I've got my own favorite oil stocks that I tend to talk about exclusively, which is limiting - and a reason why I ask readers for their stock picks on a regular basis.
You have again responded strongly, with over 75 emails asking my opinion on a wide range of energy names, few of which I normally talk about. Many thanks to all of you who sent me requests -- and let's get right to it.
A number of readers asked my opinion on ConocoPhilips (COP). I've been a loud advocate for only two majors over the entirety of the crude bust: Exxon Mobil (XOM) and, to a lesser degree, Total (TOT).
In the last 6 months, Exxon has blown everyone else out of the water on stock performance, for reasons that I have previously isolated: its perfect global portfolio mix and cheap dividend and stock buyback program that provides it with a financial flexibility none of the other majors can match. Conoco, on the other hand, had maintained price strength on the basis of its juicy dividend, which needed to be cut in February. But even as that shareholder pain has been completed, I'm still not a fan. One of the reasons is that the company's core portfolio growth is centered around Canadian sands production, in two partnerships -- with Cenovus Energy (CVE) and Total.
Keystone Pipeline defeat notwithstanding, I believe the economics of oil sands make it a lesser long-haul opportunity. If you measure the incredible advances in efficiencies and well productivity in shale, compared to oil sands, you just don't gain confidence in the competitive ability of Canadian oil companies compared to American independents.
That may change, but for now, I'm only marginally interested in a few select Canadian companies -- like Crescent Point Energy (CPG), a name that other readers asked about, and which remain mostly committed to conventional production.
I'm less excited by American majors relying on oil sands for substantial portions of future growth.
Another group of readers were interested in my take on Action Alerts PLUS holding, Occidental Petroleum (OXY). The most important news in the OXY camp is obviously its rumored offer for Apache (APA). Apache has been a consistently undervalued stock, which has made it, at times, one of the best-trading vehicles. Out of all the stocks I could have bought when oil was sliding under $30, I most regret not taking at least a little Apache at near $35 a share.
The rumored $25 billion price tag that OXY is offering puts Apache shares at nearly $65, which, in my mind, isn't overpaying for the Apache assets. Anadarko Petroleum (APC) tried a similar deal at lower numbers, which Apache flat-out rejected, and it is not clear whether the company would accept the OXY deal now -- if it turns out to be real, which is not clear.
But if the offer comes, the company should take it. It's a good valuation for them, considering Wall Street's disrespect, and I expect the assets to further enhance OXY's already terrific portfolio, without disturbing its balance sheet all that much. I like OXY more if the deal happens, although I didn't dislike them before. OXY receives full blessings from me if you own it.
A few more short takes:
-Chesapeake (CHK): I still believe this one won't make it to the next boom cycle, and any bet on it is purely speculative.
--Kinder Morgan (KMI): Along with other requests for my take on Enterprise Products (EDP), Energy Transfer (ETE) and other MLPs, lots of people want to know what I think of KMI. I'm entirely uninterested in the MLP space in a U.S. environment where oil production is on its way down for the next several years, and despite Warren Buffett's recent investment in Kinder, I don't feel any differently about them specifically (especially considering my debacle in the shares).
--Silver Run Acquisition (SRAQU): Many readers wanted an update on this recommendation of mine. So do I. There's been zero comment out of the Mark Papa SPAC since its IPO. I've got a call in to the company and will report back on what they say -- whether they're lining up anything specific or still feel in a waiting mood.
Thanks again for all your letters. It's good to know my words have an impact and are being read. And keep them coming!