HSE - Husky Energy

[montizzle]

Starting to see some value in this one after the latest price drops. Stocks down over 15% in the past week or so as Canadian oil stocks continue to get murdered. Dividend is 5% at todays closing price of 10$.

 

Many of the issues with this stock seem likely to be sorted out in the next 1-2 years. Curtailment by the Alberta government will not go on forever and setbacks including the Superior plant fire, the Saskatchewan thermal plant turnarounds, and delays in Indonesia are all short term issues. Oil prices are a longer term cause for concern however I don’t see a time where we don’t need oil.

 

Predicted WTI price moving forward in their 5yr plan is 60$, which seems fair. Healthy payout ratio around 30%, and share buybacks and dividend increases are on the table should we see even higher oil prices.

 

Anyone else looked at this company or have any thoughts?

 

[Cardboard]

I am with you.

 

This is one of the safest place to be in Canadian energy with low debt/cash flow ratio and large refining asset base. They are also looking to sell their fuel stations which could bring very interesting proceeds.

 

If a portfolio manager ever looks for energy exposure, large company, low default risk, fairly high yield, then this should be right at the top of the list.

 

I think it will rebound here. The entire energy sector in Canada has now pretty much returned to December lows which is nuts considering how much money they are making. It is no longer just the juniors and intermediate but, also SU, CNQ and now this at 2008 lows maybe?

 

There is a lot of fear about everything but, we just learned that China imported a record amount of oil from Saudi Arabia in June. So where is the slowdown?

 

It will be also very interesting to watch if EIA fully brings back the 1.1 million bls/d of Lower 48 States production that they have removed from estimates over the last 2 weeks. A good chunk was certainly the storm in the Gulf but, all of it?

 

We have had rig count decline for months and both SLB and HAL have reported reduced activity. If it ever becomes obvious that shale has peaked (at least temporarily), then this whole discussion of a glut by IEA becomes a joke. Companies like PXD, FANG and many others have a gun to their head from investors telling them to stop growing. This should matter someday.

 

Cardboard

[montizzle]

Rough Earnings report today. Profits down by about half compared to last years Q3, primarily due to lower US refining margins.

 

Positives are the Prince George Refinery sale to be finalized in the coming weeks, and the early/under budget startup of Dee Valley Thermal.

 

No news yet of the possible retail store sales, still just shopping around for offers. Otherwise, I don't see much moving this stock, at least until next earnings.

 

Closed at ~$8.90 CAD today

[wisowis]

...

Positives are the Prince George Refinery sale to be finalized in the coming weeks, and the early/under budget startup of Dee Valley Thermal.

...

 

Why is the sale of the Prince George Refinery a positive? Sale price seems cheap at 2.9x 2020 EBITDA? Thanks.

[Spekulatius]

...

Positives are the Prince George Refinery sale to be finalized in the coming weeks, and the early/under budget startup of Dee Valley Thermal.

...

 

Why is the sale of the Prince George Refinery a positive? Sale price seems cheap at 2.9x 2020 EBITDA? Thanks.

I have no dog in this fight, but 12k bro/day is just too subscale. Decent refineries are 20x larger. Considering the size, the sales price actually seems decent.