Big Oil

ChuckieEgg · 22-09-2020 3:48pm #1

It's been years since I had Oil or Gas in my portfolio. I've started over the last few weeks adding a some of these Big Oil companies.
Two company buys so far over the last few weeks.
Exxon Mobil Corporation XOM $36.50 -- 75% of my holding
Royal Dutch Shell plc RDSB £972 -- 25%

I looked at Tullow but it seems too risky when I can buy the likes of XOM. Currently the dividend yield from XOM is 9.6%, RDSB is 4.9%

Jimbobjoeyman · 22-09-2020 3:54pm

Whats the thought process when adding them ?

Also high dividend yields are usually there to make up for lackluster performance or poor growth ie. Aviva or altria etc so I'd be careful chasing income.

A high yield US bond ETF would be a better shout if your after income with an average cupon of about 6-8%.
You've the diversification benefit of the ETF and the FED has effectively propped up the US bond market so your not taking on anywhere near as much risk.

ChuckieEgg · 22-09-2020 4:00pm

My main thinking is that the demand for Oil is going to return. The dividend payouts from these companies is now very high. XOM is yielding close to 10%. So if the dividend doesn't get cut and the Oil price rises in the future then so will the share price of these companies.
So in short I looking at dividend and price appreciation.

I don't know anything really about Bonds

Jimbobjoeyman · 22-09-2020 4:03pm

ChuckieEgg wrote: »

My main thinking is that the demand for Oil is going to return. The dividend payouts from these companies is now very high. XOM is yielding close to 10%. So if the dividend doesn't get cut and the Oil price rises in the future then so will the share price of these companies.
So in short I looking at dividend and price appreciation.

I don't know anything really about Bonds

What kind of horizon are you looking to hold this over ?
Was under the impression that there are large quantities of oil in storage worldwide right now and with covid cases rising in Europe and the US again it'll be a while before air travel gets back to normal.

Ryainair are after cutting 30% of thier autumn schedule.
Assuming all this the holding periods going to be a few years ?

Kilboor · 22-09-2020 4:04pm

Providence Resources is my oil play.

ChuckieEgg · 22-09-2020 4:11pm

Long term 3 to 5 years. If XOM returns to 2019 price levels then I'm at close to 100% ROI
Providence Resources is only a Junior, it needs the majors to recover first. I don't see the need to be involved in risky Junior explorers when the majors are at current share prices

Kilboor · 22-09-2020 4:12pm

ChuckieEgg wrote: »

Long term 3 to 5 years. If XOM returns to 2019 price levels then I'm at close to 100% ROI
Providence Resources is only a Junior, it needs the majors to recover first. I don't see the need to be involved in risky Junior explorers when the majors are at current share prices

I take the higher risk approaches so Providence for me is a no brainer. I'm already up 30-40% in 3 months or so and can see huge upside over the next two months

ChuckieEgg · 22-09-2020 4:36pm

I don't know much about Providence but I think it is a different kind of play which could work out very well for you

lab man · 22-09-2020 4:42pm

Anglo american shares are a good bet

Kilboor · 22-09-2020 4:47pm

ChuckieEgg wrote: »

I don't know much about Providence but I think it is a different kind of play which could work out very well for you

Definitely is, I suppose it isn't big oil now that I read the thread title but they do have one of the biggest untapped wells in Europe

borderfox11 · 27-09-2020 8:09am

Jimbobjoeyman wrote: »

Whats the thought process when adding them ?

Also high dividend yields are usually there to make up for lackluster performance or poor growth ie. Aviva or altria etc so I'd be careful chasing income.

A high yield US bond ETF would be a better shout if your after income with an average cupon of about 6-8%.
You've the diversification benefit of the ETF and the FED has effectively propped up the US bond market so your not taking on anywhere near as much risk.

which US bond ETFs are returning 6-8% these days, surely very risky??

Mickiemcfist · 27-09-2020 8:45am

Kilboor wrote: »

I take the higher risk approaches so Providence for me is a no brainer. I'm already up 30-40% in 3 months or so and can see huge upside over the next two months

Why the next 2 months out of interest?

Kilboor · 27-09-2020 11:40am

Mickiemcfist wrote: »

Why the next 2 months out of interest?

Consortium deal including spoton finalised by end of October

RaggyDays · 06-01-2021 11:28pm

Nice returns so far, did Exon cut the dividend or did they pay out?

robman60 · 07-01-2021 1:46pm

RaggyDays wrote: »

Nice returns so far, did Exon cut the dividend or did they pay out?

They've maintained it. I'm happier to be in RDSB to be honest. I think it's prudent to do so when the company isn't actually making the profits to sustain it.

garrettod · 07-01-2021 5:32pm

I've also stuck with RDSB,

While big ships take time to turn, I do believe that their Board are turning things around at Shell - and that we'll probably see a few more (non core) asset sales, as part of this, in the months ahead.

However, it'll still take a long time before they are associated with something other than "black gold".

Recent increases in oil prices, a liklihood that OPEC will continue to keep volume surpressed, and the cold weather, all help the price.

Bawa · 11-01-2021 2:53am

ChuckieEgg wrote: »

My main thinking is that the demand for Oil is going to return. The dividend payouts from these companies is now very high. XOM is yielding close to 10%. So if the dividend doesn't get cut and the Oil price rises in the future then so will the share price of these companies.
So in short I looking at dividend and price appreciation.

I don't know anything really about Bonds

I'm guessing you did very well after you bought these since these energy stocks skyrocketed back in November. I'm a big energy guy myself. I backed up the truck in the middle of last year.

Chuckie_Egg · 11-01-2021 1:21pm

Bawa wrote: »

I'm guessing you did very well after you bought these since these energy stocks skyrocketed back in November. I'm a big energy guy myself. I backed up the truck in the middle of last year.

Yes a great return so far plus the dividend on top, up roughly 37% I'm still long term holding here, my exit price is around $75, I think once covid is behind us we will get a lot of volatility in the Oil price as for the first time in a long time as inventories could fall very quickly causing spikes in price

Kilboor · 13-01-2021 11:00am

Oil doing very nicely.

TimeToShine · 13-01-2021 11:22am

Chuckie_Egg wrote: »

Yes a great return so far plus the dividend on top, up roughly 37% I'm still long term holding here, my exit price is around $75, I think once covid is behind us we will get a lot of volatility in the Oil price as for the first time in a long time as inventories could fall very quickly causing spikes in price

I have positions in the big boys but price volatility isn't as useful as you'd think for the oil majors, they supply "baseload" oil - it's the offshore/arctic explorers who are the marginal price-setters and see huge gains when oil spikes. If you are confident in high volatility going forward and have a decent risk appetite you should be focusing on small-mid cap offshore oil companies with solid revenue bases.

Also for those of you investing in Ireland, I would not bother going with the RDS.B dividend paying stock, RDS.A has the difference premium factored in and when you consider gruesome Irish taxes/FX volatility it is better business just to let the stock ride than count on a dividend.

Chuckie_Egg · 13-01-2021 11:57am

TimeToShine wrote: »

I have positions in the big boys but price volatility isn't as useful as you'd think for the oil majors, they supply "baseload" oil - it's the offshore/arctic explorers who are the marginal price-setters and see huge gains when oil spikes. If you are confident in high volatility going forward and have a decent risk appetite you should be focusing on small-mid cap offshore oil companies with solid revenue bases.

Also for those of you investing in Ireland, I would not bother going with the RDS.B dividend paying stock, RDS.A has the difference premium factored in and when you consider gruesome Irish taxes/FX volatility it is better business just to let the stock ride than count on a dividend.

I agree that mid-caps would have a better reward if we get the volatility, but they have so much more risk. Plus we still have oversupply so any downward spike will hurt the midcaps much more.
Either way big oil is in decline and it's how well these majors can diversify in the future. XOM have other income streams and their reserves are huge basin types that can be tapped for decades. ConocoPhillips have better placed reserves but are valued higher, but wrt RDS, they have much lower reserves in far riskier countries.
Either way Big oil is a 3-5 year play at most which for Robin hoods merry men must seem a lifetime.

Chuckie_Egg · 25-02-2021 7:32am

Brent $67
WTI $63

Now Biden about to get tough with the Saudi Arabia crown prince.
all good for an oil price spike

ExxonMobile now at $57

RaggyDays · 05-03-2021 8:38am

Bought some a few weeks back, but I'm kicking myself now I didn't go in stronger much earlier.
I'm not going chasing it now, I'm heavily invested in tech which is taking a hit, but to go chasing this sector now after it has ran up seems is not what I'm going to do.

Chuckie_Egg · 05-03-2021 4:41pm

:D:D:D ExxonMobile just broke $60

AnF Chuckie egg · 25-01-2022 6:43pm

Exxonmobil just hitting my original target of $75. I think this has got further to go but it has been a fantastic run. I'm up over 130% in 15 months.

AnF Chuckie egg · 27-01-2022 7:25pm

Sold 75% of my holdings of XOM today @ $75.71

The rest goes into my long term free holdings

techman1 · 09-02-2022 10:13pm

and all these predictions about "the end of oil" that were being made a year ago when the oil price went briefly negative how ridiculous they look now. What about all the big financial funds like blackrock that said they were divesting their oil and gas investments when "big oil" stocks were at their lowest price in decades how stupid they look now. I bet they are quietly getting back into oil again as it is now obvious that we will be using huge quantities of oil and gas for decades to come

AnF Chuckie egg · 03-03-2022 2:24pm

https://www.boards.ie/discussion/comment/118608014#Comment_118608014

The likes of Blackrock say many things but their actions are usually quite different. When everyone was jumping onboard all these growth stocks it was Blackrock and Co who were first to get off and near the top too.

I've started a position in Bp this week. They traded as low as £3.50 on the back of a sell off due to their Russian exposure. My price target for them is £5 in the next 12-18 months

melven100 · 08-03-2022 8:13pm

Oil is going up a lot and will do that further. If EU and USA decides to totally cut off from Russian dependence (which I hope will do), the prices will climb up everyday.

RaggyDays · 08-06-2022 5:40pm

Cripes I've made an absolute fortune on XOM. I was kicking myself for not going in stronger back over a year ago, now I'm chuffed but still kicking myself. I missed the BP trade too Chuckie, that one looks another winner.

AnF Chuckie egg · 09-06-2022 9:48pm

https://www.boards.ie/discussion/comment/119175150#Comment_119175150

Don't beat yourself up, you've done well. I originally had a price target of north of $75 for XOM, the War has added another $30.

BP was a nice trade as it's hovering around 450 now after a few weeks.

Oil was a funny situation 18 months ago but wasn't it always obvious to anyone that drove into a petrol station that the world was still badly addicted to Oil and this has come home to roost

Anyways time to be looking for the next "Bargain"

Big Oil

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