Oil Stocks: Josef Schachter
Josef Schachter, president, Schachter Asset Management
On Oil
When it got to $79 in the summer, got way ahead of itself..US inventories were adequate, speculative money from hedge funds..as there were no hurricane, price of oil should have been trading in mid-$60s, but hedge funds knocked it down even more..at $55 they panicked, now demand is picking up, SPR growing..as they buy for storage, both US and China, will use excess capacity during soft periods in spring and fall..we forsee long-term price $70..industry needs $50 for oil sands, shales, pipe lines for infrastructure costs..
On Oil Acquisitions
I think volatility and massive downside has held back takeover activity..I think once people see inventories come in line, SPR building in China and US, people might even talk about peak oil again..I think we are running out of cheap oil..big multinational companies believe cheaper to buy on Bay Street and Wall Street
DIAZ RESOURCES (TSE:DZR): company has assets in Western Canada, also small play in Texas, deep, expensive, had some success..stock has backed off with gas story..longer-term, because of success that it has had, probably will go back to all-time highs..we do not cover it on research basis, but stay with it if you own it
UTS ENERGY (TSE:UTS): I think all of these oil sands stocks will do well..longer-term if I am right about $70 commodity price, will see all-time highs..we do not cover it officially..if you want to be involved in oil sands, all of them will do quite well in higher price environment..CANADIAN OIL SANDS (TSE:COS.UN), WESTERN OIL SANDS (TSE:WTO), OPTI..SUNCOR (NYSE:SU TSE:SU) is already in place..in case of UTS, have not started yet, will have higher costs
GROVE ENERGY (CVE:GRV): partnered in Italy, company also announced management change recently..interesting story, but again, questions are: when will they bring production in Italy on, other wells they are going to have to drill, rigs as well..story with a lot of upside if they can execute..I own the stock, cost in the 60 cent range..so far execution not happening as fast as I like to be
SOLANA RESOURCES (CVE:SOR): we started covering this July 2005, stock went up over $3.00, took a long time to get news, data did not get up, shortage of rigs, weather is an issue, stock has been hammered severely..we think in the next 6 months find out one way or another..planning to drill high-impact wells..I would allow this one to see if they can execute, they have the rigs and $27 million in the balance sheet and dedicated manager..I own it personally, we have the stock as under review..
TALISMAN ENERGY (TSE:TLM): I own a position, production profile good growth in 2007 and 2008 based on discoveries..international companies have not been able to replenish supplies..there are some crown jewels in Canada..NEXEN (NYSE:NXY TSE:NXY), TALISMAN, CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ)..rumors have..$26 target 12 month target
PAST PICK GEOCAN ENERGY (TSE:GCA): natural gas killer..stock down in proportion..68% gas weighted..not much volume growth but later in the year, company will have more discretionary cash..may be a bit soft over next quarter or two..~3500-3600boe by end of the year..company well run
PAST PICK STERLING RESOURCES (CVE:SLG): as high as $3.50..have had success with OILEXCO (TSE:OIL), that play could be worth 75 cents in cash flow in 2008..second half of 2007, will be drilling North Sea material plays..they have $25 million in cash, no debt..management formerly of BOW VALLEY..
FALCON OIL & GAS (CVE:FO): I do not own FALCON, gas play in Hungary, they believe that there is massive reserves, in process of getting testing done, seeing if numbers are there..if numbers are there, stock has material upside..there are skeptics saying can they make it happen..I do not cover or own, from this point on, I think there is geologic risk, we will not know for a while..
ENCANA (TSE:ECA): trade around $62, up $3-4 from lows..if natural gas comes back, I think stock will be trading at 52 week highs sometime in 2007..I think it is takeover target..massive gas operations in US and Canada, very efficient at what they do, attractive company..
BOW VALLEY ENERGY (TSE:BVX): following for several years, first recommended $1.50 July 2003, target $9.70 12 month target..company in Canada has struggled somewhat but real upside is North Sea..will exit 2007 with ~8000boe/day..also involved in Alaska with partners..if you own it stay with it..balance sheet in good shape, NAV >$4, will exit $1.50-$1.75 in cash flow
CANADIAN OIL SANDS (TSE:COS.UN): if I am right about $70 oil by end-2007, will be back to old-time highs..20-30% upside with distribution..on any weakness will be a buyer..
QUESTERRE ENERGY (TSE:QEC): we started recommending when stock was ~85 cents..large land play in Quebec..if gas is there, this could be material..also conventional production in Quebec..company has done well, average 1950boe next year..insiders own 21% of company, no debt in balance sheet after recent financing..we have company under review until Talisman announcement
TOP PICK GALLEON ENERGY (TSE:GO.A): we started covering May 2004..we have $25 target..done well with drill bit..we think company will average just under 15875boe end of this year..not a bad growth rate, executed well..we love this story, material upside
TOP PICK ACCRETE ENERGY (TSE:GZ): was trading at $8-9 when gas prices higher..we think stock has material upside, $10.20 target, I own it and we cover on research basis
TOP PICK OILEXCO (TSE:OIL): bringing on oil field, waves are pretty high, North Sea..30,000boe/day, they have lots of plays to drill, we think company has done extremely well..well-financed, we love it, $13 target
On Oil
When it got to $79 in the summer, got way ahead of itself..US inventories were adequate, speculative money from hedge funds..as there were no hurricane, price of oil should have been trading in mid-$60s, but hedge funds knocked it down even more..at $55 they panicked, now demand is picking up, SPR growing..as they buy for storage, both US and China, will use excess capacity during soft periods in spring and fall..we forsee long-term price $70..industry needs $50 for oil sands, shales, pipe lines for infrastructure costs..
On Oil Acquisitions
I think volatility and massive downside has held back takeover activity..I think once people see inventories come in line, SPR building in China and US, people might even talk about peak oil again..I think we are running out of cheap oil..big multinational companies believe cheaper to buy on Bay Street and Wall Street
DIAZ RESOURCES (TSE:DZR): company has assets in Western Canada, also small play in Texas, deep, expensive, had some success..stock has backed off with gas story..longer-term, because of success that it has had, probably will go back to all-time highs..we do not cover it on research basis, but stay with it if you own it
UTS ENERGY (TSE:UTS): I think all of these oil sands stocks will do well..longer-term if I am right about $70 commodity price, will see all-time highs..we do not cover it officially..if you want to be involved in oil sands, all of them will do quite well in higher price environment..CANADIAN OIL SANDS (TSE:COS.UN), WESTERN OIL SANDS (TSE:WTO), OPTI..SUNCOR (NYSE:SU TSE:SU) is already in place..in case of UTS, have not started yet, will have higher costs
GROVE ENERGY (CVE:GRV): partnered in Italy, company also announced management change recently..interesting story, but again, questions are: when will they bring production in Italy on, other wells they are going to have to drill, rigs as well..story with a lot of upside if they can execute..I own the stock, cost in the 60 cent range..so far execution not happening as fast as I like to be
SOLANA RESOURCES (CVE:SOR): we started covering this July 2005, stock went up over $3.00, took a long time to get news, data did not get up, shortage of rigs, weather is an issue, stock has been hammered severely..we think in the next 6 months find out one way or another..planning to drill high-impact wells..I would allow this one to see if they can execute, they have the rigs and $27 million in the balance sheet and dedicated manager..I own it personally, we have the stock as under review..
TALISMAN ENERGY (TSE:TLM): I own a position, production profile good growth in 2007 and 2008 based on discoveries..international companies have not been able to replenish supplies..there are some crown jewels in Canada..NEXEN (NYSE:NXY TSE:NXY), TALISMAN, CANADIAN NATURAL RESOURCES (NYSE:CNQ TSE:CNQ)..rumors have..$26 target 12 month target
PAST PICK GEOCAN ENERGY (TSE:GCA): natural gas killer..stock down in proportion..68% gas weighted..not much volume growth but later in the year, company will have more discretionary cash..may be a bit soft over next quarter or two..~3500-3600boe by end of the year..company well run
PAST PICK STERLING RESOURCES (CVE:SLG): as high as $3.50..have had success with OILEXCO (TSE:OIL), that play could be worth 75 cents in cash flow in 2008..second half of 2007, will be drilling North Sea material plays..they have $25 million in cash, no debt..management formerly of BOW VALLEY..
FALCON OIL & GAS (CVE:FO): I do not own FALCON, gas play in Hungary, they believe that there is massive reserves, in process of getting testing done, seeing if numbers are there..if numbers are there, stock has material upside..there are skeptics saying can they make it happen..I do not cover or own, from this point on, I think there is geologic risk, we will not know for a while..
ENCANA (TSE:ECA): trade around $62, up $3-4 from lows..if natural gas comes back, I think stock will be trading at 52 week highs sometime in 2007..I think it is takeover target..massive gas operations in US and Canada, very efficient at what they do, attractive company..
BOW VALLEY ENERGY (TSE:BVX): following for several years, first recommended $1.50 July 2003, target $9.70 12 month target..company in Canada has struggled somewhat but real upside is North Sea..will exit 2007 with ~8000boe/day..also involved in Alaska with partners..if you own it stay with it..balance sheet in good shape, NAV >$4, will exit $1.50-$1.75 in cash flow
CANADIAN OIL SANDS (TSE:COS.UN): if I am right about $70 oil by end-2007, will be back to old-time highs..20-30% upside with distribution..on any weakness will be a buyer..
QUESTERRE ENERGY (TSE:QEC): we started recommending when stock was ~85 cents..large land play in Quebec..if gas is there, this could be material..also conventional production in Quebec..company has done well, average 1950boe next year..insiders own 21% of company, no debt in balance sheet after recent financing..we have company under review until Talisman announcement
TOP PICK GALLEON ENERGY (TSE:GO.A): we started covering May 2004..we have $25 target..done well with drill bit..we think company will average just under 15875boe end of this year..not a bad growth rate, executed well..we love this story, material upside
TOP PICK ACCRETE ENERGY (TSE:GZ): was trading at $8-9 when gas prices higher..we think stock has material upside, $10.20 target, I own it and we cover on research basis
TOP PICK OILEXCO (TSE:OIL): bringing on oil field, waves are pretty high, North Sea..30,000boe/day, they have lots of plays to drill, we think company has done extremely well..well-financed, we love it, $13 target
posted by Spelunca at 10:11 AM
1 Comments:
Great Post. I have a link of an article that also helped me narrow my focus of inesting in Oil Stocks.
How to Profit With the Oil Service Trifecta
This WILL open your eyes....Cheers!
Post a Comment
<< Home