British Petroleum, has recovered from it massive legal obligations stemming from the Gulf of Mexico spill a good few years ago. Their share should be a good investment. The only thing that gives me pause is the steep decline in the price of oil.
You make your point with drama. Where did you find that cover? I agree, it is sensational stories that sell. However, if we're drowning in oil, the price will certainly fall. As it stands, this time, we really are drowning in oil.
It's obvious that oil at $50 per barrel is not a long term situation. I think that is closing in on the price to produce figure for a lot of the US producers... not sure how the production prices are over in Canada. While a lot of the OPEC countries can keep it flowing with those prices... why would they? It's just a temporary move to kill competition... and a largely exaggerated one due to how the financial world reacts. Keep in mind that, with oil at $60 a barrel the Saudi's already announced that they will be digging into their long term savings in order to finance their 2015 budget. I doubt they are the only ones.
Very true, which is why we'll see some form of shakeout from all of this. M&A is certainly one area - the lower and longer it goes on, the more difficult it will be for particularly the upstream names to stack up the numbers. And who knows what ripple effect there will be across the Middle East - less in the way of petrodollars to fund infrastructure, which could ripple out onto all kinds of industries that have been riding on the coattails of the oil price.
Lot's of great information here. Currently, I am fascinated with how this oil "crisis" will play out, especially, in how it will impact some key players in the stock market. Currently, I have KMI in my portfolio, but I would like to add one more. How do you guys feel about Seadrill, (SDRL)? I believe it is sitting at 10.38 at this moment, which would seem like a heck of a deal. But, I guess the big fear is, it could potentially be put out of business with this oil ordeal. I know their debt ratio doesn't look very appealing at the moment. It's a tough choice! Any input?
Love that quote by the Saudi Oil minister. If he is saying they will let oil go to $20 per barrel, they are just trying to scare the competition. If Saudi is telling you that they will let oil go to $20, then there is no way you are going to spend billions for new rigs or new exploration. OPEC is saying this to prevent competition.
I've been buying a little cheap debt on some of these companies, and also buying a little of the stocks of my favorites every week via dollar cost averaging. We've seen oil hit $140 then tank to $40 then come back up over $100 before back in '08. No one knows how low or exactly how long oil will stay so low, but it's obviously a temporary situation.
I remembered reading the magazine the first time around. Back then I was actually following the sector as an analyst, so I remember all the hysteria then. It was easy to create a very good story back then to assume that oil would always be $10 and below for years to come. Clearly that was incorrect. So who knows what will happen this time.
BP is a decent enough name, though it's not the most leveraged name to the oil price. That's because it's an integrated oil company, with a refining and chemicals business as well. So parts of its business actually benefit from a lower oil price, parts benefit from a higher oil price. Better names would be those with more of an upstream bias (i.e. exploration and production).
