Paul Senior,
I have been long Canadian companies such as ECA and CNQ, U.S. companies APA and APC, and land drillers PTEN and NBR, and even RDC, GSF, and ESV in the past. Currently the only long oil name I hold is PBR from a price of $14 of many years back.
Right now I am short OIH via puts and long DUG. I have never owned SLB and believe the mid- to shallow-water jackup drillers are facing a barrage of pressure from oncoming equipment this fall that will exacerbate the day rate situation for them beyond what the "street" recognizes today. Of course, the OIH could be 100 points higher by then too, along with SLB. If it has always traded at a premium, as you say, there is likely a solid reason behind it such as leadership and niche, position within segment, etc.
What I find peculiar is the rate of change in the earnings and revenues (the second derivative) of the curve which is flattening out. Once you have flat earnings, then the PEG explodes, making that premium unjustifiable subsequently.
You should do well with your purchase, but I tend to trade in and out too frequently, so please take that into consideration. My comments recently have been in light of the USD ramp and the massive move in the ETF. I am looking for a reversion to the mean.
Best regards, |
