AgAE said:

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Bought XOM at $34. Take profit now and reenter later or hold?

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I'd look to sell covered calls up here. I expect a slight pullback today AH. KSA and Russia have an agreement, but they still need the rest of the cartel to play ball

IrishTxAggie said:

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AgAE said:

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Bought XOM at $34. Take profit now and reenter later or hold?

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I'd look to sell covered calls up here. I expect a slight pullback today AH. KSA and Russia have an agreement, but they still need the rest of the cartel to play ball

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Which covered calls look most attractive?

It's a balancing act of preference really. Choose a strike that you'd be happy with being assigned on and walk away with your profits and then go from there. Choose one along the MA that has some resistance and hope it gets slapped down and you can walk away with the full premium.

Thx Irish. I like XOM and wouldn't mind owning it for the next 36-60 months, but I'd like to skim a bit of call revenue over that time. So what calls would fit that goal? Btw, 'MA'?

MA = Moving Average

I'll pull up my charts tomorrow morning and give a few spots to look at.

IrishTxAggie said:

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MA = Moving Average

I'll pull up my charts tomorrow morning and give a few spots to look at.

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Ty Irish.

With onshore tanks quickly filling, what are people's thoughts on using floating storage via oil tankers.

Are there any oil tanker stocks that are worth looking at and buying?

https://swingtradebot.com/stocks-tagged-as/1727-oil-tanker

CSTXAg92 said:

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IrishTxAggie said:

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MA = Moving Average

I'll pull up my charts tomorrow morning and give a few spots to look at.

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Ty Irish.

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Had a chance to look. I would sell the 6/19 $45 Calls at $2.50 and then buy them back on a dip.

IrishTxAggie said:

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CSTXAg92 said:

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IrishTxAggie said:

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MA = Moving Average

I'll pull up my charts tomorrow morning and give a few spots to look at.

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Ty Irish.

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Had a chance to look. I would sell the 6/19 $45 Calls at $2.50 and then buy them back on a dip.

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Thanks Irish. Couldn't get to it this morning, so I didn't get the $2.50. This afternoon I got $1.69 for the 6/19 $45 Call.

You may want to buy these back in the morning if they fall below $1

IrishTxAggie said:

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You may want to buy these back in the morning if they fall below $1

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Appreciate the heads up. Can I set a limit order with an option, just like with a stock?

Also, since I 'sold to open', I'd want to 'buy to close' correct?

What would y'all think if XOM suspended the dividend for 2 quarters to pocket the $7B and buy something distressed now.

Yes you can set a limit. You'll want to take a look at the delta before you set the limit order so you don't leave much on the table. Yes, you'll do a buy to close.

Both CVX and XOM have debt to assets ratios in the lose 20%... just how low would you have them go on improving their balance sheet? I could understand saying perhaps reduce dividend to maintain a strong balance sheet to keep acquisition opportunities strong but their dividend is one of the reasons some many mutual funds make them a part of their portfolio.

If I was an activist investor I would have them suspend dividend, M&A with stock / cash and buyback stock if still profitable, but I doubt they are.

What's up w/ EOG trending down, while XOM, CVX, RDS, etc are all up?

Majors up, independents down today is a function of two things... oil prices down (hitting independents)- why not majors? Well xom and cvx biggest components of s&p energy- so big passive inflows on broad market will drive up those stocks...

Makes sense. Thanks.

You may be speaking to the void here.

xMusashix said:

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Both CVX and XOM have debt to assets ratios in the lose 20%... just how low would you have them go on improving their balance sheet? I could understand saying perhaps reduce dividend to maintain a strong balance sheet to keep acquisition opportunities strong but their dividend is one of the reasons some many mutual funds make them a part of their portfolio.

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The issue for XOM is free cash flow doesn't support the current dividend payout at these oil price levels (much less acquisitions). Not sustainable for the long-term so future debt levels have to increase if they want to keep paying it. Will just have to hold on a bit and see where oil prices shake out over a few quarters.

2wealfth Man said:

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xMusashix said:

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Both CVX and XOM have debt to assets ratios in the lose 20%... just how low would you have them go on improving their balance sheet? I could understand saying perhaps reduce dividend to maintain a strong balance sheet to keep acquisition opportunities strong but their dividend is one of the reasons some many mutual funds make them a part of their portfolio.

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The issue for XOM is free cash flow doesn't support the current dividend payout at these oil price levels (much less acquisitions). Not sustainable for the long-term so future debt levels have to increase if they want to keep paying it. Will just have to hold on a bit and see where oil prices shake out over a few quarters.

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That's fair if you think this shutdown is a long term issue. I believe that this shutdown will end up being limited. This, downstream demand will be able to take advantage of the low oil price (which I think will last much longer compared to drop in downstream demand) and take advantage of being an integrated oil company. This is unlike CVX, which has much lower exposure to downstream compared to their peers.

Edit to add:

XOM had a capacity of 5.1MM bpd compared with CVX of 1.9 MM bpd. This figure is a few years old so both may or may not be less, but the point still stands.

xMusashix said:

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but their dividend is one of the reasons some many mutual funds make them a part of their portfolio.

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Obtaining competing assets at cheap prices will bring long term shareholder value as much as anything

Neither company needs to cut the dividend to buy assets. What a strange statement.

In a general sense, companies like Exxon and Chevron should have healthy dividends. How are they creating shareholder value as a resource extraction company if they aren't?

But, there's an incredible opportunity to buy some more assets in the coming weeks. Will be interesting to see if the executive team is willing to weather a stock ding when they reduce dividends so they can go shopping.

Cutting capital expenditures 33 billion to around 23 billion, not cutting dividend

I agree with the points about the dividend being unsustainable at current cashflow levels, but having never cut the dividend and always seeming to tout the strength of said dividend makes me think this will have to go on for a long time before they do anything to it. I think they are more likely to sell off assets before cutting the dividend.

Good WSJ article this morning where Woods says the $10B budget cut won't affect production very much (may have an impact in 2021). Makes me wonder if some of that $10B isn't going to be put towards a couple of onshore US acquisitions. $10B is about to be able to go a long way. Maybe they finally pull the trigger on Endeavor?

That is a massive cut and probably 2x what I was expecting. Permian officially dead.

Yes capex cuts now won't impact 2020 production much at all just given the lag to first production from capex.

$10 b capex cut was inline with what I was thinking and I agree the divi cut would happen if this low price (sub $40) sustains for another 6 months.

The 1Q guidance implies a loss of $600mm on earnings... street (albeit stale) was expecting +$1.4 B. Even more updated numbers were expecting a gain of a few hundred million. I would imagine the outspend/cash burn in 1q is going to be a big number

What are your thoughts on the the majors using shale as a short cycle option for their larger portfolios ?

I think they are learning that the proper way to develop (mega pads), it's not that short cycle, and economics aren't as good as advertised when you consider parent/child relationships...

Reserves are there, we just need higher prices to be really viable ($60 for most). So I think majors will continue to have a presence but I think both XOM and CVX will abandon their 1 mmbld targets just as PXD and CXO did several years ago.

I continue to think that CVX has the preferred position given their minerals.

I agree. I did not think through the scale aspect. From a major's perspective this may be a short-cycle project, however, it is difficult to fully understand in that context vs. independents

I really wished I would have backed the truck up on sub $60 CVX stock a few weeks ago. Anybody think we'll see it below $70 this month?