Answering Reader Questions

As mentioned in this month’s investor web chat, we are starting a new feature answering questions we couldn’t get to during the chat.

Q: What are the Australian LNG companies to look at for this year and beyond?

While the Australian LNG industry has seen robust growth, it has been in the news lately for serious cost overruns and delays in every major project. The companies involved include familiar names like
Chevron (NYSE: CVX) and Royal Dutch Shell (NYSE: RDS.A), but they provide a perfect example of the challenges involved in developing Australia’s LNG industry. The ambitious Gorgon LNG project bringing together Chevron, Shell, and ExxonMobil (NYSE: XOM) has seen projected costs rise from $37 billion (US) when the project was first approved in 2009 to the current estimate of $52 billion.

Thus, I would recommend caution. Having said that, some of the potential beneficiaries that may be worth considering include Origin Energy (Sydney: ORG) and Woodside Petroleum (Sydney: WPL).

Q: Why is it that when I go to set up my energy stocks, many of the stocks in your portfolios are not listed?

This is an example of a question that wasn’t answered during the chat because I needed to gather more information. It turns out that when you try to set up a personalized list of stocks the only ones available are those on our Energy Watch List, not necessarily those in the portfolios.

Thank you for bringing this to our attention. We are in the process of making some major upgrades to the site and will add this to the list of needed changes.

Q: Can you comment on Northern Tier Energy? The dividend is very high.

Northern Tier Energy (NYSE: NTI) debuted after an IPO in July, and has had a nice run-up since. The company has two major assets: the SuperAmerica chain of convenience stores and an oil refinery in St. Paul Park, Minnesota. The refinery benefits from processing Bakken and other northern mid-continent crudes and then moving the refined products into the Minneapolis/St. Paul area.

One thing concerning me is that the company just announced a secondary offering and the share price reacted negatively. The stock is not in our portfolios but definitely on our radar. For the moment, we would counsel patience.

Stock Talk

Guest One

Tom de Uriarte

Hi Robert – just wanted to thank you for your response to me about CCJ. I found it under the topics where I had first questioned you about my lack of a response. Thanks for the info and the explanation. Enjoying the new articles.

I have held onto WFT and it has been on a tear. Any chance you will add it back to the portfolios? I have been investing in WFT thru options and right now am doing very well with WFT. thanks again.

Robert Rapier

Robert Rapier

Hi Tom,

All of the drilling services companies have made nice upward moves lately, with WFT being one of the strongest performers lately. We are still cautious on the stock. While we felt like the correction down was overdone and it was ripe for a bounce, we also want to be certain those accounting issues are behind them before we consider putting it back in the portfolio.

Guest One

william Lasarzig

Robert, your current take on SDT and PER. 2% sell of on Friday with higher oil prices. Any new ideas for high yield in this sector? Thanks

Guest One

Jerry Reimers

SDR downgraded by Raymond James on lower production volumns. Should we exit the position or was production lower for some reason?

Guest One

Raymond Martino

sdr price is down to 15.this is a best buy to 24.i just bought more at you feel it is still a best buy.please comment on sdr.thanks

Guest One

Note that the President, EVP, GC and others as insiders have filed with the SEC showing further reduction of their positions this month: February.

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