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Strategies & Market Trends : John Pitera's Market Laboratory
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To: The Ox who wrote (17234)9/4/2015 11:43:30 AM
From: robert b furman4 Recommendations

Recommended By
isopatch
John Pitera
roguedolphin
The Ox

  Read Replies (2) of 33421
 
Hi OX,

I have sold January 2017 $10 puts in Rig for 3.06 net purchase price of 6.94.

They are about to discontinue their dividend - which I assumed they would.

They have cash per share of 10.37.

The biggest knock on the fleet is it is old.

New rigs being built for delivery in 2016 have been delayed.

They have a lot of old rigs that need to be scrapped or cold stored.

This will reduce overhead and not burn cash.

I had some 2016 january 13 and 10's.Made enough on the 10's to take a loss on the 13's and still get a small profit. If I did it again I'd sell the 10's only.

I have a profit on the 2017 tens more time = motr premium and If you believe oil will be low longer the 2017's are safer.

I'm under water on my ESV's also 2017's. I sold the 20's.

I'd look at the 15's now.
$5.51 cash per share

I have a long time friend who works for Ensco - they'll be a round as a driller and seller of many things out in the Gulf of Mexico.

I have a small position in both but all 2017's.

I think in time, oil will gravitate to $50 - $60 per barrel and these wild card plays will not only be profitable but with the big time premium just hope you get to buy the stock at cash per share levels.

These plays are small and lottery tickets.

They remind me of when the dot,com blew up and you could buy csco at 13 and Amat below 10.00.

Buy them put them in a drawer and fagetaboutem.

Let the time premium do its thing and hope that the saudi's get tired of selling bonds and drawing down their reserves.

I bot to close the 2015 rig puts because I like the KMI puts much better.

I have sold KMI puts at 30 and 32.50 for january 2017 -up on some down on some breakeven mostly.

Time premium will be my friend here.

They are a pipeline company that charges the same fees to transport the crude regardless of how the commodity prices things.

As natural gas displaces coal in electrical generation pipeline business will grow.

This is one of the few sectors with in the energy complex that does not have excess capacity.

I'm sure there is some seasonality to it but we all use natural gas every day.

Pipelines seem to me to painted by the same brush as crude but definitely not subject to commodity swings and very stable demand characteristics vs the drillers.

Hope that helps.

Bob
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