00:01:00 #COM Valuations spreadsheet discussion. Differences between volumes and pricing on TSX vs. American exchanges. OVV volume in U.S. is 10X Canadian volume.
https://docs.google.com/spreadsheets/d/1KqXzZ1I_ln39TYttCeYvrkuzcHNe4sojDrKZ931SZb4/edit?usp=sharing
00:03:00 @AssetTraveller begins a discussion of Cardinal Energy ($CJ). Tourist doesn’t think it deserves some of the criticism it has received in the past and recent history. @jleqc is in general agreement that CJ is a good company.
00:13:00 @energyburrito discusses some “woodshed” stocks that have been punished (possibly fairly), and might be ripe for a short and sharp spike up.
@emmpeethree1 identifies potential issues with CJ’s Venturion acquisition (high-interest-rate coupon and warrants).
00:19:00 Burrito discusses the 2020 situation of trying to identify companies while balancing upside vs. ability to survive! “It’s so much easier to value businesses now.”
00:23:30 @UndervaluedOnG discusses historical governance issues, including issues with CPG. JSG discusses his history in O&G investing, how he lost a great deal, then redeemed himself (and then some) during the run-up from 2020 on.
00:29:30 Burrito delves into the dark history of Crescent Point, the Blackberry of #COM? Burrito is careful to note that the present team is much better than the group that left CPG underwater.
Jlecq adds a great deal of color regarding the prior CPG team, and how the current team appeared to find religion when Eric Nuttall bought in. CPG could eventually surprise to the upside — with multiple catalysts, including an NYSE listing.
00: 39:00 Beginning of a discussion of OVV that weaves throughout the Space.
00:41:00 An extremely passionate (and breathless) @timber001 takes a break from hiking the Sierra-Nevadas to discuss CPG's call vs. other recent #COM Spaces with companies.
00:49:00 What do we need from all the companies in which we might invest? CLARITY. What we are going to do based upon future events.
A good start is clear, easy to understand MD&As and corporate presentations. Where are you selling your products? What are your margins? Why is it hard to find this information?
00:52:00 @AhmedBa44329064 joins the stage. @AssetTraveller: dividends vs. buybacks.
An moderated approach? Schmuck channels @BubleQe. Schmuck prefers divvys, himself, and recommends we listen to @HiddenForcesPod's recent show:
Burrito: Start with a large divvy, then go hardcore into NCIB. If total dollars paid out in dividends remain constant, yield would rise as shares are retired. @UndervaluedOnG and @EnergyInvest0r provide their thoughts.
MEG(!) doing buybacks vs. divvys, and tax implications. $VET(!) demonstrates how its issued shares have led to improved funds to shareholders. Vermilion has a tiny float for its size. How much could/would they buy back?
1:06:00 DS’ favorite fable: The legend of $PNE — divvys NOT buybacks. @EnergyInvest0r’s thoughts on taxation are based on a Canadian-centric view. DS responds with a U.S.-centric view. Dividend treatment in the U.S. is favorable, as Canadian divvys are basically treated like U.S. divvys.
1:12:00 Why hasn’t MEG been taken out? Tourist says that the right price could make that happen. Reserves and land are not getting any valuation. How do companies unlock value? TOU’s spinning off of TPZ is one way. Market is telling us it values dividends most.
@HectOracle clarifies how per-share dividend payments work. … TOU used its TPZ winnings to go buy a series of distressed assets without diluting shareholders.
1:21:30 Living off dividend income? @JamesHMackay: People keep calling the top on oil without providing empirical evidence to back their statements. “We’re betting against the stupidity of Western Governments. … That’s why we’re making stupid amouts of money.”
1:30:00 Are other folks entering the trade? Joe says the data points indicate that new money is trickling in.
@thebiglong9 discusses the tailwinds that will push UK fund managers into British supermajors. Big makes a modest proposal: Stop all Energy Spaces to ensure buybacks will be done at rock-bottom prices!
Lots of money will go to BP and Shell, but there is a lot of new interest in $ITE, and money will eventually trickle down. Money managers who want to keep living the money-manager lifestyle will have to do better or ask if you want fries with that.
1:40:00 Backlash against Blackrock’s woke politics in UK and US that have crimped energy supply. @SHOPGod2 with a stemwinder mulling changes afoot; catalyzing U.S. elections; risk-appetites increasing, and how we are here, while others consider joining.
1:50:00 @WarrenFine discusses stock rerating and companies reaching their acceptable debt levels. Warren touches on $TVE's recent call. All groups of investors are going to be drawn to companies returning capital. Warren thinks it will take two more good years to forget the seven years of pain.
Legendary hot-tub aficionado and dry-cleaning expert @BJamz2022 asks Warren about MEG (what else?!). Warren is not a fan of parabolic moves. He also thinks MEG is a $45-$60 stock that's a bolt-on for the big boys.
2:06:00 @sohaibab9 breaks out of his kidnappers' trunk and calls in.
@C_Mercanti asks about the massive $ARX volume yesterday. @jlecq also notes $OBE's large move.
Sohaib calls in from Arizona during his one lap of America. He ponders the cost of living here. Regulation opportunities vs. unregulated costs.
2:18:00 Tourist discusses odd last-minute moves from yesterday. @Renniestein3 Monday: Face-ripping; Tuesday: ?.
"@RazorOil is only emotional if you don't use numbers."
Mark and Joe discuss adjusting holdings, trimming and taking winnings. "The pain of loss is more profound than the joy of gain." No MEG shares were sold in the making of this COM Space!
2:35:00 Is there a bear case for (against?) MEG? @BJamz2022 is game to offer some thoughts on what it would take for MEG to stumble greatly.
2:47:00 Our beloved stocks have tiny floats. #COM members own a huge chunk of these companies. We have to have conviction because we're sitting in a hot tub, holding the shares.
2:51:00 Tourist suggest folks who are concerned should look at less risky options such as royalty companies.
@sohaibab9 thanks @AlexVergeJOY and congratulates him on the recent success of $JOY. Journey, despite its microcap status, trades at a surprisingly high volume in the US.
Sohaib talks about companies that have come on #COM Spaces and how his value proposition was that it would provide early-mover advantage. Some companies are still reluctant to come on Twitter and talk with retail investors, but we hope the tide is turning.
What are the companies we want to hear from on future #COM Spaces? OVV, TAL, VET, MEG, GTE?
3:01:30 @sohaibab9 talks about how companies seeking attention from investors are not taking advantage of an opportunity to talk to up to 8,000 interested investors. Why? $VET's best investor relations team is #COM.
Sohaib says talking to management is a game-changer. He allocates more capital to management teams that engage. $PNE vs. $OVV. Jeff hates $OVV but still owns it. ... The hedging is, indeed, horrific.
The case for starting a position in $OVV right now.
3:14:00 @Renniestein3 asks about $TAL vs. $PNE after Pine Cliff's FCF appears to have dropped significantly. Valuation is hard. How much of PNE’s NG tied to AECO? How much to Henry Hub? We need to get IR teams/CEO’s to communicate better.
Balancing PNE's special dividends vs. TAL's production growth for the balance of the year.
@BugHumbled asks about $BTE and companies continuing to hedge production.
Ahmed gives his thoughts and is wondering if Baytex is going to spend more capex on expanding its Clearwater program.
Hector ponders if the hedging programs are to influence earnings in future quarters so that consistent growth is shown.
Hector discusses how expensive it is to use puts.
3:29:00 @anasalhajji says the WSJ article about OPEC production and Russia is not correct.
Ahmed discusses OVV and gives it a bit of a premium because it has a U.S. listing and will be on the radar for U.S. fundings. A legitimate comparison with $TOU?
Do people know that $TOU is projecting a 13.1% divvy if they meet their 2022 FCF goal of $3.9B?
Meanwhile, OVV lost $1.4B because of hedges in Q1.
3:41:00 @emmpeethree1 says the company is guiding to massive reductions in hedging.
Hector has just noted that institutional investors have been coming into the energy trade starting at the end of March.
3:49:30 *** A very important day in HET's illustrious 14-week history: @KNLCBD joins to discuss thermal coal, NG and CONSOL Energy ($CEIX)! ***
3:54:00 In time, we will see large daily swings in NG pricing in North America if we don't see large increases in production. @KNLCBD: breaks down the energy crisis from a North American NG/coal perspective.
If prices hold, @KNLCBD says $CEIX could have FCF of 140% of market cap from 2022-2023, which is approximately 108% of CONSOL's EV. KNL has CEIX's EV of $2.6B and projects FCF at around $2.45B.
This is being masked because all coal companies are being forced to go to zero debt by YE2022. Some companies are ahead of $CEIX, such as met coal producer, ARCH, which is trading 50%-100% FCF over the next 24 months (KNL hasn't run numbers recently).
4:03:00 Most companies have small capex expansion projects recently, but next year will be about buybacks and dividends.
IS 2022 for coal what 2021 was for #COM stocks?!
Ahmed asks about coal-gas switching. KNL: How do you do coal-gas switching if there's no coal? Gas-gas switching?
4:09:00 If all of Consol’s tons are already sold for 2022, when can they start accessing current pricing? For 2023 the pricing looks really good. There’s an August deadline for Europe to switch off Russian coal. @mfwarder joins.
There's an opportunity for CONSOL that will have 5 million additional tons coming online to sell overseas. The coal has a high heat content that is offset by its sulfur. 4:15:00 ** Matt gives a masterclass on coal properties. **
Our #CoalTwitter friends pivot to discussing met coal. CONSOL has the ability to tap into that pricing with some of its products.
4:25:00 @MasBest2point0 makes an in-flight call, he is skeptical about coal-switching.
@KNLCBD believes these skeptical concerns are priced in -- the stocks would be more expensive at these FCF rates if investors believed in coal. "When you screw up energy infrastructure ... it's a 10-year fix."
We use NG for so many things, and NA is blessed with industry built around extraction of NG. But if we hit the magical arbitrage moment where NA prices tie to European prices, we will have inherited Europe's curse.
4:32:00 KNL says coal is easier to bring back onto the grid. The real problem is coal production. ARCH was planning on shutting down thermal production, but decided not to because of demand.
Another issue that many aren't discussing is the number of workers needed to add more energy.
4:37:00 So how much longer does the coal trade have? If #COM is a once-in-a-lifetime opportunity, thermal coal and met coal look like a great opportunity, as well.
4:43:00 @anasalhajji asks about coal/oil and railroad transportation. Dedicating cars and crews to one or the other.
@KNLCBD compares railroad companies transporting coal to royalty companies.
4:51:00 NG pricing could go wonky if we have a hot summer/cold winter. When does the supply chain loosen up to support NG production growth? There's no new LNG facilities coming online until 2024. If production ramps, it will kill NG prices. But NG could go to $15 otherwise.
KNL: You have to play probabilities. You will have strong prices into 2023, but 2024? But if there's no production response, it could go crazy.
@mfwarder: If you can figure out NG, we can give you a coal answer!
@InvestInOnG makes a ninth-inning appearance to ask about $BTU, I mean Corsa. Deep also asks about $HCC's labor issues.
High-Energy Tuesday