Sure TAP is a good "call option" on oil price rising - but so...

Sure TAP is a good "call option" on oil price rising - but so are a few others.

Gotta say I've heard the "oil price is going to rise because ...." for the past 15 months. I've always believed it would be a long road to recovery, but never thought it would drop this low (otherwise would have exited most of my oil positions). Companies that were solidly profitable, paying dividends and growing their business now look like trash.

So before "investors" believe the conspiracy theories of why posters may or may not post you should really do your homework.

1. How sure are you of the oil price recovering. THERE IS NO MARKET CONSENSUS that oil will average AT LEAST $50 in 2016. That is absolute garbage. It might be the opinion of an investment bank (I take it UBS).

Let me back that statement up further. There is an investment bank that survey's other banks that lend money (yes the real banks that are on the hook for providing the cash for Reserves Based Loans) on a senior secured basis to the E&P companies.

Based on that survey of 32 participating banks (WTI), 4 banks for Brent, taken Oct 15-Oct 30th 2015 (so before this latest crash)

* MEAN at their base case scenario for Brent was $50.45 with low of $46 and high of $53.80. Base case for Brent is 103% of NYMEX WTI futures over the strip average for 2015-2019. And we all know the Brent premium has goneski since the passing of legislation to export WTI.

* MEAN at their sensitivity case (conservative) scenario for Brent was $41.95 with a low of $36 and a high of $42

This should put an end to the consensus statement. I guarantee you the banks have lowered their price decks since Oct15-30th timeframe.


2) Forget for a moment the cash flow discussion (and who feels confident about collecting off of Chat) and focus on NAV. The promise that Manora had, has been eviscerated by low oil prices WHEN THE FIELD PRODUCES THE MOST. This has really done a number on the long term value (in price per share) of Manora to TAP. Long term value has taken a hit whatever way you look at it.


3) Full disclosure - I know Autosime personally. If that makes me a co-conspirator then so be it. I'm also a holder (so I might be a silly conspirator) because Manora looked the goods and I thought TAP weren't dreadful (that changed due to their inept hedging as detailed earlier).


Always do your own due diligence and that means taking posts at face value and learning from them if you can.

GL & GFTA (that would be Good Fortune To All).