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Discussion Starter #1
Enough talking about tech sector getting hammered.

Energy sector is taking a big hit today.

I decided to create a thread for this sector also. Maybe there could be threads for each sectors.
 

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There is virtually no good news for oil companies or oil investors - it could not be any worse. But not all in the energy space is bad - most renewable companies are up.
 

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The 'energy' sector is bifurcated. It is really fossil fuels vs renewables, with utilities in general being an awkward hybrid/sector of their own.

I don't own any fossil fuel companies except as they are in ex-Canada broad market indices. I will stick to primarily utilities and the likes of AQN that I think can either be called a renewable or a utility.
 

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I think the down trend in global energy is resuming. I'm bearish on XEG and XLE.

You can also see the volume on XLE picking up as it sells off. Really bad chart.
 

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Discussion Starter #5
TSX Energy Capped Index is down -7.59%
TSX Oil and Gas EW Index is down -4.62%
TSX Renewable and Clean Tech Index is up +0.80%
TSX Utilities Capped Index is up +1.09%

So, yeah, basically, Renewable, Clean Tech and Utilities are currently the best performers today during this sell off.

I just bought of few O&G for their recovery, but I don't plan on holding them long. I have SCL and OVV still up +45% since I bought them around May/June. Though I made a big mistake when I bought SU without looking at the red flags of the spike we had in June and I'm down -30% on that one.
 

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I might consider something like SU after a few more drops like this. Under $16 maybe?
Perhaps.. It seems to be more and more like a casino play, albeit one of the most solid given its integration. No one knows where oil prices will be going, perhaps nowhere for another few years while in the meantime there will be more cost pressures, e.g. carbon penalties, potentially accelerated reclamation work, higher environmental bond security, etc. Nothing but headwinds it seems.

I am not touching anything in this space but will hold the major pipelines because takeaway capacity will still be used AND they have considerable operations in the USA.. Even in the USA, pipelines are having issues, so installed infrastructure will be as valuable as the railroads.
 

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Discussion Starter #8
I might consider something like SU after a few more drops like this. Under $16 maybe?
16$ would be nice, I'll wish that for you. As for me, I'm not buying more O&G because I don't want that industry to be part of my long term portfolio. I will most likely sell at some point and give my losses on SU to Bay Street.
 

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16$ would be nice, I'll wish that for you. As for me, I'm not buying more O&G because I don't want that industry to be part of my long term portfolio. I will most likely sell at some point and give my losses on SU to Bay Street.
Looks like under $16 is within reach, already at 16.60 or so.
 

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Perhaps.. It seems to be more and more like a casino play, albeit one of the most solid given its integration. No one knows where oil prices will be going, perhaps nowhere for another few years while in the meantime there will be more cost pressures, e.g. carbon penalties, potentially accelerated reclamation work, higher environmental bond security, etc. Nothing but headwinds it seems.

I am not touching anything in this space but will hold the major pipelines because takeaway capacity will still be used AND they have considerable operations in the USA.. Even in the USA, pipelines are having issues, so installed infrastructure will be as valuable as the railroads.
AR. Would you be a buyer of ENB at today's sub $40 or maybe TRP as long term holds? Thoughts on their divs? I presently hold both, considering more.
 

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AR. Would you be a buyer of ENB at today's sub $40 or maybe TRP as long term holds? Thoughts on their divs? I presently hold both, considering more.
For what it's worth, ENB is one of my largest positions and I recently bought more at $42. I would not buy it for the dividend (I don't buy anything for the dividend) but it seems like a perfectly good holding, to me.
 

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Since 8 September, oil bottomed at $37.19. Since then, it is up 6.3% on shrinking inventories worldwide. Yet Suncor is down 9% - an interesting disconnect. CNQ is down a more modest 4.9% - CNQ is not suffering from as much refining issues, and has established itself as one of the world's low cost leaders.

Suncor does look particularly attractive, although the refining profits are challenged so I don't think the discount is necessarily unwarranted. But a few refineries have already shut down, and when demand fully returns, watch out. Suncor is still unquestionably a low cost producer with very low cost of capital and good debt levels. Definitely looks good here at $16-17.
 

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AR. Would you be a buyer of ENB at today's sub $40 or maybe TRP as long term holds? Thoughts on their divs? I presently hold both, considering more.
I own both but have not looked close enough at either recently to say yes. Based on multi-year stock charts alone, I would say probably. I would hope neither would raise dividends near term, especially ENB, because I'd like to see them both pay off non-regulated* debt first to raise credit ratings to A- from BBB+, and to improve both D/E and dividend payout ratios. Both should be looking to raise cash for niche acquisition opportunities and high grade their suite of development opportunities. ENB should be the better prospect with Line 3 replacement adding cash flow. TRP needs to find a way out of KXL, or at least to minimize further financial exposure that may have to be written off soon.

Neither company has high growth ahead of it so I see the last 2 years share price compression as appropriate consolidations from a valuation perspective.

* By non-regulated, I mean corporate debt not captured in tolls and tariffs. I'd like to see both companies, ENB particularly, pay off enough such debt to move into A- credit rating category from BBB+
 

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Coincidently, there has been discussion today in the ENB thread over at FWF in which I have actively participated in. TRP and ENB both could reduce debt and raise cash to participate more in natural gas and/or renewable power opportunities. The caution, of course, is to be careful of the economics of renewable opportunities. Investors have gone gaga over renewable power bidding up share prices into the ozone layer. The fundamentals are not yet that clear.

P.S. I own AQN in this space.... more of a hybrid than a complete nenewable power company. I don't like buying into momentum/hype.
 

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an interesting energy play, in my opinion, is Pulse Seismic (PSD). Looking at the chart most will probably shy away but when you look closer at the company you find that if drilling ever comes back to Canada this company cannot help but participate in a big way. They own a monopoly rights to many seismic surveys that are required by Oil and Gas companies before they drill. No one competes with them directly. If you want to drill on land they have surveyed, you must do business with them. While we wait for drilling to come back the company can operate on very little operating expense. A few people to answer the phone. They have a little debt on their balance sheet right now from an acquisition of a large data library last year, I think. They tend to pay that down their debt as quickly as cash flows allow. The good news is that the tax write off these acquisitions give them allows them to avoid almost all income taxes, for a long time (must use shareholder free cash flow to analyze them and not earnings per share, due to these non-cash depreciation charges they are allowed).

Anyway, the company is not going anywhere. They can wait out this drought probably forever and will surely participate when/if drilling activity ever resumes. Most of the downside is probably in the stock since their seismic data library is probably worth twice what the stock is trading at today.

Anyway. Do your DD. I own a few shares. I don't own any other oil and gas companies, since they are truly awful long term businesses, but I do own the pipelines and some utilities.
 

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PSD is very much a 'trade' given it is oilfield services without much overhead. It is even more volatile than O&G companies themselves.

I think the days of its revenue from oil plays is about over, but the next big push will be natural gas drilling playing on the recovery of gas prices and feedstock needed for the LNG facility. I don't have the stomach for such speculative plays myself but it could be worth play money.
 

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$12 is a price/book ratio of 0.5. That is pretty attractive, especially considering SU normally trades at 1.5-2 times book. Refining margins are pretty crappy, but gasoline stocks are actually reasonably low and I think maybe even down year over year. Diesel stocks are high though but are starting to come down. Really, oil will probably have a very, very strong seasonal period given how much supplies are coming down but that doesn't usually start until December.
 

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I Hold ENB, TRP, IPL, SU. Combined, they represent less than 10% of my portfolio. I bought them a few years back when I was looking for income and big names.

I have a 15+ year time horizon. I’m wondering what’s in store for these companies long-term as we Transition away from oil and gas. I think gas has a much Longer lifespan Than oil.

i haven’t done any research yet on what these companies have said or what is thought that their plans will be. Are they Continuing to push The idea of oil and gas or do they Have plans to diversify?

i think the total move away from oil and gas is farther away than people think. However, I don‘t know much about the industry’s long term plans.

ultimately, my questions are...

1. What plans do you have to sell your positions over time? Do you have plans to exit the industry long-term?

2. My time frame could be as long as 25-35 years.....should this change my outlook?
 
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