it's monthly dividend and the growth it offers via a large capex going forward.  The big oil money though that I hold personally is Vermillion Energy.  20% return

[nikehercules]

Thanks Backwardblade It's thoughtful posts like this that I'll miss the most about the 'ol STP bullboard. I'll take a look at Vermillion during the next inevitable pullback in the oil price. COS has been on fire lately, up to 11.50 from 7 bucks from just a few days ago. The oil markets are like a casino right now. Unfortunately, the easy money has already been made on COS. Good

[alfino]

"until the Park1 hits the fan" lol!