The Woodside anomaly

The ‘de-correlation’ and anomaly of the Woodside Energy (WPL.AX) share price.

May 31, 2021
by Rob Zdravevski
rob@karriasset.com.au

Oil continues marching higher

My current read of the Brent Crude Oil price is….

if it closes above $70, then there is clear air to the $74-$76 region, while probability of a spurt to $80-$82 remains, such a move would swing the pendulum into extreme territory.

and then we’ll see OPEC start to increase output.

Basically, traders are waiting for a break above $70 and if they see it, then watch them pile in.

for context though, going Long Oil today (currently trading at $69.50) is a marginal bet. I see the risk/reward equation as being either $6 up or down.

After all, Brent Crude already seems stretched on various measures after having tripled from its $16 low in April 2020. Establishing a new ‘long’ position at this moment is akin to squeezing the last 10% out of a trade.

Keep in mind, that markets tend to move in the direction where they can inflict the most damage……..and a $80 oil price would hurt more (politically and commercially) than if fell to $50.

March 12, 2021

by Rob Zdravevski

rob@karriasset.com.au

Oil at $70 in short order indeed.

Brent moved $10 higher (from $60) to my mentioned target (see linked story below) of $70 within a month.

There is reasonable probability of $75 being next and $84 would make a few squirm.

https://robzdravevski.com/2021/02/09/oils-stealthy-rise-and-still-going/

March 8, 2021

by Rob Zdravevski

rob@karriasset.com.au

Reviewing Times Of Oil Excess

I wrote the linked article in September 2012 when Oil was trading at $117, predicting bearish times ahead.

Since the rout in the first half of 2020, I have been an oil bull.

https://robzdravevski.com/2012/09/17/lower-oil-prices-by-2020/

March 5, 2021

by Rob Zdravevski

rob@karriasset.com.au

An Oil Shock in stealth

OPEC are meeting today, it could be a doozy….murmurs of supply cuts.

My question to answer what OPEC may decide is…..

what do the Saudi’s and Russia want or need ??
and what will hurt America the most ??
especially following the recent accusations made by the U.S about MBS and Biden approved missile strikes against Iranian backed militia…….

the answer is higher oil prices.

Logic suggests a nice reversion of Brent back to $53 would be sensible, equitable etc.
but without being a purposeful antagonist and we are a year on from last years March 8th stoush,

although Brent at $75 would remind many who’s in charge….

and I reiterate that inflation (meaning higher interest rates and higher government and corporate debt servicing costs) will likely come from higher prices in the energy complex and definitely not from services and consumer products.

March 4, 2021
by Rob Zdravevski
rob@karriasset.com.au

Overbought Brent

Today, at $51.10, Brent Crude Oil has registered its most ‘daily’ overbought reading since January 3rd, 2020 (when it was trading at $70).

I’m still bullish on the price of Oil but its telling me to harvest a little as prices should take a pause.

December 17, 2020
by Rob Zdravevski
rob@karriasset.com.au

Who is calling the shots

Putin and MbS are having talks again,
watch the oil price,
timing interesting near the U.S. election,
output cuts are the logical bet,
there is nothing like petro-nations needing petro-dollars.

Oil Rigs…going cheap !

This is the lowest amount of oil rigs in operation within the United States since……”like ever”.

For the Oil, Gas and Statistic nerds – Scroll through the historical data in this link and you’ll be quite amazed.

Do you know what is currently going cheap in the world ?

Buying or renting an oil rig……

October 8, 2020

by Rob Zdravevski

rob@karriasset.com.au

Bullish on Exxon Mobil (finally)

I have been negative on Big Oil but there have been some monumental moves lately. Some stocks are trading at “monthly” oversold levels not seen the 1960’s.

At $33, my calculations tell me you can Buy Exxon Mobil at its intrinsic value.

So this example turns XOM into a bond and still have some optionality.

Buy stock at $33 and
Buy January 2023 $30 strike Put option for $6.50.

Dividends are slated to be 87 cents per quarter. You’ll earn $7.83 over 9 quarterly dividends.

And the difference paid between your put option insurance and dividends earned is $1.33 or equivalent to 4% of the price paid for the stock today.

Over the next 2 1/4 years, this cash difference easily beats (even if it’s taxed) the 0.35% yield on the 5 year U.S. Government Treasury bond.

And the optionality is limitless, ranging from whether the oil price rises to $70, XOM returning to the Dow Jones Industrial Average or improving free cash flow, margins and EBITDA from a low base.

With a market cap of $145 billion (net debt of $57 bn) thus an Enterprise Value of $202 bn on 2019 revenues of $214 bn (2020 likely to be $185 bn) and EBITDA of $30 bn.

The Queen Mary is about to do a U-turn.

I’ll write about Gazprom & Russian oil, later.

October 6, 2020
by Rob Zdravevski
rob@karriasset.com.au

What’s been missing in Oil & Gas?

‘Innovation’ has been the most scarce thing in the oil and gas industry over the last 50 years.

That’s a long time to be doing things the same way and expecting a better result.

Oilfield services companies have curtailed and gazumped competitive technology which probably threatened their own staid practices.

It could be curtains for them when E&P companies cease pandering to these incumbent giants and accepting the continually woeful outcome of budget and project overruns.

And within the current market of uneconomic exploration and extraction, what if the E&P companies start using the competing software and technology available to create one of the most important advantages they could possibly yearn for…….

efficiencies

September 27, 2020
By Rob Zdravevski
rob@karriasset.com.au

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