Black Gold, Anyone?

Discussion in 'Stocks & Derivatives' started by AgStalker, Aug 27, 2020.

  1. AgStalker

    AgStalker Member Silver Stacker

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    Just wondering about your thoughts on the future of OIL, Electric Vehicles and Alternate Energy...
    I would like to share this clip as a topic starter:
     
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  2. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    My plan is to trade out my gold shares predominantly for oil, gas and 5G when the time comes (and a few others). I'm liking the oil majors, particularly Chevron, but also Shell and to a lesser extent Equinor. I haven't looked into Exxon but I'm sure it would be a solid buy. Chevron will be a big player in the shale oil seen in the future, now that there are adults in the room and the kids have been tamed. My reading points to a huge demand for black gold in the future, in particular carbon neutral oil production as well as gas. And of course renewables will expand as well, but the upside potential is with gas and oil.

    Coal power generation could possibly become extinct so when my funds begin to materialise, if I do buy coal mining companies, they'll be mining metallurgical coal.

    I just don't have enough money. :D

     
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  3. AgStalker

    AgStalker Member Silver Stacker

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    Highly illuminating. Thanks for sharing also.
    I am not familiar with the US sharemarket as such; and looking more at WPL's and STO's prospects.
    Surely coal miners should be avoided altogether though?
     
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  4. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    The world will still need steel. :)
     
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  5. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Modelling from "Thunder Said Energy" points to a trebling of natural gas usage by 2050, so maybe gas might be the sector to be in if we had to make a choice amongst the fossil fuel energy sources. And gas may be an easier buy on the ASX than oil, I don't know.

    Screen Shot 2020-08-28 at 8.45.36 am.png
     
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  6. AgStalker

    AgStalker Member Silver Stacker

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    I thought oil companies produce gas also?

    As for coal, I think they might find ways to use use induction furnaces to replace coal.

    Maybe big oil companies could be a technology play also, per the research.
     
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  7. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Probably a bit of each.

    Dunno how up-to-date this is:

    https://www.engineering.unsw.edu.au...e-oil-and-gas-industry-in-australia/major-oil

    I remember reading the earlier stuff from Thunder Said Energy and they have criteria for their predictions based upon the level of advancement of the technologies associated with each energy source.

    I can't recall the terms they used but basically they categorise each potential technological advancement. So the first category may be technologies that are currently purely speculative, or at say the lab level only, the next may be currently commercial trials, whilst at the most confident level are technologies that currently have patents filed or pending approval and look like they could work. They then do a cost analysis on these technologies looking at cost/unit of energy returned. Their methodology is the reason why things like technologies around offsetting emissions from burning coal for power or increasing nuclear power usage rank at the lower end of their upside potential for future energy sources. They do a lot of work looking at patents being filed to work out which companies are at the forefront of tech development.

    One thing they are resoundingly confident upon is that humanity's future energy needs will far surpass our currently available technologies/methods of production. So whilst oil may not gain any greater % of market share in the future, the amount of oil we need in the future will probably still be more than we use today.

    So next time you read some 20-something or middle-aged leftie on FB ranting about the government giving approval for the expansion of some gas or oil exploration rights and how we should be turning to renewables, you know she's an idiot who has no clue about our future energy needs. :p
     
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  8. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Thanks for the heads up. I used to look at Peabody a couple years ago, and thought the company went bankrupt, and now it's back again and there's talk that it might go bankrupt the 2nd time... Peabody mines a lot of coking coal but the company has terrible track record. ARLP is a better run company but does mostly thermal coal. ARLP is now $3.29. EPS in 2019 is $1.85, 2018 is $2.50 and 2017 is $2.94, 2016 is $3.39 and 2015 is $3.20. Share price is basically almost the same as last year's average EPS.

    The figures look too good to be true. To give an idea, it's like buying a kilobar of silver, get a free 10 oz bar immediately, and then have an option to sell the kilobar back to the seller a year later at 20% premium. :D

    But nowadays, the market has no rationale, pricing is all distorted. I purchased a tech stock, which hasn't made any money, in March that went up 4 folds, it has beaten all my mining stocks. For me, I'm only concerned about accounting fraud. As long as the company doesn't go bust as a result of fraud, the stock price can still go up.
     
    Last edited: Aug 28, 2020
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  9. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Bought 650 ARLP for starter. Yes it’s thermal coal but I can foresee they will need to use some coal if they are to have electric vehicles in the future. If they ban fracking, there won’t be enough cheap NG to produce electricity. Either way, coal won’t die once we get past the virus induced depression. But provided the company doesn’t go bust first before prices recover.

    Found a met coal producer HCC.
     
    Last edited: Aug 28, 2020
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  10. AgStalker

    AgStalker Member Silver Stacker

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    WOW! You guys are a well of knowledge.
    Thanks for sharing your thoughts.

    I was amazed at Rob West; how young he is and how comprehensive his analysis was.
    As an old codger, I must tip my hat to the millennials.

    Now you guys have got my mind in a spin.
    I am concerned with the ESG push; with coal being one of their targets.
    I wonder if platinum could come to table to help "scrub" the exhausts.

    As for stocks mentioned; I know that the US stock market is 50x ours in Australia
    but I have never ventured outside of Commsec.
    (And their fees for International share trades are abhorrently high for a small investor as myself.)
     
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  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Which also means that there are opportunities for those companies that can reduce their carbon footprint, like Equinor for example:

    https://www.equinor.com/en/how-and-why/climate.html

    I'm going to check this resource out too: https://www.iogp.org/watch-learn/
     
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  12. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Eventually, everything boils down to price. If price is too high, then government must subsidise the difference. Do governments have money for environmental subsidies when boomers start to demand their payout? Or maybe they will opt for nuclear? Nuclear is "cleaner" than fossil fuel, but it's not cheap also. NG is currently cheap but NG depends on fracking which is already dropping off.

    The pandemic and economic decline in the West has shown that you can't continue to outsource your manufacturing and hope that other countries will use cheap energy (coal) to manufacture your renewable infrastructure cheaply while they pollute their own environment. Once the West needs to produce the dirty carcinogenic gadgets, the equation changes.
     
    Last edited: Aug 29, 2020
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  13. alor

    alor Well-Known Member Silver Stacker

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    looks like US is heading back to use coal, they have too much coal, so its very cheap
    its their turn to pollute the sky

    China will diversify to use nuclear, they have Russian gas piped in
     
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  14. AgStalker

    AgStalker Member Silver Stacker

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    Looks like the US will be Australia's major trading partner soon;
    with all our iron ore (and coal also?) going to US manufacturing.

    American made products well-known for their quality.
    Hope they will continue to use good quality metals instead of plastics;
    and not overprice their labour...... (wonder how they could do that without foreign workforce)
     
  15. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    No it doesn't.

    Of course you can. Manufacturing should go to wherever the comparative advantage is. It's best for consumers and best for the planet.
     
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  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    In an email from TSE:

    "Today's note summarizes all of our work on hydrogen, from half-a-dozen research notes, plus a dozen data-files and models. We are cautious on the green hydrogen economy.
    Costs may remain immutably high due to the laws of physics, abating CO2 for $200-700/ton. Some companies may have over-promised. Opportunities do exist, but they must be chosen very carefully.
    We prefer other options in the energy transition. As always, all of our models are available on our research portal, so you can stress test our assumptions, and any constructive pushbacks are welcome..."

    Edit to add: the cost to purchase their reports is waaaaaaay above our pay grade though @AgStalker. We'll just pick up the crumbs on the periphery. ;)
     
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  17. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Perhaps in Australia? In the USA, a lot of NG is from fracking from my understanding.

    Most of it is due to regulations. A lot of manufacturing today is mostly automated. I’ve been to lot of factories in Singapore in my work, you hardly see people in the production floor. It’s like a 20,000 sq ft room filled with machines and only 1 or 2 persons walking about. Most of the time there are no people.

    Of course you get lots of chemicals discharged through the air and water - as long they are not visible or fatally toxic and not carbon based, they can be discharged, that’s the rule.
     
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  18. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Manufacturing will go to wherever the cheapest production costs are. Which is usually the best outcome.
     
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  19. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Another interesting watch.

    Dr Robin Wright, a "Fish Doctor" gives his views on ESG. The fear of the unknown amongst the general population combined with what he believes to be the industry's poor handling of environmental issues basically have blown out of proportion most of the incidents associated with oil and gas exploration.



    Edit to add: and the future energy mix is a little "crypto" too.
     
    Last edited: Aug 30, 2020
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  20. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    If you take out global warming etc etc (I personally consider fossil oil/gas/coal industry akin to enviromental terrorists) but I recently purchased sizeable amount of Woodside, Santos and Exxon.

    My personal investment view is that they are a neccessary evil and I might as well get paid.....

    Back to OP point tocks like Exxon over a 5 year outlook (NSYE: XOM) is an absolute bargain... at the moment

    I will bet a ten ounce bar that Oil per barrel will be trade above $100 and below $30 few times over the next 5 years.

    Btw if you want to trade American Stocks join brokerages like Stake or eToro dont use traditional online brokerages. It is quite easy and sooooo much cheaper than doing it via traditional brokerage in Australia

    Also if you do sign up to Stake or etoro etc to buy US stocks.... also look at Intel (INTC) shares if you looking at 5 year horizon to double your money and trade out, with certified blue chip companies.
     
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