Tomorrow September 8, I’m selling shares of U.S Oil Fund (USO) out of my Jubak Picks ad Volatility Portfolios to take profits on the 25% really in oil since June and to raise some cash in case September volatility delivers a bargain or two.
On Wednesday, July 5, Exxon Mobil (XOM) told investors that second quarter earnings could drop by 50% from earnings in the second quarter of 2022. On Thursday, July 6, shares of Exxon Mobil closed down 3.73%. Remember, we’re talking about Exxon Mobil here, one gigantic oil company. So while earnings could fall by half in the quarter, the company is still looking at quarterly earnings of $6.2 billion. Exxon’s news has implications across the energy sector.
I’m holding onto oil stocks that pay big dividends such as Pioneer Natural Resources (PXD), at 11.22%, and Devon Energy (DVN), at 9.06%, but I lightening up on my oil exposure by selling ConocoPhillips (COP) out of my Jubak Picks Portfolio tomorrow, June 20. The stock pays a dividend of just 2.29%.
This week’s Trend of the Week is Where is All That Oil Cash Going to Go? The likely answer: the Permian Basin and acquisitions. Oil companies like Exxon Mobil (XOM) are putting so much cash into the bank, they don’t know what to do with it. Exxon Mobil had $32.7 billion in cash in the bank. With little debt, and plenty left over after capital spending, dividends, and buybacks, the company is left with a tremendous amount of cash. Historically, extra cash could be used in oil exploration, which could take 5-15 years. In a global warming economy, that doesn’t make sense since we don’t know where oil prices and demand will be in the years ahead. The better option is acquisitions. One of the companies Exxon is rumored to be targeting is Pioneer Natural Resources (PXD) for their assets in the Permian Basin. Chevron (CVX) is in a similar position as Exxon and you can expect them to be in the market for Permian companies as well. Other Permian Basin companies that are ripe for being acquired are Devon Energy (DVN) and Diamondback Energy (FANG). I already have PXD and DVN in a portfolio in my JubakPicks Portfolio, and I’ll now be adding FANG as well.
The Wall Street Journal reported today, Friday, April 7, that Exxon Mobil (XOM) has held preliminary, informal talks with Pioneer Natural Resources (PXD) about a possible acquisition.
Just in case there are readers who don’t watch my videos, but do follow my picks. Today, April 5, I added Devon Energy (DVN) to my Jubak Picks, Dividend, and Volatility Portfolios.
Today’s Quick Pick is Devon Energy (NYSE: DVN). On Sunday, OPEC+ said it’s going to cut oil production by about 1 million barrels a day. The following Monday saw a surge in oil prices. My take on this? If you’re going to bet on oil, do it now, before the question of whether or not we’ll have a recession starts to hang over the sector. Devon Energy has a similar playbook to Pioneer Resources, a stock I already own. Devon has introduced a variable dividend (50% of post-dividend cash flow) alongside their set dividend payout. About 70% of Devon’s resources are in the Permian Basin, the lowest-cost oil resource in the U.S. oil shale sector. At the moment, the forward yield is about 9.4%, but it is variable and could go up and down. If oil prices continue to go up and Devon decides to produce more oil, cash flow will go up with it. I’ll be adding this to three of my portfolios–Jubak Picks, Dividend, and Volatility to get one more bump in this commodity before we start to worry about an upcoming recession.
On Friday, shares of Pioneer Natural Resources (PXD) fell on a Bloomberg story reporting rumored talks between the Permian Basin oil shale producer and Appalachian natural gas producer Range Resources (RRC). On Monday shares of Pioneer rebounded as the company denied that it was in acquisition talks. The lesson? Investors really don’t want Pioneer to spend money on acquiring more assets.
Wednesday, February 22, Pioneer Natural Resources (PXD) reported better-than-expected adjusted earnings for the fourth quarter of 2022 while revenues came up short of Wall Street estimates. Revenue was still up 18% year-over-year to $5.1 billion. Fourth quarter net income nearly doubled to $1.48 billion or $5.98 share, from $763 million, or $2.97 a share, in the fourth quarter of 2021. The company declared a quarterly total dividend of $5.58/share, made up of a $1.10 base dividend and a $4.48 variable dividend. The total annualized dividend yield is approximately 11%.Which is why I’m adding the shares to my Dividend Portfolio today.
Today, Wednesday, February 8, Equinor (EQNR) reported a record $74.9 billion adjusted operating profit for 2022. That more than doubled the previous record. If you’re looking to add an energy stock to your portfolio ahead of a year that looks likely to be a good one for energy stocks, I’d suggest Equinor. I’ll be adding it to my Jubak Picks Portfolio tomorrow with a target price of $40 a share.
Today, Wednesday, October 5, OPEC and its allies, including Russia, approved a two million barrel-a-day cut in oil production. This is the largest cut in production since the onset of the pandemic. Here’s the key paragraph in the OPEC+ statement: “Adjust downward the overall production by 2 mb/d, from the August 2022 required production levels, starting November 2022 for OPEC and Non-OPEC Participating Countries as per the attached table.” On the news, oil and oil stocks extended the rally that began on news leaks yesterday.
All it takes is a report that OPEC+, the group of oil-producing countries that includes Saudi Arabia and Russia, is considering a big cut in production at its meeting this week to send oil and oil stocks off to the races. As of noon New York time on Monday, U.S. benchmark West Texas Intermediate is up 4.21%, and international benchmark Brent crude is higher by 3.75%.
