Stay Out of The Oil Patch Part 2 This Time It Ain’t Different

The U.S. stock market is showing signs of fatigue

iShares S&P/TSX Energy (XEG : TSX : $12.25), Net Change: -0.18, % Change: -1.45%
Canadian Natural Resources* (CNQ : TSX : $33.17), Net Change: -1.07, % Change: -3.13%
Suncor Energy* (SU : TSX : $32.13), Net Change: -0.43, % Change: -1.32%

Another week, another drop in the price of oil, oil sector stocks - As We Forecast , the C$ and Canadian equities.

The S&P/TSX lost another 5% last week and erased nearly all its gains for the year.

To make things worse, the U.S. stock market is showing signs of fatigue, and macro risk indicators that
s are all flashing red. With oil prices becoming a gauge of investors’ risk appetite, it seems that only a bottom in prices could halt the slide in global equities.

But with WTI breaking below the key resistance of US$60/bbl, investors are bracing for the worst. There are not many historical parallels of supply-driven oil shocks. Past periods of price weakness have been demand-driven. That said, the current experience shows :
similarities to the 1986 oil shock, when OPEC boosted production to gain market share. Last week, OPEC cut its 2015 customer
demand forecast by 300,000 barrels per day (b/d) to 28.9 million b/d – that’s the lowest level in 12 years. The downward
revision reflects the upward adjustment of non-OPEC supply as well as the downward revision in global demand. In 2015, nonOPEC
oil supply is forecast to grow at by 1.36 million barrels a day to 57.31 million a day. Growth is seen coming mainly from
the U.S., Canada, and Brazil, while declines are expected in Mexico, Russia, and Kazakhstan.

Separately on Friday:
International Energy Agency (IEA) released its oil market report for December. The IEA cut its outlook for 2015 global oil demand growth by 230,000 b/d to 900,000 b/d on lower expectations for Russia and other oil‐exporting countries.
This is the second consecutive year of growth below 1 million b/d. The IEA believes, “barring a disorderly production response, it may well take some time for supply and demand to respond to the price rout.” The IEA adds, “As for demand, oil price drops are sometimes described as a ‘tax cut’ and a boon for the economy, but this time round their stimulus effect may be modest…The resulting downward price pressure would raise the risk of social instability or financial difficulties if producers found it difficult to pay back debt. Continued price declines would for some countries and companies make an already difficult situation even worse.”

REDUCING CAPEX IS THE NEW NORMAL.

Bankers Petroleum* (BNK : TSX : $2.59), Net Change: 0.09, % Change: 3.60%, Volume: 1,717,990
Bankers Petroleum has reduced its 2015 capital guidance to a maintenance level in order to average 21,000-22,000 b/d, in line with its 2014 average.

The company will spend approximately $218 million in 2015, which is within its cash flow and debt utilization means in a $60/bbl realized Brent price environment.

The company intends to reduce its rig count from six to three rigs by early 2015 but remains positioned to respond quickly when oil prices recover by potentially reinstating drilling rigs.

The three focus areas of the company will be: 1) execution of its horizontal drilling program;

2) acceleration of its secondary recovery program; and

3) targeting capital for operational improvements that will result in reduced costs (with projected cost savings of $2-3/bbl in the next two years).

The company remains well positioned for low commodity prices in 2015 with a reported September 30, 2014, cash balance of $88 million and only $104 million drawn on its $224 million line of credit. With the budget, Bankers continues a theme of fiscal responsibility, cash preservation and maintenance of 2014 production levels. In the interim, the company has the
ability to operate within its means while maintaining current production levels. Bankers plans to release its Q4/14 operational
update Tuesday, January 6, 2015.

the dramatic plunge in oil prices has made some shale projects unprofitable. Investors are waking up to the realization that not all shale oil is created equally.

Drilling for oil is extremely capital intensive. Companies often borrow money to fund the exploration and drilling. Now that oil is sitting at just $55, it’s likely to get much more difficult for shale players to get the financing they need after years of low interest and bond rates.

Investors are betting that at least some of these more speculative shale companies won’t survive if oil prices stay low for a prolonged period.

Don’t take our word for it. Just look at the junk bond market, which has been rattled by the energy turmoil. High-yield energy bonds have tumbled almost 10% this month alone, according to S&P Dow Jones Indices.

“It becomes a vicious spiral. If bonds stay where they are, it’s going to be very difficult for these companies to raise new capital to continue to live,” said Spencer Cutter, a credit analyst at Bloomberg Intelligence.

high yield debt
High-yield U.S. corporate energy bonds have tumbled in recent weeks amid the oil price meltdown.

Cash flow negative: Huge energy companies like ExxonMobil (XOM) and Chevron (CVX)have plenty of financial flexibility to weather low oil prices, but that’s not the case for many smaller, highly-leveraged players.

Some of them are cash flow negative, meaning they aren’t generating enough revenue to offset the heavy investments they are making. Up until now, they’ve plugged those holes by selling stock or raising equity.

But $55 oil has changed that equation. Few investors are willing to provide affordable financing.

For example, the bonds of SandRidge Energy (SD), Midstates Petroleum (MPO) andResolute Energy (REN) are trading at distressed levels of just 50 cents or 60 cents on the dollar, according to FactSet.

“It’s hard to go from cash flow negative to cash flow positive on the turn of a dime when the commodity you’re selling falls by 45%,” said Cutter.

 

Defaults ahead:

The cash crunch is likely to be exacerbated by pressure from the banks, which may start reeling in credit revolvers currently cushioning shale companies’ balance sheets.

“Banks are not notoriously friendly in these down cycles. The lack of financing alternatives could speed up the demise” of some companies, said Tim Gramatovich, chief investment officer and co-founder of Peritus Asset Management.

Gramatovich predicted a “considerable” amount of defaults among high-yield energy bonds due to the looming cash crunch.

It is human nature to look for bargains - and destroy your portfolio as you gather losers into what used to be a ” nest” egg.

Look at Seeking Alpha and count the ” analysts” saying Dryships ( DRYS) is going to turn – how none forecast the sub dollar level it now enjoys.

What To Do ?

Here is our recent letter:

Managed Accounts Year End Review and Forecast

November 2014 – 40 % cash position
Gold and Precious MetalsThe largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.
Shipping Sector / Bulk ShippersYou can review our stock market letter athttp://www.amp2012.com to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait.
Oil/ EnergyI am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…

Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Alternate Guaranteed Income Payments

Private client funds Minimum $10,000 Maximum Loan $500,000

Our client is seeking funds to expand their tanker fleet .

Interest 12 % compounded – paid 1% per month

Floating charge of the full $500,000 against the fleet – valued at  more than $ 1 M

 

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email

jackabass@gmail.com OR

info@jackbassteam.com  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

Tax website  Http://www.youroffshoremoney.com

 

Lor Loewen's photo.

Gold Downside Risk Seen As : ‘Significant’

 The author of The Gold Investors Handbook says the worst isn’t over yet for gold after prices erased  this year’s gain.

“Risks are significantly skewed to the downside,” said Bass, who told investors to sell last year before gold’s biggest collapse since 1980. “Much of the support was coming from political uncertainty in Ukraine and what was going on in Middle East,” and those concerns have faded, he said in a telephone interview yesterday.

After bullion’s rally in the first half of the year beat gains for commodities, equities and Treasuries, the metal is heading for a quarterly decline to end out 2014. Demand for precious metals as a protection of wealth has been eroded by the outlook for a strengthening U.S. economy, which helped spark a rally in the dollar .

Gold fell to an eight-month low this week after the Federal Reserve  raised its outlook for interest rates, crimping demand for an inflation hedge. Money managers cut bullish holdings for five weeks, while holdings through global exchange-traded funds slumped to the lowest since 2009.

“Gold is more responsive to the near-term growth momentum in the U.S., rather than long-term inflation concerns,” Damien Courvalin, a Goldman analyst, said . “Interest is lower in gold than it was say 18 months ago.”

Dollar Rally

. The Bloomberg Commodity Index of 22 raw materials slid 5.2 percent in 2014, while the MSCI All-Country World Index of equities rose 3.7 percent. The Bloomberg Dollar Spot Index climbed 4.3 percent.

Bass isn’t alone in predicting the end to this year’s rebound that drove the best first-half performance for gold since 2010. Societe Generale SA’s Michael Haigh, who also correctly forecast 2013’s slump, said in a report this month that he expects the metal will drop more than 5 percent by 2015’s third quarter. Investors, who in June and July were adding to bullish wagers, may be starting to agree with analysts, taking their short holdings on the metal to the highest in three months.

Muted Inflation

After 12 straight years of gains, gold tumbled 28 percent in 2013 as an equity rally and muted inflation prompted some investors to lose their faith in the metal.

Bass on April 10, 2013, issued a sell recommendation, before a two-day 13 percent plunge that ended April 15, 2013, and left prices in a bear market. The slump wasn’t foreseen by most money mangers, who had increased their bullish bets by 11 percent the prior month. The investors cut holdings to a six-year low by December.

Now, Currie expects bullion to drop to $1,050 by the end of 2015, maintaining a forecast from the start of the year. SocGen’s Haigh sees prices at $1,150 in the third quarter next year, he said in a report e-mailed Sept. 12. The metal reached this year’s peak of $1,392.60 in March amid violence in Ukraine.

Citigroup Inc.  lowered its forecast for next year amid expectations of U.S. rate increases, while the “risk-related source of support has been diminished.” The bank cut its outlook to $1,225 from $1,365. UBS AG reduced it three-month outlook yesterday by 7.7 percent to $1,200.

Target Price

“Turbulence is still there, but is not escalating any further, which we believe will help gold decline to our target,” Courvalin said.

“Our inflation forecasts are pretty subdued,” Bass said.

Inflation expectations, measured by the five-year Treasury break-even rate, this week reached the lowest since June 2013.

 

“Ultimately, what drives fair value for gold prices is the U.S. real interest-rate environment,” Courvalin said.

 

It is human nature to look for bargains - and destroy your portfolio as you gather losers into what used to be a ” nest” egg.

Look at Seeking Alpha and count the ” analysts” saying Dryships ( DRYS) is going to turn – how none forecast the sub dollar level it now enjoys.

What To Do ?

Here is our recent letter:

Managed Accounts Year End Review and Forecast

November 2014 – 40 % cash position
Gold and Precious MetalsThe largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.
Shipping Sector / Bulk ShippersYou can review our stock market letter athttp://www.amp2012.com to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait.
Oil/ EnergyI am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…

Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Alternate Guaranteed Income Payments

Private client funds Minimum $10,000 Maximum Loan $500,000

Our client is seeking funds to expand their tanker fleet .

Interest 12 % compounded – paid 1% per month

Floating charge of the full $500,000 against the fleet – valued at  more than $ 1 M

 

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email

jackabass@gmail.com OR

info@jackbassteam.com  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

Tax website  Http://www.youroffshoremoney.com

 

Lor Loewen's photo.

Year End Tax Advice On Investment Gains/ Losses / Income

Sell Your Losers

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Thinkstock

Not all stocks and mutual funds fared well this year, despite a 13.2% rise for the S&P 500 through December 1. If you own investments in a taxable account, such as a brokerage account, that are worth less than you paid for them, consider cutting them loose before year-end. You can use the losses to offset capital-gains income.

If your losses exceed your gains, you can deduct up to $3,000 from your other taxable income. Losses that exceed that amount can be carried forward to future years.

Delay the Sale of Investment Winners

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Thinkstock

If you’re about to rebalance your portfolio by selling some winners so you can redeploy the cash elsewhere, remember that waiting until after January 1 means you won’t have to report the gains as part of your 2014 income. Never make an investment move based solely on the tax impact, but don’t ignore it, either.

 

Defer Income Until 2015

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Thinkstock

If you think a year-end bonus is in the works, ask that it be paid next year. That way, it won’t increase your 2014 taxable income. (If the firm has already announced that it will pay bonuses in December, though, it’s 2014 income even if you don’t cash the check until January.)

If you’re self-employed, send bills to clients in late December so you won’t receive payments until after the first of the year.

Alternate Guaranteed Income Payments

Private client funds Minimum $10,000 Maximum Loan $500,000

Our client is seeking funds to expand their tanker fleet .

Interest 12 % compounded – paid 1% per month

Floating charge of the full $500,000 against the fleet – valued at  more than $ 1 M

- see contact information set out below.

 

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Investors will not wait for the government to sort things out and then lurch to the next crisis.What are you doing ?

Who Is Designing Your Offshore Strategy ?( do you have a strategy?)

The most important thing that you MUST do is seek advice from a qualified advisor – Jack A. Bass, B.A. LL.B. (someone who understands international tax jurisdictions and tax law) . Your advisor must understand the benefits of particular offshore jurisdictions. It is your responsibility to take action.

In most jurisdictions you can set up your offshore company in as little as a few weeks. We most often start the process with registering a company name and sending in the right documentation and supporting documents for the incorporation and a bank account(s) or merchant account for you and your business.All of this can be conducted by internet on in rare cases we will attend in person – for you.

      You can start today – for a confidential / no fee/ no obligation  initial inquiry 

Email

jackabass@gmail.com OR

 info@jackbassteam.com

 OR call Jack direct at 604-858-3202  

http://www.youroffshoremoney.com

Get Out Of The Oil Patch, Get Out of Dry Bulk Shipping – New Paradigm Update

It is human nature to look for bargains - and destroy your portfolio as you gather losers into what used to be a ” nest” egg.

Look at Seeking Alpha and count the ” analysts” saying Dryships ( DRYS) is going to turn – how none forecast the sub dollar level it now enjoys.

“We could definitely see $55 next week,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “We are probably going to see some violent trading.”

‘Drifting Down’

Skip York, a Houston-based vice president of energy research at Wood Mackenzie Ltd., said the next price target is $45.

“The market hasn’t seen the response they’re looking for on the supply side yet,” York said. “We’re now in this environment where I think prices are going to keep drifting down until the market is convinced, until the signal that production growth needs to slow has been received and acted on by operators.”

Are you still a client of a portfolio manager urging you to ” stay the course” – or worse, telling you to add to losing positions and losing sectors?

small- and mid-capitalization stocks, both E&P and Oil Service, are trading ~60% below their recent peaks, on average.

  • A growing number of stocks are priced at less than one-quarter of their peak prices achieved less than six months ago.

This is what is happening to oil TODAY ( Friday Dec. 12)

U.S. oil drillers, facing prices that have fallen below $60 a barrel and escalating competition from suppliers abroad, idled the most rigs in almost two years.

Rigs targeting oil dropped by 29 this week to 1,546, the lowest level since June and the biggest decline since December 2012, Baker Hughes Inc. (BHI) said on its website today. Those drilling for natural gas increased by two to 346, the Houston-based field services company said. The total count fell 27 to 1,893, the fewest since August.

As OPEC resists calls to cut output, U.S. producers from ConocoPhillips (COP) to Oasis Petroleum Inc. (OAS) have curbed spending. Chevron Corp. (CVX) put its annual capital spending plan on hold until next year. The number of rigs targeting U.S. oil is sliding from a record 1,609 following a $50-a-barrel drop in global prices, threatening to slow the shale-drilling boom that’s propelled domestic production to the highest level in three decades.

“It’s starting,” Robert Mackenzie, oil-field services analyst at Iberia Capital Partners LLC, said by telephone from New Orleans today. “We knew this day was going to come. It was only a matter of time before the rig count was going to respond. The holiday is upon us and oil prices are falling through the floor.”

ConocoPhillips said Dec. 8 that the Houston-based company would cut its spending next year by about 20 percent, deferring investment in North American plays including the Permian Basin of Texasand New Mexico and the Niobrara formation in Colorado. Oasis, an independent exploration and production company based in Houston, said Dec. 10 that it’s cutting 2015 spending 44 percent to focus on its core area in North Dakota.

What To Do ?

Here is our recent letter:

Managed Accounts Year End Review and Forecast

November 2014 – 40 % cash position
Gold and Precious MetalsThe largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.
Shipping Sector / Bulk ShippersYou can review our stock market letter at http://www.amp2012.com to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait.
Oil/ EnergyI am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…

Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Alternate Guaranteed Income Payments

Private client funds Minimum $10,000 Maximum Loan $500,000

Our client is seeking funds to expand their tanker fleet .

Interest 12 % compounded – paid 1% per month

Floating charge of the full $500,000 against the fleet – valued at  more than $ 1 M

 

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email

jackabass@gmail.com OR

info@jackbassteam.com  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

Tax website  Http://www.youroffshoremoney.com

 

Lor Loewen's photo.
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Teekay LNG Partners LP BUY – LNG Is The Only Viable Portion of Shipping Sector

TGP

 NYSE : US$38.06 BUY 
Target: US$46.00 

COMPANY DESCRIPTION:
Founded in 2004, Teekay LNG Parters (TGP) is the third
largest independent owner of LNG carriers. TGP was
organized as a publicly-traded master limited partnership by
Teekay Corporation (TK) as part of its strategy to expand its
LNG and LPG shipping sectors. TGP provides seaborne
transportation of LNG, LPG and crude oil under long-term,
fixed-rate time charter contracts.
All amounts in US$ unless otherwise noted.

 

Energy — Maritime
TEEKAY IS A-OK
Investment recommendation
We are initiating coverage of Teekay LNG Partners (TGP) with a BUY
rating and a $46 price target. Teekay’s strategy of growing organically
primarily through joint ventures with vessels fixed to long-term
contracts is ideally suited to the nature of the LNG business.
Investment highlights
 Substantial long-term charter coverage leads to cash flow visibility:
Teekay’s LNG fleet has substantial charter coverage, with an
average remaining contract length of 14 years. Long-term charter
coverage is critical for shipping MLPs in order to provide stability to
cash flows and maintain the safety of the distribution.
 Organic growth should drive distribution increases: With 15 LNG
vessels and 10 LPG vessels expected to be delivered through 2020,
Teekay LNG already has significant built-in growth. We expect a 6%
net income per distribution CAGR through our forecast period
(2017). The company’s growth profile is heavily weighted to 2017+,
which is when we expect the LNG market to be most robust.
 Leader in developing new technologies: The company was a leader
in developing LNG vessels with the new MEGI engine, which
provides substantial fuel savings to charters. While this is one of the
rare cases where ships were ordered by Teekay without charters
attached, the gamble paid off as five of the remaining vessels
(including options) were recently chartered to Shell for 6-8 years.
Valuation
Our $46 price target is based on dividend discount model using a 9%
discount rate and 3% distribution growth rate.
Risks
Geopolitical risks may hinder LNG projects in Russia from coming
online, and delays/cancellations of planned LNG export terminals in
North America and elsewhere may negatively impact fundamentals.

Tax website http://www.youroffshoremoney.com

Management  http://www.jackbassteam.com

Canada Heavy Oil Nearing $40 Threatens New Oil Sands Projects : Bloomberg

Canadian heavy crude fell to near $40 a barrel, threatening projects under construction as producers boosted output and space on a pipeline was rationed.

Imperial Oil Ltd. (IMO) is increasing output at its Kearl oil sands project to 110,000 barrels a day after a shutdown last month, Pius Rolheiser, a Calgary-based spokesman said by phone yesterday. Enbridge Inc. apportioned space on the Spearhead pipeline, which carries Canadian crude south to Cushing, Oklahoma, after demand to ship on the line exceeded capacity, according to a company statement.

Heavy West Canadian Select dropped $3.73, or 8.1 percent, to $42.19 a barrel yesterday, the lowest since April 2009, data compiled by Bloomberg showed. Crude has fallen into a bear market as U.S. output surges to the highest in more than three decades. Companies including Calgary-basedCanadian Natural Resources Inc. (CNQ) have said they may scale back investment plans if oil prices remain near current levels.

Any production that’s currently under construction is at risk, absolutely,” Dinara Millington, the vice president of research at Canadian Energy Research Institute in Calgary, said by phone. “Any production that’s currently existing can produce at $40 to $50.”

West Texas Intermediate futures added 20 cents to $61.14 a barrel at 4:04 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. Yesterday the contract closed at the lowest level since July 2009.

Expensive Crude

WCS trades at a discount to WTI due to higher production costs and a shortage of pipelines to move supplies to refineries. Some of the oil from Alberta’s oil sands must be dug out of the ground and upgraded into a lighter synthetic crude before it can be processed by refineries, increasing costs.

The lowest-cost oil sands producers use steam to loosen and pull bitumen from the ground and extract the fuel for about $51 a barrel, a July report by the Canadian Energy Research Institute showed.

Last week, Baker Hughes Inc. reported Canadian drillers cut the number of rigs used to the least for this time of year since 2009 as margins were cut by the price fall.

The last time WCS traded below $50 a barrel was in December 2012.

“We saw prices a couple of years ago that were similar to this,” Jackie Forrest, a vice president at ARC Financial Corp. in Calgary, said by phone. “For existing operations, you need to cover your operating costs. We’re still above those thresholds.”

OPEC Is Finished Oil Crash Will Continue : Bank of America

Warning from Bank of America

 The Telegraph | December 10, 2014 8:41 AM ET

An engineer walks in the Barjisiya oil fields in Iraq. Bank of America says the OPEC cartel is dead and free markets now control the global cost of oil.

Getty ImagesAn engineer walks in the Barjisiya oil fields in Iraq. Bank of America says the OPEC cartel is dead and free markets now control the global cost of oil.

The OPEC oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over coming months as market forces shake out the weakest producers, Bank of America has warned.

FP1211_Oil_Continues_fall_620_AB

Revolutionary changes sweeping the world’s energy industry will drive down the price of liquefied natural gas (LNG), creating a “multi-year” glut and a much cheaper source for Europe’s gas needs.

Francisco Blanch, the bank’s commodity chief, said OPEC is “effectively dissolved” after it failed to stabilize prices at its last meeting. “The consequences are profound and long-lasting,” he added.

The free market will now set the global cost of oil, leading to a new era of wild price swings and disorderly trading that benefits only Middle East petro-states with the deepest pockets, such as Saudi Arabia.

BoA said in its year-end report that at least 15 per cent of US shale producers are losing money at current prices, and more than half will be under water if US crude falls below $55. The high-cost producers in the Permian basin will be the first to “feel the pain” and may have to cut back on production soon.

The claims pit BoA against its arch-rival Citigroup, which claims the US shale industry is far more resilient than widely supposed, with marginal costs for existing rigs nearer $40, and much of its output hedged on the futures markets.

BoA said the current slump will choke off shale projects in Argentina and Mexico, and force retrenchment in Canadian oil sands and some of Russia’s remote fields. The major oil companies will have to cut back on projects with a break-even cost below $80 for Brent crude.

It will take six months or so to whittle away the 1 million barrels a day of excess oil on the market — with Brent falling below $60 and US crude reaching $50 — given that supply and demand are both “inelastic” in the short-run. That will create the start of the next shortage.

“We expect a pretty sharp rebound to the high $80s or even $90 in the second half of next year,” said Sabine Schels, the bank’s energy expert.

We expect a pretty sharp rebound to the high $80s or even $90 in the second half of next year

oil-chart

Ms. Schels said the global market for LNG will “change drastically” in 2015, going into a “bear market” lasting years as a surge of supply from Australia compounds the global effects of the US gas saga.

If the forecast is correct, the LNG flood could have powerful political effects, giving Europe a source of mass supply that can undercut pipeline gas from Russia. The EU already has enough LNG terminals to cover most of its gas needs but has not been able to use this asset as a geostrategic bargaining chip with the Kremlin because LNG has been in scarce supply, mostly diverted to Japan and Korea. Much of Europe may not need Russian gas within a couple of years.

BoA said the oil price crash is worth $1-trillion of stimulus for the global economy, equal to a $730-billion “tax cut” in 2015. Yet the effects are complex, with winners and losers and diminishing benefits the further it falls. Academic studies suggest that oil crashes can turn negative if they trigger systemic financial crises in commodity states.

Barnaby Martin, BoA’s European credit chief, said world asset markets may face a rough patch as the U.S. Federal Reserve starts to tighten afters year of largesse.

He flagged warnings by William Dudley, head of the New York Fed, that US authorities tightened too gently in 2004 and might do better to adopt the strategy of 1994, when they raised rates fast and hard, sending tremors through global bond markets.

BoA said quantitative easing in Europe and Japan will cover just 35 per cent of the global stimulus lost as the Fed pulls back, creating a treacherous hiatus for markets. It warned that the full effect of Fed tapering had yet to be felt. From now on the markets cannot be expected to be rescued every time there is a squall.

What is clear is that the world has become addicted to central bank stimulus. BoA said 56 per cent of global GDP is supported by zero interest rates, and so are 83 per cent of the free-floating equities on global bourses. Half of all government bonds in the world yield less than 1 per cent. Roughly 1.4 billion people are experiencing negative rates in one form or another.

These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries break out of the stimulus trap, including Fed officials themselves.

Tax website  http://www.youroffshoremoney.com

The “New Normal “for Gold ( BTO / BTG) and Energy/ Oil/ Gas ( Baytex)

Baytex Energy*

(BTE : TSX : $16.90), Net Change: 0.44, % Change: 2.67%, Volume: 5,712,428
THE NEW NORMAL: REDUCING CAPEX AND LOWERING DISTRIBUTIONS. Baytex Energy announced its 2015
capex budget and lowered its monthly dividend. The company will be spending $575-650 million in 2015, that’s ~20% lower
than consensus estimates of $765 million. Roughly 75% of Baytex’s 2015 capital budget will be invested in the Eagle Ford.
Baytex provided 2015 production guidance of 88,000-92,000 boe/d that was just shy of the consensus estimate of 93,400 boe/d.
Approximately 52% of the company’s 2015 annual production is expected to be generated in Canada with the remaining 48%
coming from its Eagle Ford assets in the U.S. With respect to hedges, for H1/15, Baytex has entered into hedges on
approximately 41% of their net WTI exposure with 29% fixed at US$96.47/bbl and 12% receiving WTI plus US$10.91/bbl
when WTI is below US$80.00/bbl. For H2/15, the company has entered into hedges on ~12% of their net WTI exposure with
8% fixed at US$95.98/bbl and 4% receiving WTI plus US$10.00/bbl when WTI is below US$80.00/bbl. The company cut its
monthly dividend by ~58% from $0.24 per share to $0.10. Under the new dividend policy, the annualized dividend of $1.20 per share represents a dividend yield of ~7.1% based yesterday’s close.
B2Gold* (BTO : TSX : $2.08)

Net Change: 0.09, % Change: 4.52%, Volume: 7,748,492

Update
UNSCATHED? B2Gold reports that operations are running normally at the Masbate Mine, Philippines, following Typhoon
Hagupit. The typhoon first made landfall last Saturday at the island of Samar, just southeast of Masbate Island, reaching
Masbate early Sunday. The eye of the storm tracked close to the site of Masbate Gold Mine. By late Sunday, the typhoon had
diminished in strength and passed over the island. Mining operations were curtailed during the storm event and have resumed.
Ore processing continued, however at the peak of the typhoon there was a 15.5 hour shutdown to plant production as operations were halted as a precautionary measure. The process plant is now operating at full capacity and the 2014 Masbate production forecast of 180,000 ounces of gold remains unaffected. According to Reuters, Hagupit has left 27 dead, nearly 13,000 houses destroyed and more than 22,300 damaged on the eastern island of Samar. According to Canaccord 
Analyst Rahul Paul, based on current projections and assuming no additional debt/equity raises or drawdowns, he foresees no capital shortfalls for B2Gold to the end of 2017 provided gold prices were to remain above US$1,151/oz.

 

Here is our recent letter:

Managed Accounts Year End Review and Forecast

Managed Accounts Year End Review and Forecast
November 2014 – 40 % cash position
Gold and Precious Metals

The largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.

2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.

Shipping Sector / Bulk Shippers

You can review our stock market letter at http://www.amp2012.com to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait .

Oil/ Energy

I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.

On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…

 

Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email

jackabass@gmail.com OR

info@jackbassteam.com  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

Tax website  Http://www.youroffshoremoney.com

Shipping Sector Drops With Oil Sector – Don’t Try To Pick The Bottom

Tonnage Keeps on Coming – sector keeps drifting to the reefs

Dry Bulk Forecaster

London, UK, 8th February 2012 – Drewry Maritime Research’s latest edition of its Dry Bulk Forecaster pulls no punches in its assessment of a market that looks certain to continue hitting dry bulk shipowners hard.

Tonnage supply hit a massive 605 million dwt at the end of 2011, an increase of 15.2%, which is even more impressive considering 19 million dwt was removed in the same period. With rates suffering under current market conditions Drewry’s forecast for the fleet hitting 684 million dwt by the end of 2012 and 765 million dwt by the end of 2016 signals daunting prospects for the future.

The near future will play heavily on supply-side fundamentals, as ships continue to hit the water at a very fast pace. Given the colossal delivery schedule and slippage from previous years, deliveries in 2012 are forecast to increase further to 97.6 million dwt. The largest increase in deliveries is foreseen in the VLOC segment, where a total of 16.5 million dwt of tonnage will hit the water compared with only 8.9 million dwt in 2011. In light of
China’s recent ban on such vessels, this could mean further headaches for owners.

Demolition in this over-supplied market totalled 19.1 mdwt in 2011, nearly quadruple that of the preceding year, as the ailing hire market forced owners to retire older ships. 2012 levels are forecast to reach almost the same as 2011 due to the declining average demolition age of vessels. However the Capesize segment is set to see a decline in demolition levels as most of the obsolete vessels were already demolished in 2011. In the longer forecast period all demolitions are expected to decline, to total 10.6 mdwt in 2016.

Shalini Shekhawat, a dry bulk analyst at Drewry stated, “It’s not all bad news for the sector as Drewry forecasts a 4% growth in trade for 2012, increasing yearly to a rate of 5.8% come 2016, which considering growth stood at less than 1% in 2011 is a boost for the market . Coupled with an orderbook that has been shrinking since February 2009, when it sat at 295 million dwt, there are glimmers of hope that the serious issue of over supply can start to be addressed.”

The AMP Year End Forecast – right on oil and the shipping sector :

Here is our recent letter:

Managed Accounts Year End Review and Forecast

Managed Accounts Year End Review and Forecast
November 2014 – 40 % cash position
Gold and Precious Metals

The largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.

2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.

Shipping Sector / Bulk Shippers

You can review our stock market letter at http://www.amp2012.com to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait .

Oil/ Energy

I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.

On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge:

Company                                   (Ticker)                        Price Change
Energy Transfer Partners LP (NYSE:ETP)             $ 65.17 -4.13%
Exxon Mobil Corporation (NYSE:XOM)                $ 90.54 -4.17%
Chevron Corporation (NYSE:CVX)                       $108.87 -5.42%
ConocoPhillips (NYSE:COP   )                                 $ 66.07 -6.72%
Vanguard Natural Resources, LLC (NASDAQ:VNR) $ 23.22 -6.86%
Seadrill Ltd. (SDRL)                                                  $ 14.66 -8.32%

Have you avoided this sector – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email

jackabass@gmail.com OR

info@jackbassteam.com  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

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Oil Just Crashed To A 5-Year Low – as we forecast ( update DEC 10 )

DEC 10

WTI Crude Declines as U.S. Inventories Grow; Brent Slides

West Texas Intermediate crude extended losses after the Energy Information Administration reported a gain in U.S. supply. Brent fell to a five-year low.

Crude inventories rose 1.45 million barrels in the week ended Dec. 5, the EIA, the Energy Department’s statistical arm, said. Analysts surveyed by Bloomberg expected a drop of 2.7 million. Brent declined as OPEC said it expects demand for its crude next year to be the lowest since 2003.

Both Brent and WTI collapsed by about 15 percent after OPEC agreed to leave its production ceiling unchanged on Nov. 27, resisting calls from members including Venezuela to cut output to stabilize prices. Saudi Arabia and Iraq this month deepened discounts on crude exports to their customers in Asia, bolstering speculation that group members are fighting for market share.

WTI for January delivery fell $2.69, or 4.2 percent, to $61.13 a barrel at 10:37 a.m. on the New York Mercantile Exchange, the lowest level since July 2009.

Brent for January settlement decreased $2.56, or 3.8 percent, to $64.28 a barrel on the London-based ICE Futures Europe exchange after touching $64.23, the lowest since September 2009.

Crude stockpiles increased to 380.8 million barrels last week, the EIA said. Inventories at Cushing,Oklahoma, the delivery point for WTI futures, rose 1.02 million to 24.9 million. Refineries operated at 95.4 percent of their capacity, up from 93.4 percent the previous week and the highest since August 2005.

Price Forecasts

The EIA yesterday reduced its price forecasts for next year while also downgrading its production outlook for a second month.

The Organization of Petroleum Exporting Countries reduced its demand estimate by about 300,000 barrels a day to 28.92 million next year, according to the group’s monthly oil market report. That’s below the 28.93 million required in 2009, and the lowest since the 27.05 million a day OPEC supplied in 2003, the group’s data show.

The group pumped 30.56 million barrels a day in November, exceeding its collective target of 30 million for a sixth straight month, a Bloomberg survey of companies, producers and analysts showed.

Crude might fall as low as $40 a barrel amid a price war or if divisions emerge in OPEC, said an official at Iran’s oil ministry.

“Any break in OPEC solidarity or price war will lead to an enormous price-dive shock,” Mohammad Sadegh Memarian, head of petroleum market analysis at the Oil Ministry in Tehran, said yesterday. Iran, hobbled by economic sanctions over its nuclear program, wants to raise production to 4.8 million barrels a day once the curbs are removed, he said at a conference in Dubai.

The risk of Brent dropping to $60 is “clear,” Francisco Blanch, head of commodities and derivatives research at Bank of America Corp., said yesterday at a press event in New York. WTI may decline to $50, he said.

The oil price crashed to a new low this morning DEC 9

At the time of writing Brent was 3.20% down on Monday and is currently being traded at $66.86. In earlier trading it hit $66.80, a new record low not seen since 2009.

 

US benchmark WTI Crude is in similar shape, losing 2.13% of its value on Monday falling as low as $64.13 just after 12 GMT.

Crude Price Update
The $70 level for West Texas oil is significant, but, it may not represent the final support level.

There is some support at the $65-$60 zone, though not nearly as strong as the $70 level. Bottom line: At this point, Light crude oil prices are in a free-fall. Having reached the $70 level, the next lower support zone is at $65-$60. Investors are
recommended to stay on the sidelines for now until there is ample evidence of a turn-around.

Note:

This on-going weakness in oil prices plus in gold, silver, copper and grains reinforces our opinion that the
secular commodity cycle is over.

“Brent is oversold but that is no indication of a rebound. Oversold is like undervalued. It can go on for a
long time. Brent is into a fairly solid support zone on $70-$80. I would expect some traction
in this area. At this point, $70 appears to be the next likely target, no relief yet for oil. Keep
to the sidelines and do not try to catch a falling knife.” (27Nov2014)

 

The devaluation of oil since it hit a record high in June this year. Brent fell from $115 to its current $67, a drop of around 40%.

Oil Price 6 Months Low

In a report date 5 December, Morgan Stanley adjusted its forecasts for oil prices, saying saying oversupply will likely peak next year with OPEC deciding not to cut output. “Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015,” Morgan Stanley analyst Adam Longson told Reuters.

In a meeting on 27 November, the oil producers’ cartel announced it would not cut its output in the next future, a move that aims at out pricing the US domestic shale production according to many analysts.

Morgan Stanley now expects prices to go as down as $43 a barrel in 2015, meaning that the crude could lose a further $20 in the upcoming months.

Mixed Chinese data hit a further blow to the oil price: the Asian giant reduced its imports in November by 6.7%. China’s export growth slowed too, a hint that the country could be facing a sharp slowdown.

and last week we posted this in http://www.youroffshoremoney.com

JACK A. BASS MANAGED ACCOUNTS – YEAR END UPDATE AND FORECAST
November 2014 – 40 % cash position

Year End Review and Forecast

“Oil/ Energy

I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers. “

No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email info@jackbassteam.com or

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

 

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