Jadestone Energy Share Discussion Threads

[tom111] 28/11/2022 14:44

A long and detailed assessment of the state of the oil market by the ft "The week that could unravel the global oil market"Very bullish imo

[mount teide] 28/11/2022 14:09

Continue to read plenty of high quality research on the oil market, but seen little to argue against the Saudi's view's, which is one that some of us have been writing about and investing accordingly since 2017. That what will be driving the oil market and global energy crisis over the rest of this decade is the catastrophic collapse in E&P Capex since 2014. EVERYTHING ELSE IS JUST BACKGROUND NOISE BY COMPARISON.

Of course, as Jeff Currie at Goldman explained well, future oil price movement will not be straight up but, broadly follow a pattern as in past periods of supply tightness that are structural(created by a lack of investment)......they will be a series of spikes up and down from a high floor price.

Consequently, aș a long term investor in an oil market that has been starved of investment since 2014, have been using recent oil price weakness to add to my O&G and shipping positions.

However, been a little disappointed not to have got more 'value'.

Seems the reason for this is that more of the mainstream investment market has now spotted, something some of us have been writing about for 9 months, that even at $75 oil, the now super lean oil producers have already proved they can still deliver all time record levels of FCF.


Something that analyst Alex Kimani at Oilprice.com has been writing about this week:

Oil Stocks Are Showing A Peculiar Disconnect From Crude Prices

* Oil prices are showing a peculiar disconnect with energy stocks.

* The current disconnect hasn’t been seen since 2006.

* Shareholders remain bullish on the energy sector as firms continue to pay strong dividends.


'Oil stocks have continued to show a peculiar disconnect from the commodity they track, with oil equities staging a powerful rally even as oil prices have fallen sharply since the last OPEC meeting.

Over the past two months, the energy sector’s leading benchmark, the Energy Select Sector SPDR Fund (NYSEARCA: XLE), has climbed 34% while average crude spot prices have declined 18%. XLE now boasts a 61.2% return in the year-to-date, the best of any U.S. market sector.

According to Bespoke Investment Group via the Wall Street Journal, the current split marks the first time since 2006 that the oil and gas sector has traded within 3% of a 52-week high while the WTI price retreated more than 25% from its respective 52-week high. It’s also only the fifth such divergence since 1990.

The U.S. oil majors have not disappointed, either: over the past two months, Exxon Mobil Corp. has gained 35.3%; Chevron Corp. is up 30.6%, ConocoPhillips has climbed 30.1%, Phillips 66 has rallied 45.3% while Marathon Petroleum Corp has returned 40.3%. This trend rings true even for shorter timeframes, with all the stocks here being in the green over the past five trading sessions with the exception of COP which is down 0.5%.

There’s a method to the madness, though.

Strong Earnings

Robust earnings by energy companies are a big reason why investors are still flocking to oil stocks.

Third quarter earnings season is nearly over, but so far it’s shaping up to be better-than-feared. According to FactSet’s earnings insights, for Q3 2022, 94% of S&P 500 companies have reported Q3 2022 earnings, of which 69% have reported a positive EPS surprise and 71% have reported a positive revenue surprise.

The Energy sector has reported the highest earnings growth of all eleven sectors at 137.3% vs. 2.2% average by the S&P 500.

At the sub-industry level, all five sub-industries in the sector reported a year-over-year increase in earnings: Oil & Gas Refining & Marketing (302%), Integrated Oil & Gas (138%), Oil & Gas Exploration & Production (107%), Oil & Gas Equipment & Services (91%), and Oil & Gas Storage & Transportation (21%).

Energy is also the sector that has most companies beating Wall Street estimates at 81%. The positive revenue surprises reported by Marathon Petroleum ($47.2 billion vs. $35.8 billion), Exxon Mobil ($112.1 billion vs. $104.6 billion), Chevron ($66.6 billion vs. $57.4 billion), Valero Energy ($42.3 billion vs. $40.1billion), and Phillips 66 ($43.4 billion vs. $39.3 billion) were significant contributors to the increase in the revenue growth rate for the index since September 30.

Even better, the outlook for the energy sector remains bright. According to a recent Moody's research report, industry earnings will stabilize overall in 2023, though they will come in slightly below levels reached by recent peaks.

The analysts note that commodity prices have declined from very high levels earlier in 2022, but have predicted that prices are likely to remain cyclically strong through 2023. This, combined with modest growth in volumes, will support strong cash flow generation for oil and gas producers. Moody’s estimates that the U.S. energy sector’s EBITDA for 2022 will clock in at $$623B but fall to $585B in 2023.

The analysts say that low capex, rising uncertainty about the expansion of future supplies and high geopolitical risk premium will, however, continue to support cyclically high oil prices. Meanwhile, strong export demand for U.S. LNG will continue supporting high natural gas prices.

In other words, there simply aren’t better places for people investing in the U.S. stock market to park their money if they are looking for serious earnings growth. Further, the outlook for the sector remains bright.

Whereas oil and gas prices have declined from recent highs, they are still much higher than they have been over the past couple of years hence the ongoing enthusiasm in the energy markets. Indeed, the energy sector remains a huge Wall Street favorite, with the Zacks Oils and Energy sector being the top-ranked sector out of all 16 Zacks Ranked Sectors.

Share Buybacks

Further, earnings in the sector are likely to remain high due to high levels of share buybacks. Oil and gas supermajors are on course to repurchase their shares at near-record levels this year thanks to soaring oil and gas prices helping them to deliver bumper profits and boost returns for investors.

According to data from Bernstein Research, the seven supermajors are poised to return $38bn to shareholders through buyback programmes this year, with investment bank RBC Capital Markets putting the total figure even higher, at $41bn.

In 2014, when oil was trading over $100/barrel, we only saw $21 billion in buybacks. This year’s figure easily outpaces the 2008 number.

But here’s another interesting thing: Big Oil’s capex and production have remained mostly flat despite reporting record second-quarter profits.

Data from the U.S. Energy Information Administration (EIA) shows that Big Oil companies have mostly downshifted both capital spending and production for the second-quarter. An EIA review of 53 public U.S. gas and oil companies, responsible for about 34% of domestic production, showed a 5% decline in capital expenditures in the second-quarter vs. Q1 this year.

Cheap Energy Stocks

Another surprising finding: energy stocks remain cheap despite the huge runup. Not only has the sector widely outperformed the market, but companies within this sector remain relatively cheap, undervalued, and come with above-average projected earnings growth.

Key Metrics for O&G Sector

PE
8.19 - Energy
16.42 - S&P 500

Peg Ratio
0.58 - Energy
1.89 - S&P 500

Proj EPS Growth
95.62% - Energy
6.38 - S&P 500

[vaston] 28/11/2022 13:31

Wow, this is real , check the company out.

[tom111] 28/11/2022 12:53

Opec stated 7 days ago that they would intervene if necessary and cut production, thats on the table as they want oil prices @80-$90

[jeff114] 28/11/2022 10:15

The lower the shareprice goes the more they can buy and the lower oil price goes the cheaper the deals they can do... so in each case a good investment

[tom111] 28/11/2022 09:34

Saudis will probably reduce production next week they are in full control of the price NOW

[amaretto1] 28/11/2022 09:34

If jadestone were not buying ....Were would the share price be ???

[amaretto1] 28/11/2022 08:02

Oil price down again .... who would have thought it !!!!Not the so called experts ....Lemmings are buying oil stocks and the clever are selling.....ADV a classic pump and dump outcome ...... amongst at least 50 other companies

[mount teide] 27/11/2022 12:10

Sogo - 'there are a number of moving parts that can cloud one's overall big picture view of what's going on, at least in the short term. And, in the commodity space, this is China, and India now too.'

I agree, that's why Jeff correctly described these shipping/commodity supercycles as a long series of spikes, with increasing high and lows. Like Jeff, I think we're currently making one of the lows, before bouncing back strongly early next year as China opens up and the full impact of the proposed EU price cap on Russian oil together with its ban on Russian crude and refined product exports into Europe extract their toll on oil and refined products pricing, and shipping transportation costs.

[sogoesit] 27/11/2022 11:56

Cheers for those links.

I don't usually listen to GS commentary but I think this Jeff Currie is pretty much on the ball for this one.

I think, however, there are a number of moving parts that can cloud one's overall big picture view of what's going on, at least in the short term. And, in the commodity space, this is China, and India now too.

[mount teide] 26/11/2022 18:33

Goldman's Jeff Currie (Global Head of Commodities) - "this commodity supercycle that started in 2020, is no different to the one's that we saw in the 70's and 2000's."

"What preceded each was the rise of the new economy. Last time it was the dotcom boom, this time it's the FANG boom....what we then saw and are seeing again is the REVENGE of the OLD ECONOMY(something I've been writing about for years on here).

"New economy takes all the capital from the old economy, starves it of the investment it needs to grow, then shifts the world into a commodity supercycle environment"

"A commodity supercycle is not a long upward trend in prices but spike, after spike, after spike, and this is going to go on until we have adequate investment in oil and other commodities like copper etc to be able to grow supply"

"In terms of solving the oil supply issue, its requires investment in terms of trillions and trillions of dollars, and we have not even scratched the surface yet in doing that"

"In 2022, oil equities are beginning to see the commodity supercycle(long term high oil price) story"

Goldman's Currie: 'Definitely' Bullish on Oil Come Next Spring


Europe still faces a structural energy problem, says Goldman Sachs' Jeff Currie

[amaretto1] 26/11/2022 16:54

Infact ... I'm going to find u anyway !

[tom111] 26/11/2022 15:26

If you are worried about a Suez blockage don't you think you should move on and invest in The Yorkshire Penny Bank or something lol

[fardels bear] 26/11/2022 15:08

Mild weather in the west. Record snowfalls in me USA and colder weather in the forecast for Western Europe next week. It is only November, you illiterate nonce.

[tom111] 26/11/2022 14:50

The Saudis are back in charge of the oil sector they will not hesitate to cut production as has been shown recently apart from which oil supplies from Russia will stop to the EU next month.In addition an extra 1mbls will be withdrawn also.In Feb more oil products will be stopped from Russia as well not forgetting the SPR shortage.We are in a different place from 2008

[mount teide] 26/11/2022 14:23

Encouraging to see that we are far from alone in forecasting a big H2/2022 for the Oil and Product Tanker shipping sector and, and an even bigger 2023, courtesy of the EU's sanctions on Russian crude and refined oil exports.

Sanctions could lift already booming product tankers to new heights - TradeWinds 21 November 2022



Tankers Expected to Emerge as the “Winners” of 2023 - Hellenic Shipping 22 Nov


My forecast of the 'peak' years for the 4 main shipping sectors during this recovery/boom stage of the latest shipping market cycle:

2020-2022 - Container Sector
2021-2023 - LNG Sector
2022-2024 - Tanker Sector
2023/4 - 2025/6 - Dry Bulk Sector

Forecast in a post in 2017 that Clarkson's would peak during this latest shipping/commodity market cycle, at around £100 a share in 2025. Although, Covid was a serious hurdle to overcome, the forecast still looks achievable, with the best years for the big two spot market shipping sectors still ahead.

AIMHO/DYOR

[pughman] 26/11/2022 11:58

Yesterday's trading volume was the highest for a while, with heavy buying in the morning and afternoon, and large sales in the morning that were not declared until after the close.

[amaretto1] 26/11/2022 11:49

What it's telling you ...It's totally uninvestable !!Far far too many possible outcomes Also add the mild weather in the west in to the mix .... Oh and USA lever pullers .....It's a absolute cake mix. i know your invested in a shipping company......Let's hope we don't have another stuck in the Suez.....