Trinity Exploration & Pr... Share Discussion Threads

[mount teide] 02/12/2019 13:55

Energy Sector Performance since the 2016 low of the previous 1999-2016 oil/commodity market cycle:

+ 117.4% - Brent
+ 113.6% - WTI
+ 8.4% - XLE - US Energy Sector ETF

This week saw a mobile phone maker(Apple) become worth more than the US S&P 500 stock index’s entire energy and renewables sector.

With US stock markets at/close to record highs, Wall Street will most probably be looking for value as the year draws to a close and they look ahead into 2020, and value is now an extremely scarce commodity in almost all sectors.

Even financials, the other S&P 500 sector that lagged the index for quite a while has now begun to catch up, leaving energy as the lone standout with much lower than historic average P/Es, despite many energy companies having shown a remarkable ability to adapt to much lower oil prices and remain highly profitable.

The low oil sector multiples have also led to high yields. There is a general feeling among Wall Street analysts that while the S&P 500 index is likely to continue a little higher from here in a Presidential election year, the move up will be a slow steady grind, which is likely to bring yield sharply into focus and make energy an attractive proposition.

AIMHO/DYOR

[nocents] 02/12/2019 13:16

What is “ interesting” is the growth in shale output in spite of falling rigs. Especially Permian. Highly contentious area as facts and figures are massaged at times. Inventories up in spite of increasing fall in rig count. Refineries complicate the picture. Technology has been given as cause for greater output. Banks are indeed shutting down funding though. There is much of magic and mystery about shale factuality.
And in spite of much said today by the UN ..oil still runs GDP’s and the world. Interesting that they called out US as biggest culprit. What about China? Also putting a cap on coal enrrgy plants...but is China going to conform to this?
Every man for himself it seems. Apart from the self-flagellating EU which hardly dents emissions.
The trillions being given for green devt. is interesting.Is it real?
As oil is squeezed it should-as you say- have a positive impact on pricing for at least a decade. The world economy runs on oil. The enormous US aviation passenger and industry and even automobiles ( tesla apart) cannot operate on biosludge. Oil runs tge world until we gradually refabricate alternatives over decades. Oil is going nowhere as yet.

[mount teide] 02/12/2019 12:21

US Shale Rig Count - reduction in rigs in H2/2019 has rapidly accelerated:

Reduction in 2019 to date is 266 rigs(24.9%) down to 802 rigs.

H1/2019 - Reduction of 101 rigs (9.4%) from 1,068 to 967.

H2/2019 - Reduction of 165 rigs (15.5%) in 5 months from 967 to 802.

[mount teide] 02/12/2019 10:47

aster - they will be referring to the IOC's of this world like BP and Shell - who are under huge political and commercial pressure to divert much more of their future cash flows into renewable energy and much less into hydrocarbon exploration and new production.

That's likely to be positive for oil pricing over the decade ahead, particularly with the growth in US shale output slowing dramatically as the impact of its very low operating cash flows and enormous debt increasingly comes home to roost, and now being compounded by the Wall Street investment banks effectively shutting off access to finance after a decade of extremely disappointing 'jam tomorrow' results that were never delivered.

[astorcourt] 02/12/2019 07:38

Oh dear;

Oil and gas stocks will be held for high dividends, not for capital gain or growth.'

[mount teide] 01/12/2019 22:08

Well, well - Goldman Sachs is now betting on a “Boris Brexit boom” and a surge of foreign fund flows into Britain if the election delivers a clear outcome, propelling faster economic growth through the early 2020s than in the struggling eurozone!

Makes a complete mockery of the absolutely dire remainer propaganda Brexit 'forecasts' of the UK treasury.


Goldman Sachs eyes multi-year Boris boom, but warns on gilts risk - Telegraph today

'The US investment bank expects a “Brexit Breakthrough” and a catch-up surge in undervalued UK assets as one of its top seven trade ideas for 2020, advising clients to take the plunge on sterling and beaten-down equities in the domestic sector.

“We have identified more than $150bn (£116bn) of UK inflows that could be unlocked by some progress towards Brexit resolution. The upcoming election will reset the Parliamentary arithmetic and potentially clear the way,” it said.

Goldman Sachs is closely watched by investors as the voice of global political finance. While coy about UK domestic politics, the bank's optimistic scenario is implicitly-linked to a decisive Tory victory.

It expects the UK economy to roar back to life next year as pent-up investment kicks in – “back-loaded acceleration” in City argot – lifting growth to a 2.4pc rate by the second half of next year. “Conditional on Brexit clarity and fiscal stimulus, our economists now look for annualised growth of 2.0pc in 2021 and 2.1pc in 2022,” it said.

This is a remarkably optimistic picture three years out given the potential pitfalls ahead as the UK negotiates trade terms with the EU. Such performance would be double the pace of Germany and far surpass the eurozone as a whole. It would alter the global narrative over the economics of Brexit.

“We see a compelling case for a pick-up in UK growth. The election is likely to mark a clear turning point for UK fiscal policy on a bipartisan basis, and the end of fiscal consolidation should help the UK economy perform relatively better,” said Sven Jari Stehn, head of the bank’s European economics team.

“We expect that this “deal dividend” would materialize relatively quickly, but leave some uncertainty on the table as this is only one stage in the Brexit process,” it said. The bank warned that a hung-Parliament would hold back recovery.

The other side of the coin is a sell-off in gilts and rising UK borrowing costs. The bank said economic reflation and a blizzard of bond issuance to cover extra spending will push 10-year gilt yields above 1pc, bringing the UK interest rate structure back towards the “neutral rate”.

This is arguably a healthy development under standard new-Keynesian doctrine but it also raises an amber warning: the next Government cannot take ultra-cheap capital for granted if it pushes the budget blitz too far.

Credit experts fear that Labour’s debt-driven expansion of the state would risk an abrupt “derating̶1; of UK sovereign profile, although the equation would be complex if it also led to a cancellation of Brexit. The country might be almost ungovernable in such circumstances. Many Brexiteers would not accept the legitimacy of a binary referendum pitting Remain against Labour’s half-hearted EU alignment plan.

The bearish view of gilts is shared by Investec Asset Management. It says investors will soon put “two and two together”, realizing that the combination of fiscal loosening and an orderly Withdrawal Agreement changes the fundamental dynamics for the UK gilts market. The flirtation with zero-rates earlier this year will seem like another era.

While the Tory spending plan is a departure from austerity it is still modest by global standards. Stimulus in the US, Japan, and China has been much greater. These countries are all running augmented fiscal deficits that are multiples of British levels.

The shift in policy is also aligned with new thinking at the International Monetary Fund, which estimates that the UK’s cyclically-adjusted deficit is at the low end of the scale. Certain eurozone states are lower but that reflects an ideological pathology and rigid legal construction far removed from world consensus. Austerity not deemed good practice by the global economics fraternity in a context of “secular stagnation”.


Faster UK growth would cause the Bank of England to start raising rates as soon as late 2020, long before the European Central Bank. This bifurcation in policy would lead to a recovery in sterling.

Goldman Sachs is targeting a pound exchange rate of around €1.22 against the euro, a level last seen around the time of the Brexit referendum and probably. This is equivalent to 0.82 in the inverted form used by international traders.

Peter Oppenheimer, Goldman Sachs’ equity guru, says UK domestic stocks have lagged the worldwide asset rally by 20pc since 2016 due to both a derating effect and lower earnings. There is catch-up potential once the uncertainty lifts. These equities tend to be FTSE 250 listings with less exposure foreign earnings than the dollarised global players on the FTSE 100 that have held up better.

It expects the STOXX Europe 600 index to eke out gains of 8pc over the next year as the net supply of equities shrinks, half from dividends rather than capital gain. Roughly 80ps of all returns in European equities over the last 20 years have come from reinvested dividends, reflecting a low-growth economic culture.

The bank’s equity team recommends digital stocks and above all a renewable basket of “climate champions”, led by Orsted, RWE, Portugal’s EDP, Enel, and Iberdrola.

These are likely to yield double the annual return of other equities over the next decade as Brussels tightens CO2 targets and the EU’s “green deal” unlocks an estimated €1 trillion of funding.

The carbon sector faces slow run-off and takes on a “bond-likeR21; character. Oil and gas stocks will be held for high dividends, not for capital gain or growth.'

[spellbrook] 01/12/2019 21:21

There are ar­eas in the oil fields that need to be re­ac­ti­vat­ed that are not present­ly be­ing pro­duced ef­fi­cient­ly by Her­itage.

These ar­eas should be iden­ti­fied and pre­pared by Her­itage to Far­mout to ex­ist­ing Oil Pro­duc­ers who have a good track record of drilling and in­creas­ing pro­duc­tion.

As men­tioned in my ear­li­er ar­ti­cles, in­cen­tives need to be giv­en to the oil sec­tor to stim­u­late pro­duc­tion.

These in­cen­tives should be in the form of re­duced roy­al­ties and SPT tax­es.

[spellbrook] 01/12/2019 09:32

Per­sad-Bisses­sar al­so laid out a plan to com­plete on­go­ing re­forms to im­prove the oil and gas tax­a­tion schemes.

She said the UNC planned to en­hance the oil and gas tax­a­tion reg­i­men to sim­pli­fy and mod­ernise the pro­duc­tion shar­ing con­tracts, ex­plo­ration and pro­duc­tion sys­tems.

[mark10101] 29/11/2019 17:12

Thanks Otemple, saved me a job.

[otemple3] 29/11/2019 16:58

One of the largest discounts I am aware of out there, certainly amongst those with credible directors with strong track records, growing production, increasing margins through cost initiatives including SCADA which will also increase CNAV further

[otemple3] 29/11/2019 16:54

CNAV of 42p and share price of 10p

[hsfinch] 29/11/2019 16:49

Looking at a number of oilies, many have NAV and NTAV per share bigger than share price Trinity doesn't. Is it over-priced?

[nocents] 29/11/2019 16:44

OT. Absolutely. His call !!

[nocents] 29/11/2019 16:43

Very very unusual trades today. Directors or institution position building. Could be well-heeled p/i!!
I have known of such investing very large amounts here. Since sadly departed ( the share not the Earth).:-/

[otemple3] 29/11/2019 16:42

Aware of the LTIP but Jeremy is a finance man and must (presumably) see the value on offer here - it will give him proper skin in the game as opposed to (earned) freebies

[nocents] 29/11/2019 16:21

However..that’s not to take away his right to do so if he wished.Cracking deal Grommit.

[nocents] 29/11/2019 15:55

Sorry
LTIP
Long-term Incentive Plan. Quite complex and intricate. Relates to increase compared to peers. Can be claimed at different dates ( lucrative) -or can fail if share price does!

[nocents] 29/11/2019 15:53

Jeremy is on LTIH plan. With Bruce. Purchases not necessary.

[otemple3] 29/11/2019 12:29

Wow, very unusual trades for Trin! Be nice to see Jeremy picking up a big chunk at this price or a new institution after all the road shows

[astorcourt] 29/11/2019 12:26

I better get a few before they go

[astorcourt] 29/11/2019 12:23

wow position building taking place at 10p

[spellbrook] 29/11/2019 12:22

Maybe a director ? The 340,000

[mark10101] 29/11/2019 12:14

Yes looks like the reason for the quick move up yesterday.

[otemple3] 29/11/2019 12:08

Is it a delayed trade as if not they got a very good price for that size of deal. Nice to see some significant investment coming in