TORC Oil & Gas Ltd. VREYD

From Bow Tie Man

[wateroperator]

Conclusion:

As we write this, WTI for November (the next contract) is at US$39.44/b with the day’s low at US$38.68/b. Further downside pressure is expected in the coming weeks as the pandemic caseload rises and the President’s indifference weights on the economy and individual behavior. The next breach level is US$36.13/b and we see this occurring during October. The next key level for WTI thereafter is US$34.36/b. If this is breached then the  sector will face enormous selling pressure. We continue to see a risk of WTI falling below US$30/b if OPEC excess production is not reigned in. 

Most energy stocks have significant downside risk. The most vulnerable companies are energy and energy service companies with high debt loads, high operating costs, declining production, current balance sheet debt maturities of some materiality within the next 12 months and those that produce heavier crude barrels. Results for Q3/20 should start shortly and continue through November and many reports will not be investor friendly. Another US producer fell by the wayside today - Bakken producer Oasis Petroleum filed for Chapter 11 with debts of US1.8B. 

Hold cash and remain patient for the next low risk BUY window expected during Q4/20. 

 

[MrICE]

I'm a subscriber because I like to know what the bulls (Eric Nuttall) and the bears (Josef Schachter) have to say. But both say oil will go to $50 to $60. The difference is their timeline. 

[tracker11]

Although I'm as concerned as every oil investor, I take some comfort in knowing that a heavyweight like CPPIB that is a 29% stake owner in TOG will tough it out and wait for higher oil prices as predicted by the likes of Russian energy minister Aleksandr Novak, and many American institutions like JP Morgan for oil reaching possibly $100 per barrel. Please see June 19, 2020 article on JP Morgan