Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (2158)	9/25/2001 8:02:52 PM
From: Frank Pembleton	Respond to of 36161

Iso, to dispel some ankle biting and to clarify the what and the why of my investment views, I’ll address the thread with a little more detail on why I ventured back into the oil sector. This post reflects my thoughts about this situation we are all in: Message 16409139 Note, I'm not a gold bug, nor I'm I an oil bug and before you think I'm totally nuts, there's a slight safety hedge playing integrated companies. If the price of oil shoots through the roof the upstream component benefits, if the price drops the downstream component benefits, also these integrated players have the additional safety benefit of a dividend yield. To clarify even further, upstream means exploration and production; it's the gauge for sustainable growth. Downstream means refining and marketing, including income from gas station and variety stores, this sector of the operation offers more revenue and better profit margins in bad times. Integrated companies like Husky, Petro Canada, Suncor, Imperial and Shell have both upstream and downstream operations. These companies tend to be measured more conservatively, and are not considered growth machines unless you look into the Canadian sector. Alberta is second only to Arabia for its oil export to the U.S., if by any chance there is a disruption in the Persian Gulf (Strait of Hormuz) guess what province becomes strategically important to the U.S. war on terrorism? By the way, there is very little conventional oil left in North America, which leaves us with the tarsand projects here in Alberta. The reason I like Canuck integrated oils is because they're heavily levered in the oilsands. Suncor, for instance, is doubling production this year, they will double production yet again, for 2008 – these guys are growth machines. All the above companies I’ve mentioned are expanding upstream and downstream operations at a nice clip. So it’s really up to you and your view of how long and how dramatic this war is going to be. If it’s finished by the end of the month, a trip into the oils will be an expensive holiday because of world wide economic contraction. If you believe the war to be long, oil will perform as well as gold, if not better long-term. My portfolio allocation break down is 2% cash, 13% Oil and 85% Precious Metals. Regards Frank P.