Hi Joël, nice article. I already own a couple of Norwegian oil companies - many of them went down recently, some very harsh - but aren’t you worried that they can’t sustain the dividend? Based on free cash flow and earnings, other Norwegian oil companies have more ‘wiggle room’ in that area…
Thanks so much. Whenever I get asked if I'm worried about something - the answer is almost always yes. Always lots to worry about. Buyback programs and sustainable dividend policies included. This worry is yet another reason I try to make sure risks are skewed more upward than downward. Right now, Equinor has an EV/EBIT of like 2x. That's the lowest on my watchlist. And its p/s at like 50% of the company. These help me believe I'm not overpaying. Then, a long history, impressive ROCE, a track record of smart capital allocation. These also help me feel (slightly) safer. As does the low debt. You mentioned other oil cos there in Norway. Yes of course. I also like Aker BP for many of the same reasons as Equinor. Then of course there's Vår, which looks great. Much brighter near-term outlook for sure. But I'm uncomfortable with Var's debt level. 5x equity. So they're not on my list for now. Who knows if that's right or wrong. We'll see. Thanks again, good luck, and stay in touch.
Hi Joël, thanks for your reply. Honest, and I agree. I do have AkerBP (too). VAR I don’t dare for the exact same reason. PNOR however I own too and (besides the dividend that was paid out) dropped (and keeps dropping) like a brick 😢
Hi Andy, thanks so much for reading, and good question. My response: I think it always feels a bit too early. Ideally you wait for the exact turning point. But most of the investment advice says you can't time it. Or worse, by the time it's all priced in - the bargains are gone. So I act when things are falling. Also, in the case of most oil companies nowadays, you're getting good value and high income even now. So there's limited downside. But again - it always feels a bit uncomfortable. Hope this helps. Thanks again and stay in touch.
Wow, thanks so much Jeffrey, really appreciate the kind words. And yeah, it's fun but nerve-wracking. It's all just guesses. Hopefully we get a few right. Have a great rest of your day and stay in touch.
Hi Joël, nice article. I already own a couple of Norwegian oil companies - many of them went down recently, some very harsh - but aren’t you worried that they can’t sustain the dividend? Based on free cash flow and earnings, other Norwegian oil companies have more ‘wiggle room’ in that area…
Thanks so much. Whenever I get asked if I'm worried about something - the answer is almost always yes. Always lots to worry about. Buyback programs and sustainable dividend policies included. This worry is yet another reason I try to make sure risks are skewed more upward than downward. Right now, Equinor has an EV/EBIT of like 2x. That's the lowest on my watchlist. And its p/s at like 50% of the company. These help me believe I'm not overpaying. Then, a long history, impressive ROCE, a track record of smart capital allocation. These also help me feel (slightly) safer. As does the low debt. You mentioned other oil cos there in Norway. Yes of course. I also like Aker BP for many of the same reasons as Equinor. Then of course there's Vår, which looks great. Much brighter near-term outlook for sure. But I'm uncomfortable with Var's debt level. 5x equity. So they're not on my list for now. Who knows if that's right or wrong. We'll see. Thanks again, good luck, and stay in touch.
Hi Joël, thanks for your reply. Honest, and I agree. I do have AkerBP (too). VAR I don’t dare for the exact same reason. PNOR however I own too and (besides the dividend that was paid out) dropped (and keeps dropping) like a brick 😢
Even when the numbers look solid, I find these stocks hard to interpret.
Isn’t it bit too early. New lower oil prices haven’t yet showed themselves on companies earning.
Hi Andy, thanks so much for reading, and good question. My response: I think it always feels a bit too early. Ideally you wait for the exact turning point. But most of the investment advice says you can't time it. Or worse, by the time it's all priced in - the bargains are gone. So I act when things are falling. Also, in the case of most oil companies nowadays, you're getting good value and high income even now. So there's limited downside. But again - it always feels a bit uncomfortable. Hope this helps. Thanks again and stay in touch.
Thanks Joel,
Well done. Again, a very interesting and enjoyable read, but more importantly thought provoking too.
And I agree with you, just having a little difficulty pulling the trigger for some reason.
Please keep writing.
Cheers,
Jeff
Wow, thanks so much Jeffrey, really appreciate the kind words. And yeah, it's fun but nerve-wracking. It's all just guesses. Hopefully we get a few right. Have a great rest of your day and stay in touch.