oil....Alberta oil sands

[selkirk]

Recently I have received three reports from US brokerages that rated the top 20 countries in oil/gas production.

Canada did not make the top 20, also heard a story that an enery conference only 3-14 US firms (US based financial companies) ever heard of the Alberta oil sands.

It is interesting how little press the Alberta oil sands receives. Alberta premier Ralph Klein went to Washington this past week to open a trade office. The visit had little to no media coverage especially in the US. The trade office is a good idea since there is a trade dispute on live cattle, due to mad cow scare that needs resovled. Also in the future Alberta will be one of the most important sources of oil on the planet.

just some facts

Canada ranks fourth in conventional oil/natural gas production, behind Russia, United States and Saudia Arabia.

Canada accounts for 16.9% of all energy imports to the US, compared to 20.7% all middle east countries. South America and Central America account for 20.1%

Besideds the Cdn. oil Sands in Alberta also there is Venezuela Orinoco (heavy oil) which will be developed.

Based on Current technology(and cost) 175 billion barrels of recoverable reserves.

current production is around 1.2 million barrels a day.

this may increase to 10 million barrels a day. for fifty years.

Saudia Arabia produces 10-12 million barrels a day

the Alberta oil sands reserves might be as much as 300 billion barrels

The Alberta oil sands needs high oil prices to be developed, it will take roughly 130 billion US to reach the 10 million barrel level.

At $30+ oil the projects make sense and even more at $40+.

There are systems that are being developed and may work...will know in 3-4 years to lower production costs...(eliminate the need for natural gas to get the oil)...

Of coarse oil from Alaska and the Cdn. north only makes sense at $40 + oil, so Alberta oil sands will be just as low cost if not better.

China is also talking about a pipeline to ship some the oil to BC and then to Asia.

ten years from now Alberta will be one of the greatest energy producers in the world.....if any one notices does not really matter.....just the money.

note: own Enbridge(pipeline), Suncor (Toronto), CNQ Cdn. Natural Resources.

would rate them holds short term, looking for a small correction.


thanks
selkirk

 

[MSM]

RIGHT ON - CNQ WENT UP ALMOST A $1.00 TODAY!!!

ENBRIDGE?
HAS A LOT OF PRODUCTS OUT THERE - WHICH ONE ARE YOU LOOKING AT?

SIMCOR?
HAS 3 DIFFERENT ONES - AGAIN, WHAT ONE ARE YOU IN?

THANKS
MSM

 

[MSM]

SORRY.

I MEANT SUNCOR, NOT SIMCOR

 

[selkirk]

MSM Enbridge trades ENB $49.69 US, Suncor (SU) $37.91 US, also CNQ (Cdn. Natural Resources) has heavy oil exposure $53.59.

Tailsman is also a good oil/gas company along with Petro Canada which looks cheap.

however all of these stocks are off their highs and have been going down the past two weeks.

Encana ECA is another stock that had a strong run but is now slipping.

energy and base metal stocks have sold off and most that I follow are off 5-12% in just a couple of weeks.

that is why I would wait, until you see strenght in the sector.

these are all well run senior oil/gas stocks, Enbridge is a well run pipeline stock but this stock probably returns around 10% a year.

it is not a high flyer. a couple of years ago suggested as a retirement pick (then $45cdn. ) now it is $60 cdn. so it has done well, also pay a 3% yield.

would wait as with rising rates you should be able to buy the stock 5% cheaper.

own Enbridge, Suncor in DRIP/SPP plans, CNQ I own a large position have $68 calls August on the stock. got over $6 cdn. for the options. CNQ $64.96cdn.

Tailsman have a number of $32 puts (now $39.25cdn.) various months.

own ECA 300 shares, owned much more but sold large position ( a little to early) to buy other oil/gas stocks.

looking at PCA.

for now just waiting until the selling is over......

thanks
selkirk

 

[selkirk]

the last two day oil/gas stocks have fallen back, I am still waiting.

bought a few puts on certain oil/gas stocks on April 6, 7. this is mainly a hedge as I hold oil/gas stocks.

so if my TLM, eca, cnq go down the put options go up, in the short term. also inco, and teck (base metals) in toronto are tracking oil/gas stocks.

will just wait until the selling is over, expecting a correction in oil/gas stocks. should be a great time to buy base metal stocks soon, copper hitting all time highs and teck selling off, trading below 10PE and so is inco (nickel). owned falconbridge but it is sold.

most of the long oil/gas positions now have covered calls against them to reduce cost.

should note I am the worse person in the world of calling oil prices, still remember when thought the price would never go below $18, and for sure not $16. A wiser and richer investor thought it could go much lower, price went below $9 and as a result lost 30% on a "cant miss" oil stock..... live and learn

thanks
selkirk

 

[DOGS THAT BARK]

Kirk Give me a heads up when you move on the oil stocks--just sent in my SEP funds and looking to buy this one back if it gets much lower.

PETROCHINA CO ADS (NYSETR) Delayed quote data

Last Trade: 60.33
Trade Time: Apr 15
Change: 1.22 (1.98%)
Prev Close: 61.55
Open: 61.22
Bid: N/A
Ask: N/A
1y Target Est: 59.60

Day's Range: 59.25 - 61.35
52wk Range: 41.28 - 65.70
Volume: 704,000
Avg Vol (3m): 455,909
Market Cap: 106.07B
P/E (ttm): 8.12
EPS (ttm): 7.43
Div & Yield: 3.56 (5.91%)

another note confirming your statement above that may be of interest---

Enbridge, PetroChina ink pipeline cooperation agreement
Thursday April 14, 12:22 pm ET
By Chelsea Bellows


SAN FRANCISCO (MarketWatch) -- Enbridge Inc. said Thursday that it has signed a deal with PetroChina International Co. to cooperate on the development of the Gateway Pipeline and the supply of crude oil from Canada to China. The Gateway Pipeline is a proposed project to transport 400,000 barrels of oil per day oil sands to a port on the west coast of British Columbia where it would be shipped by tanker to China, other Asia Pacific markets, and California. A regulatory application for the C$2.5 billion (US$2.02 billion), 720-mile crude-oil pipeline would have to be made in 2006 to achieve a late 2009 or 2010 in-service date, Enbridge said.

 

[selkirk]

DTB the Enbridge PTR deal got quite a bit of news coverage, even saw a large artilce on ROB (report on business/globe and mail) on Friday.

The deal is a small one and it will start with 200,000 and probably grow to 400,000. the deal is still a good start for both companies.

China is looking around the world for sources of oil and this will not be the last one involving the Alberta oil sands. they may wait espcially if oil drops, you would quickly have investors lose interest in some of these companies. Then they would add to the position. this will not be the last deal they do involving the Alberta oil sands.

US companies directly/ and indirectly control roughly 25% of current production. China wants to increase their interest, a bidding war for some of these companies/properties will take place over the next 5/10 years between US and China.

as for buying into oil/gas companies I bought some today and on Friday, small positons.

bought 1000 shares of True energy at $3.85 will provide more details on this stock, trades on Toronto, could have got it for $3.61-$3.65. of coarse my last two jr. oil/gas stocks have not done well that I have mentioned in this forum CLL, and dee (have sold 50% of the position at a loss...

bought some CNQ $62.50cdn and ECA $79.50cdn, also looking at PCA and tlm.

here are some earnings and cash flow estimates on some companies I follow (watch) invest in....


2005 $50 2005 $45 2006 $50 2006 $45

cnq $63.84 $51.11US $7.80eps/$17cf $6.50eps/$15.50cf 7.90eps/$18cf $7.60/$18cf

TLM $38.27cdn. $30.72US
$4.16/$11.03 $3.08/$9.80cf $4.95/$8.60 $3.70/$10.40

ECA $79.90cdn $64.01
$5.95/$13 $5.10/$12 $7.75/$15.50 $6.75/$14.25

SU $45.35 $36.36 US
$2.90/$11 $2.40/$9.50 $3.80/$6.90 $3.20/$6

Exxon $56.90 US
$4.60/$7 $4/6.40 $4.80/7.25 $4.3/$6.70

most of these numbers are in Cdn. except XOM, did provide US prices for the shares.

EPS is the first number, then CFS for this year 2005 $50, $45, and next year EPS, CFS.

the stocks are cheap as long as oil holds at $45 or higher. also assuming natural gas stays at $6.50-$6.75. this effects all of the companies but especially ECA.

as for PTR DTB would buy a small position now, maybe half and then see what oil/gas does, going forward.

then keep some money on the sidelines just in case there is more to the drop in oil.

of the ones listed above have positions in ECA, CNQ, TLM, and SU (DRIP/SPP).
also have covered calls against most of the positions at various prices.

thanks
selkirk

 

[MSM]

WHAT IS THE SYMBOL FOR TRUE ENERGY? CAN'T SEEM TO FIND IT.
THANKS
MSM

 

[selkirk]

MSM True energy TUI trades on Toronto. produces 8900 barrels/day, should be close to 10,000 within 4-6 months, and within a year could be an energy income trust.

thanks
selkirk

 

[selkirk]

just a quick update sold TUI at $4.14 this week. it hit $4.18 and was following back so I sold my small positon.

will be looking to buy it back around $3.70-$3.80.
hoping energy income trusts to sell off, sold off these months ago and most are now below what I sold them for; of coarse went up 5-6% after I sold them

now they are drifting lower; trade on Toronto and most looking at yield 12%, want the price to fall so they wil yield 14-15%.

looking at AE.un, KER.un, Cresent, Bonavista, bte.un,ect.

not sure what oil will do not a good sign it broke below $50, believe it will go to $45 before it hits $55.

have holding in some senior companies, keeping 50% in cash (intended for this sector).

True Energy TSX is at $4, looking to buy $3.70-$3.80.

thanks
selkirk

 

[DOGS THAT BARK]

These two have some very good yeilds but probably more risk--any comments on these Canadian's Kirk?
ARC Energy Trust
NAL Energy Trust

 

[selkirk]

DTB these stocks have some risks but not a risky as you may believe.

first a quick update: have positons in CNQ,TLM, ECA, SU. options sold put contracts on CNQ, tLM, ECA. last trade TLM $40P DEC (cdn) $2.95, was trading at $41.90 when did the trade now over $42.

the put options made a profit in April, was mainly insurance against my oil, base metal positions, worked out well.

also bought back in True at $3.95, did not fall as much as thought, also did not get a full positon.

also bought back in DEE as it had a nice move on Firday.

will use the prices for tracking that I posted here, nice profit on TUI, and a loss on DEE. still believe both offer good value. DEE is the higher risk play.
and has not acted well.


DTB as for the royalty trusts, in Canada they have been around years. In the US many energy trusts would have a certain number of wells, and have high dividends.

soon the oil would run out and many people got burned since they did get some cash back (dividends) they held worthless paper.

In Canada many of these oil trusts drill more wells, and expand or maintain current distributions. in time the oil/gas will run out but hopefully not for years....ie. invested in some trusts in 1995 that had seven-eight years of reserve life, today still have about the same, they found more production.


checked on your two companies (use to own Arc) bought in at $11.40 sold at $14.80, now at $18.25... , however not that upset as I put the money in cdn. seniors that also had a nice run, still should not have sold.

yield payout ratio 2005
AET.un yield 9.6% 65%
NAL yield 13% 74%
Enerplus 9% 72%
Pengrowth 13% 91%

Believe all four of these trusts trade in the US, most are rated holds (by most brokerages).

the one would not own is Pengrowth, this trust has been around for years and have done well in the past, however do not like the high payout ratio, the lower the better, allows a company to keep more money for drilling and exploration, and downside protection on the dividend.

anything over 80% payout ratio is to high. as for risks in most cases the oil/gas is there, so this is not a jr. (though True is not to risky either, DEE another story).

for instant AET.un will produce 54,800 barrels a day.

RISKS
1.) oil/gas these companies are getting $50, now if oil falls (to $45-40 would not be bad), however a further drop would hurt distributions. if they ever cut distributions these companies get torched.

if oil goes up, payout ratios fall further, and you make at least 9-14% a year...not bad.

2. cdn. dollar, the dollar went as high as .84 against the US. now back to .80. the higher the dollar the more it hurts the trusts. cdn. dollar is not a major risk as upside is probably .85, and more likely to sit in this range.

3. taxes: the cdn. governement may want to tax these trusts, in Sask, they put a small tax on some explortaion costing arc 2.7 million. would say the risks in this area are small, at least for the next 1-3 years.

4. interest rates in US, Cdn. rates may go higher but only about another half point, both economies seems to be growing at a very slow pace. higher rates would drive the trusts down as investors could search for other interest vehicles...ie. bonds.
still rates if they go up a small amount less than .50% should not effect the trusts.

a large spike to intrest rates would be sell off, due not see this happeing.

most of these trusts are well run, and are good at maintaining production, biggest risk is oil/gas prices.

biggest risk is oil/gas price.

if you buy would be a small stake, these trusts have had a good run,

remember when I was shocked that Arc was no longer yielding even 12%.... LOL.

currently do not own any trusts but would buy them if oil drops. however also did not believe oil would stay so strong above $50, thought it would be in the low 40s

thanks
selkirk

 

[DOGS THAT BARK]

"IF" I had a broker I'd fire him and put you on retainer

Just what I was looking for and couldn't find. Certainly appreciate it my friend--don't know what I'd do without you.

 

[Ritchie rich]

I think Everyready is also worth a look I bought in early and have done really well the stock symbol is EIS.UN. Listed in the top 4 of Alberta's fastest growing companies. Very aggressive management team. In the Oil and gas services. Pays a monthly dividend of 3 cents a share. Do your own DD and I think you'll find alot of upside to come.

 

[selkirk]

DTB another one that trades in the US cdn. oil/gas trust is PrimeWest yields 11.63%, and payout ratio of 76%.

most of the coverage is a hold. there are smaller trusts that may offer more value but they trade only on Toronto for now..., worse trust to own though is a small trust with small amount of land and drilling prospects. hard to acquire production when oil is $50+.

believe TUI in two years will also become a trust. still like TUI, and DEE.

Ritchie Rich will take a look at ESI.un. In general have missed the move in the drillers. had a small cap that doubled but did not even pick up a small positon. many of these companies have had a great run.

as long as oil price/gas stay high these drillers should do very well. in fact some argue that they will hold up better in a decline (not so sure though) as more drills are being used by companies desperate to grow or just maintain production.

know a friend who is a bank manager, he left his job to take over (with his brother) a private oil drilling company that their father started. He will handle the financial side his brother the operating part of the business, doing very well....tell him should become an income trust... LOL

had an uncle in the business in the 90s when oil went from $19 to below $9. went through pure misery, maybe that is why I have avoided the sector so far.....

thanks
selkirk

 

[DOGS THAT BARK]

Saw most interesting feature on Fox last night on Alberta Oli Sands.

A geologist they interviewed said there was more oil there than all of mid east combined and said only recently has there been and all out venture by the big companys on research to extract it efficiently. Thats quite a statement.

 

[selkirk]

one company that is almost a direct play on the cdn. oil sands is Suncor SU, $46.62 US, $57cdn.

have owned the stock since 1997 avg. price $10.25cdn., own it through a DRIP /SPP. a good stock with growing production and long life reserves 40+years.

risks
sometimes (upgrades) increasing production has gone over budget.
oil, price of oil like most. had a great run, so would if bought would begin with a small position and see how it works out.

SU never looks like the cheapest oil but has been a good play in the past.

another play in the cdn. oil sands trust pays a dividend however most of the money is spent on increasing production on the oil sands.

trust only trades on the TSX (Toronto), SU trades on both sides of the border.

will list some more later.
thanks
selkirk

 

[selkirk]

True taken over merged with TUSK,

True taken over merged with TUSK,

Just an update on some of the oil stocks mentioned in this thread.

4-18 CNQ $62.50cdn. ECA $79.50cdn.

both had a 2-1 split and are now trading at ECA $51.74 and CNQ $53.50

PCA was cheap and I should have had a greater positon up 50%......

True Energy today merged with Tusk Income Trust, the shares traded at $5.54cdn.

traded this but bought some at $3.95 (thread 6-04), talked about True many times and it is nice to see a jr. I pick make money...it can happen.

Shareholders will get a very good income trust and True shareholders will get one share in a new explorco (new jr. spun off) they will also get a warrant that will allow them to buy one share at the estimated NAV around $2.22.

shareholders should excercise the warrants as this company will have excellent managment (made us money once) and 600BOEPD and 61,000 acres of unexplored land (but good potential). have to inhierit $5 million of True energy debt. the explorco when it iPO is a buy buy.....ect.


now DEE believe when last talked about it was $3.25 and $3.50, even got below $3....

now it is $4.25. going to hold as it still looks cheap, looking for $4.75.


by the way US officials visited Alberta oil sands VP, and secretary of the treasury.
believe everyone has visitied but the President but that will happen matter of time.

the story is just beginning...........
Good news....heard on Mad Money...Cramer sold his oils......good.

if oil stays above $60 these companies will do great. I have no idea what oil/gas does more bullish on gas however even if the cdn sr. lose 15% they still will have had a great run....that is where my stops are....

thanks
selkirk

 

[selkirk]

small update

oil and natural gas spiked mainly because of the storm Katrina (wish the best for the people down there, hard to imagine)

many oil and gas companies have went higher. raised my stops to 15-20% current levels (50% of the positon)

would not buy new positions at this time, oil has been drifting lower off of highs and the next two months maybe weaker than normal.

many of these stock are volatile and trusts so you might be able to get them cheaper if you wait a few weeks.

ie. CNQ can go from $52cdn to $58cdn. and back down in just a couple of days.

believe oil may go to $60-$61.50 in the next two weeks.

long term like all of these stocks, note: my calls on the price of oil are ussually wrong....

thanks
selkirk

 

[selkirk]

may start a new post, was going to begin with Carnage or bloodbath. anyways it is not that bad for the energy sector but as oil has fallen back from $67-$69 to $62 there has been a sharp sell off.

actually that is one short term oil prediction that was correct. a week ago the Globe and mail Report on Business (we have two major business papers in Canaada ROB and National Post/Financial Times)

ran a top headline of how much the energy stocks went down that week.

Suncor -12.8%, Nexen 10.5%, ECA 10.3%, Tailsman TLM -10.1%, Petro Canada -9.4%. a few others but these are some that have been mentioned by me in the past.

this week they are off more especially today many are off another 5-10%.

believe these stocks are beginning to show great value, would not buy them now, for now just waiting and watching the damage.

CNQ $45.07 cdn. $38.02US, TLM $49.95 $42.18US, ECA $55.10, $46.58. if these fall another 5-10% they will be good long term buys, as long as you believe oil will hold above $50.

some of the calls have been correct in this thread and sometimes have been to cautious, but you have to realize the how volatile these stocks can be;


would like to highlight CNQ Canadian Natural resources (have a small positon and covered calls on it, had a much bigger position but got stopped out on 75% of my holdings.)


CNQ $45.07 $38.02US

the following earnings cashflow/shares is based on $8.25US mcf natural gas and $55US oil. 2005, 2006.

numbers in Cdn.
earnings per share 2005 $3.95-$4 2006 $4.75-$4.90

cashflow per share 2005 $9 2006 $9.75-$10

avg production in 2005 558,000-559,000 Barrel/day, this number should grow by 5-8% per year. oil makes up around 55%. this will grow to over 60% going forward.

their oil sands project may come on stream in 2009-2010 with 100,000-110,000 boe.

the stock sell off is not that surprising since at one point is was up over 100% for the year.

currently at $45.07cdn. $38.02US if oil drifts lower stock would be a great buy around $40 cdn.

then hope and pray for a cold winter...lol......

thanks
selkirk