The Oil & Gas Consolidation Is Coming

1,406 views

We are soon to enter the next phase of the oil price collapse, which will take the form of industry wide mergers and acquisitions, stitching together failed businesses where the cash rich emerge on top.

Although I have been perhaps loyal to a fault with this industry, I have also warned of being on the wrong receiving end of just this very development from the start. Following BAS’ latest earnings report, management talked about this looming reality at some length.

The entire industry is failing and some are on the cusp of insolvency. Although the Saudi’s are failing in their alleged goal of destroying the US space, there will be no dawn for many of these highly leveraged and small players. BAS and others are preparing to pick through the carnage and buy out their assets for pennies on the dollar.

Those who have not maintained their asset rollover plans will be discarded via hard default; no savior come for them.

Prepare yourselves…

Sold Out Of ALDW For $25.77

1,213 views

So far for 2015, it has proceeded very much like the end of 2014 in both scope and suffering endured by my person. Summer is coming to a close and it is time to make some preparations.

I wanted more cash; watching everything that is unfolding, and knowing the frequency of recessions in the United States, I have this horrible fear that we are not done going lower yet. China is teetering on the edge of ruin; a silly place that encourages a 5:4 male to female ratio, that likes to build huge train transit systems to everywhere but where they need to be, and that loves constructing entire Potemkin cities utterly devoid of people.

So I sold entirely out of ALDW. This is exactly what it looks like; selling winners and holding on to losers. I took my almost 40% gain and walked.

The trouble is that this 40% is counterbalancing some pretty ruinous action on the other half of my portfolio. HCLP has sunk lower that I ever believed HCLP could sink. BAS is a smoldering pile of ruin. VOC…don’t even talk about it.

The oil trade is dead, brought to the end in a most severe fashion. It is hardly the only tale of sorrow, but it is perhaps the worst.

And if we see Recession 2015: Welcome The Fuck Back materialize (trademark), well then…

Oil would stay down and ALDW and all fuel ventures would join them overnight. No thank you.

At this junction, betting we don’t go into a recession is equivalent to just betting on oil. I don’t need complicated hedges, thank you very much. They’re more likely to strangle me at inconvenient moments than actually help here.

If the recession fears don’t pan out, then make no mistake everything will be going much higher very soon.

Oil Treading Water

1,644 views

Another disappointing inventory report sent oil down about 1% over the past 24 hours. Despite this, the oil names are holding up okay. BAS, HCLP, and VOC were all up today, and ALDW was down if you can imagine.

We’ll see what tomorrow brings. The oil and energy patch is down from the recent top, but this is a process we are working through.

See you tomorrow.

I Seem To Be Experiencing A Correction

1,087 views

Welcome back and how I did miss you all while I was away. My 9th floor office had that cold air of abandon wafting through it for the better part of forty-five minutes, before the warmth of the hearth drove it out.

The recent days have brought a correction in my positions, with BAS diving back below $10, HCLP testing $30, and some others also wallowing. It is hard for me to read too much into this, at the moment. The EURUSD is running back to test 1.10 and bonds are rallying again. At hand is the question of whether we are to retest the lows of the damage or will find support.

But for me this question is superficial in a sense. BAS in particular was up a great sum and so though we have corrected significantly, it’s nothing I wouldn’t expect from a distressed asset. My positions are derived from non-technical details mostly so while it’s difficult to watch this sort of thing play out, it’s not material.

The summer months are upon us now.

A Break From Vacation

1,814 views

Hello all and good morning. Welcome to the 9th floor, where Cain Hammond Thaler has returned for a few hours in this dreary rainy afternoon to work through some paperwork, before gathering his coat and hat and heading out the door again.

The big news for the 9th Floor out last week was earnings out of HCLP and ALDW.

HCLP took a hit on news that they offered some concessions to customers, who are all hurting from low oil prices and desperate to get their operating costs down. It’s unclear what the value of those concessions are to me, at this point, but the trade off here is that for momentary pricing concession, HCLP got customers to lock into greater volumes and contract durations. Provided those customers survive (and HCLP is obviously betting that they will), HCLP is sitting on a pretty payoff down the line.

Outside of that, HCLP also entered into a partnership to develop an energy rail hub in the Permian and DJ basins. Does this sound like a company prepared for US fracking to dry up? HCLP is betting directly that we’ll be back to good times in the US oil market by the second half of this year.

ALDW announced a solid earnings beat, with earnings per share rising to $0.39 per share, up from just $0.01 per share from the same quarter in 2014. Income available to shareholders rose to $0.30 per share, up from $0.06 year over year.

ALDW is benefitting greatly from the lower WTI prices. This company is the hedge to my positioning, should I prove dreadfully wrong. If oil prices keep spiraling lower, ALDW should help keep my head above water as their operations outpace from cheap input costs.

The beauty about ALDW is that yes they are doing great because WTI prices are way down, but when I looked through their books I liked them so much I would have bought them even if it wasn’t.

That’s all for now friends. I shall see you later this week (turns the light off).

The Oil & Gas Consolidation Is Coming

1,406 views

We are soon to enter the next phase of the oil price collapse, which will take the form of industry wide mergers and acquisitions, stitching together failed businesses where the cash rich emerge on top.

Although I have been perhaps loyal to a fault with this industry, I have also warned of being on the wrong receiving end of just this very development from the start. Following BAS’ latest earnings report, management talked about this looming reality at some length.

The entire industry is failing and some are on the cusp of insolvency. Although the Saudi’s are failing in their alleged goal of destroying the US space, there will be no dawn for many of these highly leveraged and small players. BAS and others are preparing to pick through the carnage and buy out their assets for pennies on the dollar.

Those who have not maintained their asset rollover plans will be discarded via hard default; no savior come for them.

Prepare yourselves…

Sold Out Of ALDW For $25.77

1,213 views

So far for 2015, it has proceeded very much like the end of 2014 in both scope and suffering endured by my person. Summer is coming to a close and it is time to make some preparations.

I wanted more cash; watching everything that is unfolding, and knowing the frequency of recessions in the United States, I have this horrible fear that we are not done going lower yet. China is teetering on the edge of ruin; a silly place that encourages a 5:4 male to female ratio, that likes to build huge train transit systems to everywhere but where they need to be, and that loves constructing entire Potemkin cities utterly devoid of people.

So I sold entirely out of ALDW. This is exactly what it looks like; selling winners and holding on to losers. I took my almost 40% gain and walked.

The trouble is that this 40% is counterbalancing some pretty ruinous action on the other half of my portfolio. HCLP has sunk lower that I ever believed HCLP could sink. BAS is a smoldering pile of ruin. VOC…don’t even talk about it.

The oil trade is dead, brought to the end in a most severe fashion. It is hardly the only tale of sorrow, but it is perhaps the worst.

And if we see Recession 2015: Welcome The Fuck Back materialize (trademark), well then…

Oil would stay down and ALDW and all fuel ventures would join them overnight. No thank you.

At this junction, betting we don’t go into a recession is equivalent to just betting on oil. I don’t need complicated hedges, thank you very much. They’re more likely to strangle me at inconvenient moments than actually help here.

If the recession fears don’t pan out, then make no mistake everything will be going much higher very soon.

Oil Treading Water

1,644 views

Another disappointing inventory report sent oil down about 1% over the past 24 hours. Despite this, the oil names are holding up okay. BAS, HCLP, and VOC were all up today, and ALDW was down if you can imagine.

We’ll see what tomorrow brings. The oil and energy patch is down from the recent top, but this is a process we are working through.

See you tomorrow.

I Seem To Be Experiencing A Correction

1,087 views

Welcome back and how I did miss you all while I was away. My 9th floor office had that cold air of abandon wafting through it for the better part of forty-five minutes, before the warmth of the hearth drove it out.

The recent days have brought a correction in my positions, with BAS diving back below $10, HCLP testing $30, and some others also wallowing. It is hard for me to read too much into this, at the moment. The EURUSD is running back to test 1.10 and bonds are rallying again. At hand is the question of whether we are to retest the lows of the damage or will find support.

But for me this question is superficial in a sense. BAS in particular was up a great sum and so though we have corrected significantly, it’s nothing I wouldn’t expect from a distressed asset. My positions are derived from non-technical details mostly so while it’s difficult to watch this sort of thing play out, it’s not material.

The summer months are upon us now.

A Break From Vacation

1,814 views

Hello all and good morning. Welcome to the 9th floor, where Cain Hammond Thaler has returned for a few hours in this dreary rainy afternoon to work through some paperwork, before gathering his coat and hat and heading out the door again.

The big news for the 9th Floor out last week was earnings out of HCLP and ALDW.

HCLP took a hit on news that they offered some concessions to customers, who are all hurting from low oil prices and desperate to get their operating costs down. It’s unclear what the value of those concessions are to me, at this point, but the trade off here is that for momentary pricing concession, HCLP got customers to lock into greater volumes and contract durations. Provided those customers survive (and HCLP is obviously betting that they will), HCLP is sitting on a pretty payoff down the line.

Outside of that, HCLP also entered into a partnership to develop an energy rail hub in the Permian and DJ basins. Does this sound like a company prepared for US fracking to dry up? HCLP is betting directly that we’ll be back to good times in the US oil market by the second half of this year.

ALDW announced a solid earnings beat, with earnings per share rising to $0.39 per share, up from just $0.01 per share from the same quarter in 2014. Income available to shareholders rose to $0.30 per share, up from $0.06 year over year.

ALDW is benefitting greatly from the lower WTI prices. This company is the hedge to my positioning, should I prove dreadfully wrong. If oil prices keep spiraling lower, ALDW should help keep my head above water as their operations outpace from cheap input costs.

The beauty about ALDW is that yes they are doing great because WTI prices are way down, but when I looked through their books I liked them so much I would have bought them even if it wasn’t.

That’s all for now friends. I shall see you later this week (turns the light off).

Previous Posts by Mr. Cain Thaler