Valuentum Exclusive Analysis for the Discerning Investor

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Sep 4, 2020

Dividend Increases/Decreases for the Week September 4
Let's take a look at companies that raised/lowered their dividend this week.

Jun 5, 2020

Dividend Increases/Decreases for the Week Ending June 5
Let's take a look at companies that raised/lowered their dividend this week.

Mar 9, 2020

Oil Markets Get Decimated
Image Shown: Oil prices have been decimated year-to-date. The outlook for independent upstream names has become dire. In an industry that’s generated little to no free cash flow since 2010, and instead has relied heavily on capital markets to stay afloat; for all the hype surrounding surging US production of raw energy resources there hasn’t been much shareholder value creation to show for it. Consumers and certain US states have been big winners, sure, but equity holders and now potentially credit holders have largely taken it on the chin. We will continue following the space for our members going forward, and please note there’s a very good reason we removed the Energy Select Sector SPDR ETF from our newsletter portfolios back in August 2019 (link here), the outlook for the energy space (particularly oil & gas) was lackluster at the time and has since become dire.

Mar 3, 2020

Covering Oil Markets Ahead of the Upcoming OPEC/OPEC+ Meetings
Image Source: Exxon Mobil Corporation – 2019 IR Presentation. On March 5, the Organization of Petroleum Exporting Countries (‘OPEC’) is holding an “extraordinary” meeting in Vienna, Austria, which will be followed up by a ministerial meeting between OPEC and non-OPEC members the next day. The group had already agreed to cut oil supplies by an additional 0.5 million barrels of per day (‘bpd’) back in December 2019 through an agreement that would last through March 2020 (that was on top of an existing deal to keep 1.2 million bpd off of the market which runs through the end of March 2020 as well). As part of that deal, Saudi Arabia offered to “voluntarily” reduce supplies by an additional 0.4 million bpd; however, that hasn’t been enough to prop up oil prices (even though ~1.7-2.1 million bpd of oil supplies are effectively removing removed from the market at 100% compliance). As of this writing, the internationally-oriented May 2020 Brent contracts are trading near $52 per barrel, down from the high $60s level seen at the end of 2019. The US-oriented WTI contracts haven’t fared any better, and April 2020 deliveries are trading near $47 per barrel as of this writing.

Jan 29, 2020

The Great Guyanese Oil Boom
Image Shown: A drill ship floating in open waters. Image Source: Exxon Mobil Corporation – 2019 IR Presentation. Guyana’s economy of ~780,000 people is about to experience the oil boom bonanza of a lifetime, even in the relatively subdued oil price environment Exxon Mobil is currently operating in, as substantial royalties and taxes are set to fill the government’s coffers. That will allow for major public investments in healthcare, education, infrastructure, and so much more. Given the relatively small size of Guyana’s population, there will be a lot of new funds to go around. For Exxon Mobil and its partners, turning ~750,000 barrels of gross daily crude oil production capacity online by 2025 would be quite the achievement. In less than five years, the consortium went from hitting it big on the exploration side to reaching first-oil, and in ten years, the group plans on turning Guyana into one of the world’s largest oil exporters on a net basis. However, please keep in mind that big projects like these are contending with material mature field declines across Exxon Mobil’s upstream portfolio. Guyana is just part of the puzzle for Exxon Mobil.

Dec 2, 2019

Apache Comes Up Empty in Suriname, Shares Plummet
Image Source: Apache Corporation – November 2019 IR Presentation. On December 2, Apache Corp announced that its first exploration well off the coast of Suriname (a small nation in northern South America) was a dud. The Maka Central-1 well was drilled to a total depth of 6,200 meters (~20,300 feet) in Block 58 and drilling activities commenced in late-September. While the well was testing two Upper Cretaceous plays, neither play appeared to have commercial level of hydrocarbons (more information will be provided by management on this issue in the near future) so Apache opted to drill down to a total depth of 6,900 meters (~22,600 feet) to test a third Cretaceous play. This news sent shares of APA down by double-digits on December 2 as of this writing for reasons we’ll cover in this article. While shares of APA yield ~5.2% as of this writing, that payout isn’t sustainable in our view.

Nov 18, 2019

Big Energy Earnings Roundup
Image Source: Exxon Mobil Corporation – Third Quarter 2019 Earnings Presentation. As long as raw energy resource prices remain lackluster, the upstream divisions of the major energy giants will continue to generate far less cash flows than they did during the boom period (2010-2014). For Chevron, Shell, Total, and Exxon Mobil, their downstream operations offer a degree of stability but their large net debt positions and hefty capital expenditure budgets will continue to pressure their financials for some time. While Conoco doesn’t possess downstream operations anymore after the split with Phillips 66 in 2012, management’s focus on net debt reduction and free cash flows post-2014 puts COP in a better position than most of these bigger integrated peers (particularly CVX, RDS and XOM). That being said, we don’t include Conoco in any of our newsletter portfolios in part due to its lack of a “natural hedge” (downstream operations) and its direct exposure to raw energy resource prices. BP plc continues to represent one of our favorite plays in the energy space and shares of BP are included in our simulated High Yield Dividend Newsletter portfolio. We like BP’s cash flow profile, its stellar operational execution of late (upstream projects are consistently getting turned online under-budget and ahead of schedule), and its impressive downstream asset base. Members interested in reading more about why we like BP should check out this piece here, and if you may wish to add the High Yield Dividend Newsletter to your membership, please click here. Shares of BP yield 6.3% as of this writing and our fair value estimate of $45 per share of BP is comfortably above where shares are currently trading at.