Sunday, March 15, 2015

Sold IEO, Bought Genel

Sold 300 IEO shares on Thursday night at $70.85.  Total loss was USD 1042.34.  Only bought them to have some exposure to oil when I couldn't find any stocks to buy.

Bought 1800 shares of Genel at 515p on Friday afternoon (London - Friday morning).  Total cost was SGD 19,393.51.  They dropped 3% in that session.  Shit!  If only I'd waited a little longer.  At 515p, I value them at 12x earnings (@ $70 Brent), excluding failed-exploration costs.

Friday's session was terrible for oil: WT is retesting its lows at $44, Brent closed at $54.64, may soon retest lows around $50.

Still think oil will recover by the end of the year as marginal shale producers go belly-up and cut production.  Providing there is no recession.  Am 40% invested and looking for more companies to buy. US shale producers are still expensive - they did not drop much on Friday.

Thursday, March 5, 2015

Genel 2014 results and Valuation

Genel Energy released their full 2014 results today, and the stock price has shot up 10%.

Guidance for 2015 is for $350-400m revenue (at $50 Brent), and a 38% increase in production volumes.  Based on that, I estimate 2015 profits to be 26c (or 17p) profit per share, using generous assumptions:

This would give a high PE - fair enough in a cyclical industry.    What if we adjust for a long term price of Brent $70?

  • From their 14th May 2014 Investor presentation, and after going through the flowchart (p38)  Genel's revenue rises/falls by around 6% for every 10% rise/fall in the oil price.
  • So an 40% oil price increase to $70 Brent would give a 24% increase in revenue, to $496m.  Profit would be 60c or 40p.  At a share price of 600p, thats a PE of 15.  Not cheap.  And with a few unrealistic assumptions.
What am I missing?

Monday, March 2, 2015

Bought Dragon Oil (LSE:DGO)

2nd Mar 2015 - Bought 1700 shares at 541p.  Total cost: SGD 19.833.97

Held in my DBS Vickers acct.

Brent was around $61 when I bought.