Medemswer
Telling DSD the market is forward looking indicates you have missed key points completely.His whole primise is that into the future WOR which is centred very lopsidely on new oil developments and more particularly offshore is in trouble unless it diversifies. extremely quickly.
At the moment it has 2 very big threats
1 Renewables which are moving at an incredible pace.Specifically EVs are now openly recognized as bound to happen even by big oil
2 Oil expansion is being dominated by development of tight oil plays.The expansion of US oil is incredible .Every time OPEC trys to squeeze them out they come back stronger.They continue to expand at prices below 60 whilst deep sea needs 80 plus for new projects.How much more American tight plays can continue to expand I dont know but they continue to expand and surprise.
The real trouble however is going to be when American knowhow is utilzed elsewhere.There are a d0zen countries that have known
Canada( the biggest) being proximal has reached its potential. Some like Eygpt dont have the investment climate IMO the real threats will come from Argentina (3 billion barrels definitely but probably 10 million) Big oil Shell Exxon etc are investing here and probaly working on $40 to $60 barrel.Do you think they will invest offshore which will require a price of $70 to 80 on a sustained basis to trigger the investment.The other 2 real threats are Russia and China
Countering this to a limited extent is Venezuela implosion and Trumps willingness to open what has been sacrosanct ground.
Unless WOR can find a way to enter tight oil or renewables it is probably in for a shock after FY 2020 when lack of income finds them out.I work on earnings of 50c per share 2018 (PE plus or minus 30) 75 for each of FY 19 and FY 20 and then a rapid decline as its lack of income tells.THIS IS MY OPTOMISTIC SCENARIO
As Wor heads for losses again how can it react.It cannot cut back on staff and pemises again because it has gone as far as it can.
It has very few tangible assets and is mainly good will.
It does not have spare cash to cushion it and in fact has over 700m debt
So why am I not like DSD short.I have the dollars after getting out of lithium.Lithium showed me the market can miss things both at my entry and exit points
Long and short of it is I am scared.I see all the support it gets and I think I must be missing something .The analysts at the instos must know something I dont .Am I being naive here or do they too not care about anything beyond 2 to 3 years
The other thing tyhat scares me is the Arab part of Opec might just buy WOR expertise in fundamental analysis to figure how they react to threats against conventional oil but logic tells me they would buy the people and save 75% of the bill which is goodwill.
No 3 is somehow and again without logic except for my next point I find it hard to short.
Lastly I am a great believer in human ingenuity to solve prolems and WOR could just come up with something no one is expecting
Looking forward to comments on the above - particulary those like DSD who can supply somereasoning with them.Also could someone tell me how likely it is for WOR to regauin contracts lost like Worsley Alumina.Do they just tender and say we will find the staff or do they have to put staff in place first
WOR Price at posting:
$14.80 Sentiment: None Disclosure: Not Held
(20min delay)
