# Thoughts on oil stocks please: CPG & WCP



## jargey3000 (Jan 25, 2011)

I own approx. 1000 shares each of Crescent Point (CPG) & Whitecap (WCP) & yes, I'm shuddering at current [email protected]$1.48 [email protected]$1.34 ( well, at least they are not in negative territory ...yet!)
Let's just say I bought them both at substantially higher prices
Would you advise buying MORE now, at these prices, to lower the overall dollar cost average? I'm tempted to buy...$1000 bucks into each one could effectively reduce my DCA by nearly 50%...?
Or, should I bite the bullet & leave bad enough alone? 
I'd appreciate some thoughts.


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## dubmac (Jan 9, 2011)

Hi Jargey. I bought WCP & in a similar position. I don't have many shares, but started a position as a high-risk play after it dropped in 2018.
The only reason to buy more is if you expect it to increase in price, significantly, over time.
I can't see that far in the future - too much smoke and haze from all the crashing and burning. Not sure if anyone can.
If Trump gets re-elected, he'll likely become even more isolationist - cutting more ties with importers. But who knows where the cutting the start and stop. JMO


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## AltaRed (Jun 8, 2009)

FWIW, I do not own any O&G stocks and I don't like speculative bets. The oil surplus problem (or better said, the collapse in demand) is not going away any time soon. There is a huge gap between the two that might take 2 years to work off, maybe longer. Pricing will be under significant pressure until there is a better balance.

Trump getting re-elected or not is not material to the type of oil we produce and what is required/preferred/desired by a range of refineries in the USA. If anything, a Dem victory would be of higher risk to Canadian exports by virtue of shutting down pipeline expansions, not that Keystone XL has more than a 50% chance of being completed (or needed) anyway.


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## agent99 (Sep 11, 2013)

jargey3000 said:


> I own approx. 1000 shares each of Crescent Point (CPG) & Whitecap (WCP) & yes, I'm shuddering at current prices.


I too owned 1000 CPG. Bought in 2013/4. ACB about $38  I now own 150. 

CPG has been very useful. I have been able to sell it off a bit at a time, and use the losses to offset capital gains on other stocks that I had a reason to sell. 

Other than that....... Maybe it paid some dividends early on ? No idea why I bought it - bad deal!


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## doctrine (Sep 30, 2011)

CPG and WCP going to zero with oil prices where they are now. They can only hope to hang on long enough for prices to rise. They need at least $50 to be viable long-term, but even $40 would help them hang on for a few more years. We are a looong way from that. 

Canadian O&G has become a game of who can survive with shareholder equity left over.


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## jargey3000 (Jan 25, 2011)

"zero"? ya think?
I can remember not too many years ago when CPG seemed to be being touted as everybody's darlin'...you had to have it....sheesh!


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## d333gs (Apr 21, 2020)

How about the banks ,will they move lock & step with oil?


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## dubmac (Jan 9, 2011)

there was a very good article by Eric Reguly on pg 4 of the G&M Report on Business on Sat (April 25). His basic premise was that the obituary for oil has been written many times in the past - and each time the experts are wrong. He states "Every long-term prediction of a new era in the oil markets has been pretty much dead wrong. Oil has been the greater leveller - it has made chumps of us all". Not saying that oil will rise soon - but I do agree with Reguly on his point that, no one knows what the future holds. So, I'll just sit tight (truthfully - that is the only choice one has - other than sell and take the loss for tax purposes if you hold in a reg account).


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## agent99 (Sep 11, 2013)

For those that hold index ETFs like XIC/XIU, are they being dragged down further by the oil/energy stocks they include (13-15%)? Only ETF I own is ZDV, and it has about same % energy as XIC) Noticed it is under-performing as are XDV and CDZ


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## d333gs (Apr 21, 2020)

*USO* will undergo a 1 for 8 reverse share *split*. At the close of trading on April 28, 2020, each *USO* shareholder will receive 1 post-*split* share for every 8 pre-*split* shares held. 








Oil ETF USO Announces 1:8 Reverse Split


Like UCO earlier this week, USO will complete its own reverse split in order to try to save the fund.




www.thestreet.com


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## d333gs (Apr 21, 2020)

Banks VS energy performance.
Chart: ZEB.TO:XEG.TO - BMO S&P/TSX Equal Weight Banks Index ETF/iShares S&P/TSX Capped Energy Index ETF


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## MrMatt (Dec 21, 2011)

I think this super cheap/free oil will not last forever, combined with the lockdown decrease in demand, I think the situation isn't permanent.
However I'm not sure all companies can survive this, if there is someone with a good balance sheet, they might be able to pick up a LOT of good companies and underpriced assets that just didn't make it.

Strategic purchasing of specific assets could be done at very attractive prices over the next few months.

If there was a "Brookfield Oil", I'd be interested in that.


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## agent99 (Sep 11, 2013)

d333gs said:


> Banks VS energy performance.
> Chart: ZEB.TO:XEG.TO - BMO S&P/TSX Equal Weight Banks Index ETF/iShares S&P/TSX Capped Energy Index ETF


Just one line on each chart?


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## dubmac (Jan 9, 2011)

Jargey. p7 here is somewhat upbeat on WCP. They have a $2 target - up from 1.5. They'll likely cut dividend (which they should).


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## james4beach (Nov 15, 2012)

jargey3000 said:


> I own approx. 1000 shares each of Crescent Point (CPG) & Whitecap (WCP)
> . . .
> Would you advise buying MORE now, at these prices, to lower the overall dollar cost average?


No, I would not buy more. Two reasons:

(1) In speculation, it's a bad idea to add to losing positions
(2) Both of those charts look very bad

By (2), I mean that the technical chart (the price history of the last few years) looks unfavourable. It's trending downward with no sign of a rally. That's generally not the kind of thing you want to buy.


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## dubmac (Jan 9, 2011)

not suggesting he buy more. just wait a while before he sells.


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## doctrine (Sep 30, 2011)

WCP, with some of the better quality oil assets in Western Canada, wrote off $2.1 billion, or $5.17 a share, versus a share price of $1.80. That is pretty epic. That $5.17 a share is not coming back anytime soon.

Even if oil gets back to $50 in 1-2 years, WCP's equity will have suffered permanent damage, as they run production down but still have to carry debt and maintain all those assets.

It may be a reasonable investment from this price, but I think the hopes of this returning to $5-10 a share are a long way away. The dividend also needs to be cut further by at least 50%.


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## AltaRed (Jun 8, 2009)

Sometimes dead money is just dead money. Either harvest the tax loss (if in a non-reg account), or just stick them in a file folder to be dusted off in 2-3 years on the premise both pipeline capacity and/or higher oil prices are being sustained.


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## dubmac (Jan 9, 2011)

Nice bounce for WCP today. Up 16% at the close!


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## doctrine (Sep 30, 2011)

Definitely nice bounces. Oil has doubled in the last few weeks. However, they are still not profitable here, it is important to remember. They really need prices to get back to $50 ish. I wouldn't be buying o&g producers at a premium to book value, where WCP is now. CNQ, for example, is still trading at a discount to book and I think has just as much upside as WCP, ie 100% to $50 oil, but CNQ is in much better shape at $33-35 oil. CNQ didn't impair a single asset, whereas WCP had to write off $5 a share - the stock is at $2.20 now by comparison.


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## dubmac (Jan 9, 2011)

Whitecap bought TORC resources. Whitecap And TORC Announce Strategic Combination Creating a Leading Sustainable Light Oil Focused Company with a Significantly Enhanced Free Funds Flow Profile Supporting a 6% Dividend Increase
Seems like some confidence is back in WCP's boardroom. This should add a nice nudge to the dividend in April 2021.
Kinda wish I bought more WCP back in March/April.


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## Retiredguy (Jul 24, 2013)

7 months later ...Jargey3000. So what did you do?


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## AltaRed (Jun 8, 2009)

I have no skin in resource stocks but my short assessment suggests mostly operational efficiencies in the combination with the overlap in the AB Cardium and SE Sask plays. It might as well attract the attention of more portfolio managers with a market cap >$2B.

It is interesting they talk about shallow (low) decline rates of 17-19%. Anything above 10%/yr would be considered significant in my working days in the patch. BWTFDIK......

That all said, more consolidation at this corporate level is essential for survival to 2030 and possibly beyond.


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