EXXI

Crude Oil Prices Now Near $40 Per Barrel

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Image: Top holdings of the Energy Select Sector SPDR; source: State Street. Call it luck. Call it good timing. Call it what you will, but we’re calling it tactical prudence within a portfolio management context. The newsletter portfolios have been on the “long side” of energy equities now for the better part of the past few months, after having negligible exposure to the energy-sector bust for most of the past few years. We continue to target achieving the goals of the newsletter portfolios, and we think tactical exposure makes sense at this time. West Texas Intermediate crude oil prices (USO) have now advanced to ~$40 per barrel from the depths of the mid-$20s just a few months ago, and while … Read more

Standard & Poor’s Notes Heightened Default Risks

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Not all is well in Big Oil, or at least, not all is what it once was. The upstream oil and gas arena continues to face significant pressure from falling energy resource pricing, runaway capital spending projections and conditions that may not subside anytime soon. At the heart of the problem is OPEC’s strategy to maintain market share, apparently at all costs, which is different than the cartel’s efforts in previous cycles to support the price. Though upstream industry constituents have announced capital spending reductions and some have idled rigs, commercial inventories of crude oil remain at decade highs, and risks to the global economy, not the least of which from China (FXI), Brazil (EWZ), and Australia (EWA), threaten the … Read more

The Walking Dead?

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At 453.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. – Summary of Weekly Petroleum Data for the Week Ending August 7, 2015 The oil & gas energy complex is nearing a state of panic, if it isn’t already in one. We’ve been talking about the glut of energy resource supply for many months now, and our impeccable positioning in the newsletter portfolios long before the collapse in prices is well known. Kinder Morgan (KMI) had been a relative outperformer in the Dividend Growth Newsletter portfolio until we removed it at $40 per share a couple of months ago. The same had been true with … Read more

Dividend Increases/Decreases for the Week Ending January 30

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Let’s take a look at dividend increases/decreases for the week ending January 30.

Creditor Risk Aversion Rises Considerably in Energy, Metals & Mining Sectors

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Not all is well with commodity producers. Moody’s (MCO) has been very quick to point out that “the latest plunge by base metals prices and the renewed slide (in) crude oil prices are more ominous for corporate credit than was the earlier plummet by crude oil prices amid relatively steady industrial metals prices.” The credit rating agency’s industrial metals price index has dropped more than 10% in the past 20 days ending July 9, reaching levels not seen since the depths of the Financial Crisis in 2009. Moody’s industrial metals price index has fallen an incredible 25% since the same time stamp last year, something we’ve been witnessing anecdotally. The International Energy Agency recently warned that the bottom in crude oil … Read more

Black Gold! Crude Oil Prices Leap to ~$50

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Key Takeaways: After being negative throughout much of the collapse in energy resource prices during 2014-2015, Valuentum has been market-neutral on the energy sector since October of last year, and the newsletter portfolios have participated in the bounce in energy shares from January 2016 via the Energy Select Sector SPDR (XLE). The Dividend Cushion ratio, which is a forward-looking cash-flow based metric of dividend health, flagged the risk of every dividend cut, without fail, in the Independent Oil & Gas industry in advance of the event: Anadarko (APC), Cenovus (CVE), Cimarex (XEC), Devon Energy (DVN), Noble Energy (NBL), and Range Resources (RRC). We’ll walk through the degree of capital cuts across the Independent Oil & Gas industry, the group’s efforts … Read more