July 23, 2021

14 thoughts on “Is now the right time to dive into Oil and Gas stocks? Let’s hear from market sentiments!

  1. Rolf,

    You have made some retail investors very blue this Easter 🙁

    Other than that, refreshing insights from one working INSIDE the industry versus those working OUTSIDE attempting to understand the O&G industry from sell side analysts' recommendations 😉

    Good one!

    1. Hi Jared,

      Thank you for the compliments.

      I guess I am not so influential. It is likely Good Friday itself or the day after it, which are supposed to be blue! Ok, today is Easter, a much happier resurrection day!

      Since I am in the industry, I seriously hope to see the Sun after the rain soon! Pray Pray Pray!

  2. while the fed has been delaying the rate hike, the 'hot' money has been flowing from one place to another. this is the time for short time plays. I just got out of energy play the week before. didn't earn all of it. but did get some.

    and this is what everyone should be doing for the forseeable future, i feel.

    1. Hi SMK,

      Indeed the volatility in O&G is an appropriate time for smart traders to work their magic.

      That said, even for long term investors, making entry now is still not too bad a time as well, compared to a year back.

      Afterall, we cannot tell when/where is the bottom. Or do we?

  3. Hi Rolf, Thanks for your "insider information" to the oil and gas industry. There goes my chances of jumping into the oil and gas industry from another resource based industry.

    I've got a "newbie" question regarding the oil and gas companies. I was hopping you are able to enlighten me.

    It is regarding the reserve replacement. With the current prices, are the oil companies drilling to replace their reserves?

    1. Hi Chewyc,

      Thanks for dropping by. News and info are just news and info. In the short run, market does not really care! Therefore, you can still ride in and out and profit from the up and down cycle like SMK mentioned. Or I also mentioned that now is still not a bad time for entry compared to last year and before, except that selection of stocks have to be more careful.

      Reserve replacement? To be honest, I am newbie on this topic as well! Hope you can pardon me with the answers then which I will try to answer to the best of our imagination.

      I reckon, oil companies still require to drill and produce for reserve replacement, but with the oil price this depressed, the whole process will definitely slow down and likely they will also looking for other means such as LNG and oil sands etc to contribute to the reserves.

      Frankly, cheap oil is more and more difficult to find for many Oil companies, hence the cost of producing oil or reserves for this matters, is going to be much higher than the $30-40 mark they are selling. And reserve oil has to be of good quality. Furthermore how accurate the reserves Figure Company published, we also have to ponder.

      This is my humble opinion. Still, I have confident in the industry over long term, just need to fine-tune the right time to enter for a cyclical industry, I think.

    2. Hi SMK,

      You are right. Anyway, in response to your question, I just wrote an article. 🙂

  4. Rolf, I really hope there will be another buying opportunity to buy companies like Royal Dutch Shell and Exxon.

    1. Hi Yaruzi,

      Buying oil companies which is directly at the top of the chain sounds like a better choice if the time/price is right. They will have more control compares to those below the supply chain.

      If you look at CNOOC vs Exxon and Shell, the drop is more drastic. Maybe better choice? You will know better becos you are just so smart to do that! hehe….

    1. on the topic of jack-ups (JU).. there are many of them approaching their 5 year inspection. which coincides with the last construction boom. i understand, some of them spend up to 30mil to keep it in class (depending on region/sector). in this climate, there are not many rig owners willing to do so.
      However, that being said, if we all survive this cycle, in the next 5-7 years, there might be another boom. (hey, the 7 year itch not only applies to humans, but even industry)

      a small little bright spark; keppel delivered 2x JU to Gruppo for Pemex at a day rate of $130k (which to me, is abit surprising)

    2. Hi FC,

      Yes plenty cold stack.

      O&G is afterall cyclical. When times is good, everyone rush in, vice versa. It is also partly affected by interest rate where the cost of financing is cheaper in the past few years allowing many newbuilds. 5-7 years is a business cycle.

      In some cases Keppel do co-own the assets even after delivery. Not sure these Pemex ones!

      Now since the industry is already getting so bad, no point fretting over it anymore. In fact all the preparation is better to perform during early stage. Being slightly paranoid during end 2014, I kind of already mentally tuned to see the worst. Whether it happens or not, it's another thing.


      For now, the most appropriate thing to do now is just do our job and don't think so much.

      Hope this crisis will come to an end soon! Best of luck to you.

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