>>What do you guys think about CDG these days?<<
The only positive thing I can see for CDG in the near future is the possibility of me selling mine. If I do, it is likely to rally.
On the more serious side, I see CDG as being caught in a difficult position with its Venezuelan exposure.
The business in Venezuela is great, and CDG's earnings are likely to continue strong in that region. But Venezuela is a volatile country with some potential for hitting the skids economically (ok, it already has), perhaps forcing choices on where to cut expenditures. But even if they feel a fiscal squeeze, I don't see them killing their cash cow. They should proceed full speed ahead with their E&P programs.
The second issue with Venezuela is the conflict within OPEC. There may be a perception in the market that if OPEC is able to get Venezuela to agree not to cheat on its quota, CDG will take a hit. Again, just because they are pumping less oil doesn't mean that the Venezuelans will cut E&P. But less income from oil does mean less money for expenditures. Perhaps someone here has calculated whether the commensurate rise in oil prices will off-set any decrease in volume. And, of course, if OPEC doesn't get Venezuela to agree to cut production and prices stay low or go lower, then CDG falls with the group.
The third issue in Venezuela is the possibility of worker strikes. I don't know the likely impact these would have. It can't be good, though
Finally, there is the matter of CDG's concentration in shallow water and its land exposure, where the shorter term contracts make them more vulnerable to spending cutbacks prompted by lower oil prices.
Hmmm. Have I said anything positive? It's been a long day. Maybe someone else will give you a bullish perspective. |
