Energy Investing - Brent $74.80 WTI $72.13 - Energy Investing - InvestorVillage


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Msg  341546 of 353144  at  7/26/2021 10:56:02 PM  by

romm

The following message was updated on 7/27/2021 9:15:58 AM.

Re: Brent $74.80 WTI $72.13

All is true, many are undervalued, but there is a reason. After 6 years of bear and consistently losing money (not saying FRU, but many others) next year FCF Nattal often refers sounds as a weak argument. Investors are sick and tired and want clean balance sheet and FFO/ebitda and FCF in 4 MRQs. Yes 4 most recent quarters...at least before they pay for hypothetical next year results.
 
Even at good prices most cannot fix a balance sheet in a single quarter...or even a single year. Many need 2-3 years of high prices just for fixing, not for paying debts off.
FRU is different but it is priced differently as well. Next year 6x EV/ebitda - how about in 4 MRQ? 12X? 15X? 20X? That's what the market pays right now. Not cheap btw for no growth.
 
The market will reprice, no doubt...but companies must show money in 2-3-4 quarters first...and use that money for fixing balance sheets, not for rewarding execs....then investors could assume they would receive something as well via growth, buybacks/dividends. But before that - investors are receiving nothing right now. So why paying for next year 18 months in advance?
 
Too early to complain as companies didn't show any single quarter of high FCF so far, yes not a single one, some should show in coming Q2 reports, but not all.
How does Nattal complain about investors disinterest? Let them demonstrate high FCF for 4 quarters in a row and show clean balance sheet or at least fast progress and visibility. I don't think anybody will complain at that time.
 
PE not buying? They have no money.  They borrow money at low rates for all purchases. Where could they borrow for oil and gas right now, if banks do not lend? They are busy to lend to EV cars and trucks, but not oil and gas. I don't think it is going to change any time soon. So PE is a low probability option right now in my opinion.
 
Just general observation. My humble opinion. 
I'm concentrated in not many names for this year results in oil sector with mostly cash in other sectors, not counting short term trades.
CLR, OXY, CVE, HES, 50% APA  and DVN are among large caps.
 
romm 
 
 


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Msg # Subject Author Recs Date Posted
341553 Re: Brent $74.80 WTI $72.13 reply to ROMM Greenbub 2 7/27/2021 1:01:40 AM


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