My Downstream Oil & Gas Recovery Operations

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Last week, I blogged about My Upstream Oil & Gas (O&G) Rescue Operations. This week, the focus is on my downstream O&G stocks. Upstream O&G refers to the exploration and production of crude oil, while downstream O&G refers to the processing of crude oil into refined oil products such as gasoline. If you refer to the profit contributions at oil majors such as Exxon Mobil, BP, … [Read more...]

My Upstream Oil & Gas Rescue Operations

If you have been following my blog in recent months, you would know that I have been blogging about the Oil & Gas (O&G) industry, starting with oil and moving down the industry value chain to Exploration & Production (E&P), Offshore Support Vessel (OSV) and finally ship/rig building sectors. It is time to string everything together to discuss my rescue operations for the upstream … [Read more...]

Is Keppel Corp’s Provision for Sete Brasil’s Orders Adequate?

When both Keppel Corp and SembCorp Marine announced their financial results for FY2015 earlier this year, they made provisions of $230M and $329M for Sete Brasil's orders respectively. SembMar's provision is 43% higher than Keppel Corp's, even though SembMar's orders ($7.0B) are only 13% higher than Keppel Corp's ($6.2B). The big question is whether Keppel Corp's provision for Sete Brasil's orders … [Read more...]

The Type of Debts O&G Companies Have Matters

Swiber shocked the stock market on Thu by announcing that it had applied to wind up the company. This is unexpected because based on latest financial results for 1Q2016, Swiber is still generating a positive operating cashflow. Anyway, the latest on this episode is that Swiber has applied to withdraw the winding-up application and apply for judicial management instead. The issue in this episode is … [Read more...]

Keppel Corp – A Good Captain Sailing Through Rough Waters

If you had read my previous post on How Will Keppel Corp Navigate the Oil Crash?, you would know that I am ready to sell Keppel Corp before the full force of the storm hits it. Yet, I have to admit that Keppel Corp's management is doing a pretty good job in steadying the ship given the circumstances which they have not much control over. The recently released financial results for 2Q2016 reaffirms … [Read more...]

How Will Keppel Corp Navigate the Oil Crash?

Keppel Corp is a favourite stock among Singapore investors, given its strong earnings and good dividends (prior to the oil crash in Jun 2014). I have it in my portfolio too, after it came off its high 6 months later. Having held it for 1.5 years and sitting on paper losses, I am beginning to reach a conclusion over whether I should continue to hold or sell the stock. Do note that this post … [Read more...]

Is Brexit Just Noise?

And so, Brexit fears went as quickly as they came. Within 4 trading days, the Straits Times Index had recovered all of its losses from news of the Brexit referendum, giving very little time for investors to either buy or sell. Does the speed at which Brexit fears came and went and the relatively limited damage to the stock market make Brexit a non-event and noise to be ignored by investors of all … [Read more...]

Understanding Shipbuilders’ Balance Sheets

By now, it is common knowledge that ship and oil rig builders are going through a difficult period with the low oil price resulting in customer bankruptcies, order cancellations and deferments. How are the balance sheets of ship and rig builders affected by these events? By understanding the effects of these events, you can predict how the balance sheets of ship and rig builders will look like in … [Read more...]

What’s Next for Brexit?

I seldom like to blog about the latest financial news, primarily because I am a slow but deep thinker. Nevertheless, after the financial mayhem that Brexit caused on Fri, Brexit was at the top of my mind. So, I might as well pen down my thoughts. Furthermore, blogging helps to sharpen the thoughts on it. The current thoughts that you see in this post are already the second iteration. The first … [Read more...]

Lessons for Investing in OSV Companies from Shipping Trusts

I used to own a number of shipping trusts and lost heavily in them during the Global Financial Crisis (GFC). Like shipping trusts, Offshore Support Vessel (OSV) companies own and charter ships to other Oil & Gas (O&G) companies. Are there any lessons that shipping trusts can teach us about OSV companies? Shipping trusts buy ships and charter them out to shipping companies on long-term … [Read more...]

The Economics of An Oil Exploration & Production Company

Last week, I mentioned that the Exploration & Production (E&P) spending budgets of oil majors hold the key to the recovery of most Oil & Gas (O&G) companies. Moreover, E&P companies are the most direct beneficiaries of the recent recovery in oil price among all O&G companies. This week, we will explore the economics of a small E&P company listed on Singapore Exchange -- Interra Resources. Interra … [Read more...]

The Missing Link Between Oil Price & O&G Profitability

Oil price has moved higher to almost US$50 per barrel recently. Yet, there is a continuous stream of bad news from Oil & Gas (O&G) companies. We had Linc Energy going to voluntary administration in Apr, Ezra reporting quarterly losses of US$283 million at the same time and Technics Oil & Gas going into judicial management recently. Is the disparity between oil price recovery and bad … [Read more...]

Prefs and Perps are Generally Inferior to Stocks and Bonds as an Investment Form

I have been investing in preference shares (prefs) for many years, so much so that I had forgotten that as an investment form, prefs are actually inferior to stocks and bonds. In fact, prefs have been the cornerstone of my equity-centric investment strategy, saving my equity portfolio during severe market crashes, as described in Behind Every Successful Bear Market Recovery is A Cash-Like … [Read more...]

Do Hyflux’s 6% Perps Have Sufficient Margin of Safety?

Hot on the heels of Aspial, Perennial and Oxley, Hyflux has launched an IPO for its retail 6% perpetual capital securities (perps). I used to own its existing 6% preference shares when it launched in 2011. However, that was before I calculated whether it had sufficient margin of safety based on Benjamin Graham's criteria. After I calculated the figures, I sold it off in Jan 2014. Hyflux's … [Read more...]

Understanding Saudi Arabia’s Game Plan on Oil Price

Is the decline of oil price since Jun 2014 a cyclical decline or a structural change? This question has important implications, as it affects whether Oil & Gas (O&G) stocks, which have been severely beaten down, are bargains. If it is a cyclical decline, it is only a matter of time before oil price recovers to higher levels and good business returns to the O&G companies. However, if it … [Read more...]

The Demand and Supply for Oil

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I have quite a number of Oil & Gas (O&G) stocks in my portfolio. Yet, I never go and find out how do the demand and supply curves for oil look like, until Jan this year. The demand and supply curves would provide a clear picture of the territory upon which the battle of O&G would be fought. I always thought that demand would be inelastic while supply would be elastic. It turned out … [Read more...]

Understanding the Accounting for Joint Ventures

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Perennial has successfully launched its second, 4-year, 4.55% retail bond this week. For a discussion on whether the bond has sufficient margin of safety, you can refer to the analysis for its first retail bond here. The purpose of this post is to discuss the accounting treatment of joint ventures (JVs) and associates, using Perennial as an example as it has a fairly detailed breakdown of … [Read more...]

Possibly The Worst Time to Invest – 2 Years On

About 2 years ago, I blogged about setting up a passive portfolio of 70% stocks and 30% bonds and wondered if it could be the worst time to invest. I updated the status of the portfolio a year later in Possibly The Worst Time to Invest – A Year On. In fact, I believe that nothing should stop us from investing and I initiated a second, more spicy passive portfolio last year. You can read more about … [Read more...]

Valuable Info That You Can Only Get From AGMs

It is Annual General Meetings (AGMs) galore these 2 weeks. For most of the past 18 years that I have been investing, I have given AGMs a miss. It was only in the last 2 years that I began to attend AGMs, and I find that there are valuable information that you could only get from AGMs. For a start, very few CEOs are going to volunteer bad news in their Annual Reports or financial statements. … [Read more...]

My Portfolio of Stock Blogs

Besides having a portfolio of stocks, do you also keep a portfolio of stock blogs? I do, and they have made me both a better investor and a better person. Here are some of the stock blogs in my blog list (visible on the desktop version of this blog). BigFatPurse BigFatPurse is one of the few blogs that I always read. I like it because it does not just talk about stocks, but also investor … [Read more...]