Comments on: $100+ Oil, Not “If” But “When”?

By: Glorieux

Glorieux — Tue, 31 Mar 2009 03:17:30 +0000

If you are looking for a small canadian oil play with lots of upside and volume, check out Opti Canada (OPC.T). They have a 35% stake in a 4.3B dollar oil sands play and their current market cap is 195M due to their high debt and slow start up of production. Word is production is ramping up nicely and if that is the case, than debt servicing will not be an issue as their cost of production is $23+$9 plus interest. So at $50 per BOE, they are already profitable at their current production targets with their partner Nexen(NXY) but if you believe oil will spike to $100 and more as I do, this one has lots of upside (and they could be just bought out)

By: Agoracom: Small Cap Investment

Agoracom: Small Cap Investment — Tue, 31 Mar 2009 00:26:45 +0000

[...] when current fundamentals look like such a rise is unjustifiable. This may well be true but like I said in this weekend’s oil commentary, I believe the market has already discounted the present fundamentals and is looking at a much more [...]

By: David

David — Sun, 29 Mar 2009 22:17:08 +0000

Stay away from the Canadian O and G Producers. Ive been long HOU since oil was 35 Dollars and NO ONE, anyone had any clue on how to play the crude oil market. I don’t like the HOU that much as I really have not made as much as I would have been if I had been strictly long the futures contract on CRUDE OIL. I ve seen a few OIL and GAS projects come across my desk and many are feasible it is just the money that is required to finance them to fruition. The larger OIL and GAS companies don’t offer the return as the smaller OIL and GAS companies do, you just have to find the right ones out there. As far as peak supply sure, I guess, there never really will be peak demand so the demand will always grow. Technology will have to make inroads or else the price will go up dramatically as it did before. There is only a shortage of oil at price so the rest is scaremongering. Remember, automobiles consume a lot of the worlds’ supply of crude oil, that is key, especially when one considers the dramatic improvements on fuel economy that will come from new laws in the USA.. I am not so sure I would go against the US dollar as it seems to have behaved better than GOLD at least so far, inept governing may change that though. In the meantime, I am looking for consolidation on the commodity side as the world is a much bleaker place that the so called pundits predict. Could be boring for a little while.

By: Godfrey

Godfrey — Sun, 29 Mar 2009 20:24:51 +0000

Hi Peter:
What is the percentage of the current oil price do you think is associated with the supply interruption risk such as
terrorist attack in Nigeria’s oil fields or war in the middle east?
Your opinions are highly valued.
Thank you.
Godfrey

By: D.S.G

D.S.G — Sun, 29 Mar 2009 17:01:22 +0000

Another way to play oil is to buy something like SU and write covered calls and puts thus reducing the overall cost of SU. If SU goes up you make money and if it goes down you get more stock at a cheaper price.

By: Pam

Pam — Sun, 29 Mar 2009 17:00:42 +0000

Regarding Cdn O&G Trusts an oustanding company is Cresent Point Energy, CPG.un. They have I believe the largest land holding in the Bakken area of Saskatchewan which is light sweet crude. Their gas exposure is far less than alot of other trusts, Iast I heard they were close to 90% oil. They offer a dividend around 10% and are beginning their conversion from a trust to a dividend paying corporation. They have anounced their intention to keep paying out the same yield so any concerns about this are answered as 2011 approaches.

By: Gavin

Gavin — Sun, 29 Mar 2009 15:16:35 +0000

Dear Peter- you have been mentioing that the no-brainer trade is to short us treasuries.request some more insight from you as i agree and feel like building up a pretty large position on this, as it seems to be having the lowest risk:reward compared to any other trades/markets. would you agree. what do you think is the extent of the risk- how high could the treasuries go?

By: Klaus Willmann

Klaus Willmann — Sun, 29 Mar 2009 14:29:48 +0000

Susan, Wolf, et al:

Some of these trusts (especially PWE) have issues – such as too much reliance on nat. gas, as well as recent or impending distribution cuts. Also the charts are still trending down (although there are signs of a bottoming process).

I much prefer SU and COS.un. Charts look better and SU hardly dropped after buying PetroCan. My favorite strategy is to sell puts instead of buying outright – if the option expires worthless, you get a nice commission, and if the stock gets put to you, you get the stock cheap (strike price minus commission). After the inevitable market retrace (a week or two?) would be a great time to deploy this strategy.

I’d stay away from the leveraged oil ETFs – you have to worry about futures contracts and volatility as well as the direction – just too many issues, methinks. For example, the price of crude is now ABOVE where it was on Dec. 1, but HOU & UCO have lost over 50%!!! The only one that seems to track oil reasonably is DXO, but I’d still prefer stocks.

By: challie

challie — Sun, 29 Mar 2009 14:23:00 +0000

Well the enthusiasm is there for $100 oil, but technically I show strong resistance at 65 to 70. but now, what about the psychology of high oil prices, the oil companies cry that they have to foresake exploration because of low prices, apparently their 29% depletion allowance is not enough to explore, but is just enough for high salaries and bonuses. Tell me big oil exec, what talent does it take to sell oil and gasoline?????????? when oil begins to run low, the only ones allowed to use oil will be the military, and we will have to go electric cars. Hence the need for an alternate fuel for powering those elec cars, as it is now the electric producers could not produce enough to power elec cars if everyone goes elec car. It would seem that the only solution is nuclear, but many are fearful of nuclear, so then what??? Some how, I don’t think oil is going to 100, but if it does maybe uranium will be back in vogue.

By: Wolf

Wolf — Sun, 29 Mar 2009 13:54:19 +0000

Susan, thank you for your help. Will have a closer look.