Analysts,...they are using the 2nd quarter data, like the rest of us. Things change. I will change my position in PWI.un if 3rd quarter data shows a negative trend worse than the others.
Nice slide show by Peters here, compare to other trusts,...
http://www.primewestenergy.com/corpres13/petersco.htm
If the market listened to good fundamental analysis, I guess all stocks would be much lower. P/E doesn't seem to mean much to stock market participants because all we do is vote every day with our emotions. PWI.un doubled their production, doubled their proven reserves and lowered their costs per btu. I'm not smart enough to pick the bottom, so the best thing for me to do is slowly average in over a year or so. If you are right, I will still get some of my stock at the same price you do.
PWI.un,...figured it was beaten down when it went below book value (it's production/share, cashflow/share, profit/share are not out of line with it's peers), while the rest of the o&g trusts I looked at were 1.2 to 1.7 book. NCF.un touched it's book value,...that's why I bought it. Figured both would rebound if oil and gas prices stabilized.
PWI.un,....CIBC, HSBC, and Nesbitt are selling as much as they are buying,...the question is for whom. Pretty clear that large players are dumping positions, but new buyers are being found and large crosses are occurring daily.
Even if this trust averages a nickle per month for the next two years, it will yield in excess of 10 percent per year for me at my cost base. That beats inflation, tbills, and most bonds. Not too many stocks can touch it either. Wonder how many investors or funds have a ten year average of 10 percent per year? I imagine sometime in the next ten years, the price of oil and gas will balloon enough to allow me to get a sizable capital gain.
Got the current recommendations on the PWI.un site.
Brokerage Name of Analyst Current Recommendation
BMO Nesbitt Burns Gordon Tait Market Perform
Canaccord Capital Doug Sims Buy
CIBC World Markets David Ramsay Hold
First Energy Daryl Rudichuk Buy
Global Securities Marcel Brichon Buy
Merrill Lynch Alice Sun Accumulate
National Bank Financial Dirk Lever Hold
Peters & Co. Ltd. Andrew Boland Reduce
Raymond James Equity Roger Serin Market Perform
RBC Dominion Securities Petro Panarites Neutral
Scotia Capital Brian Ector Buy
Yorkton Securities Mark Heim Buy
Interesting piece here,..
http://www.canada.com/montreal/montrealgazette/archives/story.asp?id=63B19813-C773-48FE-98B8-54855545325F
Drillers are scrambling
Less demand forces Alberta's industry to tighten its belt
BRYANT AVERY
Montreal Gazette
Tuesday, October 09, 2001
The drilling industry is tightening its belt, pinched by declining demand for services in what was expected to be a year of endless growth.
"We can certainly see things softening out there," said Mike Heier, CEO of Trinidad Drilling. "There are fewer holes to do."
Trinidad recently announced it has revised its expectations for the rest of 2001. Only 50 per cent of its 20 drilling and well-service rigs are operating. "Every driller out there right now is scrambling."
The industry's umbrella group, the Canadian Association of Oilwell Drilling Contractors, has revised its projections for 2001. President Don Herring said there will be 30-per-cent fewer rigs working in the second half of the year than forecast in April.
"We'll still have the best year of drilling ever," Herring stressed. The total will be about 17,300 wells compared with 16,507 last year. But the April prediction had called for 19,455.
It's the current numbers that are distressing. On Oct. 2, there were 340 rigs out of 639 working, or 53 per cent. Last year, in the same week, 67 per cent of them were in the field, and in 1997, the activity was at 91 per cent.
"It's challenging," said Hank Swartout, president of Precision Drilling, Canada's largest drilling firm, with 220 rigs. Eighty of Precision's are down, meaning about 1,500 fewer people are getting paycheques.
"We have a no-hire freeze on now," Swartout said. "We're a service company, and we have to go with the flow."
Heier and Swartout said the competition is so fierce for the remaining work that they have had to take some contracts at very low profit margins.
The causes of the slowdown can be traced to the United States and its demand for natural gas. The Sept. 11 terrorist attacks in the U.S. had an immediate impact, with the stock of oil and gas firms plunging, airlines grounding their planes, and travelers canceling trips.
"For a week or two, no one wanted to even return calls," Heier recalled.
The terrorist actions served to solidify recessionary trends in the U.S. Herring noted that the U.S. demand for gas is off by about three billion cubic feet per day, out of a previous average of 60 billion per day. "The big question is when will demand for gas in the U.S. turn around."
"Gas is what is driving Alberta," Swartout agreed. He doesn't expect a full revival of demand until 2003. Precision is adding rigs only when there are firm contracts.
While drillers are picking up pessimistic signals, major oil and gas producers show a brave face.
Alberta Energy Co. has made no changes in its drilling program for the year, said spokesman Alan Boras. But 1,068 of AEC's expected 1,300 drilling projects were completed in the first half of the year
. "And everyone is aware of the changes in price," Boras said, referring to recent continental gas indexes at around $2 per gigajoule.
Nadine Barber, speaking for Anadarko Energy Canada, which bought Berkley Petroleum last year, said her firm is still "bullish on gas." But Barber paraphrased Anadarko's chief executive: "We have not put on the brakes, but we have also not necessarily kept our foot on the accelerator."
At the Canadian Association of Petroleum Producers, vice-president Greg Stringham said the drilling industry's lower projections are no surprise. CAPP had forecast 17,000 wells for 2001.
Says Heier: "It's going to be an OK winter, but it's not going to be as insane as we expected." |
