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  1. #1

    Beaten up energy sector

    I am interested in some opinions on the energy sector.
    The talking heads are proposing that the Saudiis are going to help drive down the price of oil to put the new competion out of business.
    Published information states that Russia and many other major competetors need $100 oil to sustain their domestic obligations.
    If we put the new locals out of business, how is that better for the global economy? I see it as lose,lose for everyone.
    I am starting to see opportunity here just as when the banks were being thrown on the trash heap. ie. BAC and AIG etc.
    The bright side of this is that there is gold in the trash heap.

  2. #2
    The current Barron's has several stories on bottom fishing in the cheap energy sector - with specific names. Checkout the Market Insights forum.

  3. #3
    You ask about energy, but you talk about oil. The price of oil is trending down and there is no sign at this time that a bottom has been reached. Any time is a good time to put together a short list of potential investments, but based on nearly any technical indicator, it is too early to execute a purchase of an oil company. MLP's that hold pipelines or refineries may be a different story but you have not indicated an interest in them. Natural Gas has reached the beginning of its almost annual heating season run. Consequently, that is where I have my energy money. UNG is an etf that may interest you. UPL is a domestic E&P company that has considerable potential. There are many more and "energy" is a very broad field.

  4. #4
    I've been doing due dilligence, found some value in oil field services, SLB seems interesting...

  5. #5
    Fracking has created a glut of oil on the market..Back when everyone thought we were running out of oil and the price was soaring, a smart man said "You will be amazed at how much oil there is when it hits $100/barrel" Well those chickens have come home to roost..
    Once an oil well is put in production, it STAYS in production. The money to develop it has already been spent..Shutting in the well to reduce production accomplishes nothing. Let the next guy shut in HIS wells...Yes, drilling NEW wells will come to a screeching halt but it will take a while for the amount of oil on the market to be absorbed and for prices to stabilize..
    Every oil well has a "cost of production" number assigned to it..It can be anywhere from $5/barrel as in Saudi Arabia to $50,$60, $70 or more a barrel in difficult locations or difficult drilling situations..Fracking can be very expensive.
    Obviously, at $100/barrel, it was profitable to produce more oil than the world could use..Boom and Bust is the natural rhythem of the oil industry..It will be a few years before you see $100/barrel oil again.


 

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