Here is my current thinking which includes the date and stock price when I wrote originally.
Sprott Resource (SCP.to) June 27 - $4.19 per share
Sprott Resource Today - $4.30 per share
Increase – 2.6% in 5 months
Decision – Happy to hold and add more
Comment – No change to thesis. Still incredibly liquid. Gold and silver investments have increased in value. Energy and agriculture still where I want to be.
Ensco (ESV) July 1 - $40 per share
Ensco Today - $48.52 per share
Increase – 21.3% in 5 months excluding dividend
Decision – Continue to hold, not buying
Comment – Still a good value. Still a fantastic balance sheet. Still have a nice catalyst coming when drilling does pick up again. Just not quite as cheap now.
Enerplus (ENH) July 8 - $23.06 per share
Enerplus Today - $29.81 per share
Increase – 29.2% in 5 months excluding dividend
Decision – Sell
Comment – Pretty close to what I see fair value as being. A nice low risk return over 5 months.
Cobalt International (CIE) July 28 - $8.46 per share
Cobalt Today - $11.32 per share
Increase – 33.8% in 5 months
Decision – Sell
Comment – I think this could end up being worth a lot more, but it very speculative as there is no way to know what they are going to find on their lease blocks. I’m happy to take 33% in less than half a year.
Diamond Offshore (DO) July 31 - $59.49 per share
Diamond Offshore Today - $65.67 per share
Increase – 10.4% in 5 months excluding dividend
Decision – Hold
Comment – Much like Ensco, still has a nice catalyst in drilling picking up pace (which I assume has to happen) and has a bright future in front of it as the world explores the deepwater everywhere.
Stone Energy (SGY) Aug 15 - $11.77 per share
Stone Energy Today - $21.40 per share
Increase – 81.8% in 5 months excluding dividend
Decision – Sell
Comment – I can’t believe how quickly Stone has risen given the lack of any really big catalysts. I’m thrilled at this return on money invested and am very happy to take profits.
ATP Oil and Gas (ATPG) - Various Articles
The articles I’ve written on ATP for gurufocus were at share prices below the current $14.90 per share, but as I’ve been writing positively about the company in various venues from as low as $5 in 2009 to as high as $19 before the BP spill I don’t think it is appropriate for me to suggest there has been success here yet.
Decision – Hold, buy if you think drilling permitting is imminent
Comment – ATP ‘s stock price is being held hostage by Mr. Bromwich and Mr. Obama. Until they actually start approving some Deepwater drilling permits I don’t think ATP shareholders are going to get much of a lift in share price. I tend to think that ATP will be one of the first permits approved considering that they have the most modern drilling platform in the GOM with the ATP Titan and are drilling lower risk development and not exploration wells. ATP has all the infrastructure and financing in place to add 30,000 BOE of production from 5 low risk GOM wells and can have them on within a year once they receive permits. There is a lot of upside here, but we need a reasonable government.
With respect to ATP, there was an interesting article today in the Houston Chronicle about Shell and how it is anxious to continue drilling on its Appomattox discovery in the Eastern Gulf of Mexico. The article also refers to the expectation that drilling in the Eastern GOM is going to increase due to the success Shell has had on this property. This is significant to ATP for a couple of reasons. One is that the drilling that Shell wants to continue to delineate Appomattox will include drilling into an ATP lease block where ATP has a royalty interest and could stand to gain as much as $400 million in revenue over time. Second is that ATP has the only natural gas pipeline in the Eastern GOM which is called the Canyon Express pipeline which these discoveries will tie into and create a transportation fee for ATP.
Here is the article:
“Shell Oil Co. had hoped to resume work quickly on several projects in the Gulf of Mexico after the U.S. government lifted a ban on deep-water drilling in October, but it hasn't worked out that way.
Instead, after more than five months of waiting, the U.S. arm of the European oil giant is facing permitting delays it says could be a further setback.
While the company still hopes to start drilling again by early next year, "I think it's becoming a goal that we would consider a challenge," Mark Shuster, Shell's manager of Gulf of Mexico exploration, said in an interview.
Among the projects Shell is eager to get back to is Appomattox, a major oil and gas discovery the company announced in March in the deep waters of the eastern Gulf. The discovery, estimated to hold 250 million recoverable barrels of oil equivalent, is a significant plank in a Shell plan to expand in the U.S. offshore region in coming years.
Located in an ancient rock layer that has never before been tapped in the deep-water Gulf, Appomattox also could point to yet another new frontier for domestic offshore development.
While a federal deep- water drilling ban ended Oct. 12, additional work at the site remains on hold, because the Interior Department has yet to approve any new permits for work that would have been barred by the moratorium. Enforcing compliance with tougher offshore safety and environmental rules enacted after the BP oil spill has slowed the process — and the situation is not sitting well with industry.
"I think where we're finding a little bit of frustration right now is in just working through the system," Shuster said.
Not done after all
Appomattox is a case in point. After filing what it believed was all the necessary paperwork to resume drilling there, Shell received an additional request from the Bureau of Ocean Energy Management, Regulation and Enforcement for an environmental impact analysis. The company is submitting that information.
In another case, the company was told it must submit worst-case spill information on a sidetrack well at its deep-water Tobago field, though Shell had understood previous federal guidance to say it wasn't required.
"The goal posts seem to be changing to some degree as we're trying to get permits," Shuster said.
Other deep-water operators including Exxon Mobil Corp. and Chevron Corp. said they have submitted permit applications since the moratorium and are responding to regulators' questions as they arise.
Shallow-water oil and gas producers and drillers also have expressed frustration about permitting bottlenecks, though regulators have recently approved more applications. Companies operating in the shallow-water Gulf were not affected by the drilling moratorium, but still must comply with new offshore safety rules.
Bureau adds workers
Michael Bromwich, director of the ocean energy bureau, said last week that his office is working "as expeditiously as is safely possible on processing shallow and deep-water permits." To that end, he said, the office has added 20 employees temporarily to help review applications.
The industry, however, is growing doubtful of a quick rebound in the Gulf. Thirty-eight percent of 100 chief financial officers at U.S. oil and gas companies do not expect activity in the region to return to 2009 levels until 2012 or 2013, while 31 percent say it will be after 2013 or never, according to a survey released Monday by BDO, an accounting and consulting firm.
Matt Pickard, a senior market analyst with Quest Offshore Resources in Sugar Land, is more optimistic.
"The drilling activity is going to pick up," he said. "It's a matter of when, not if."
150 exploration targets
There are more than 150 exploration targets to be drilled over the next three years in the U.S. deep-water Gulf of Mexico, and the potential rewards of those prospects will far outweigh current headaches from the permitting process, he said.
Shell, already one of the largest oil and natural gas producers in the Gulf, has said some recent discoveries give it the potential to add output of more than 250,000 barrels of oil equivalent a day in the Gulf by 2015.
Appomattox, in particular, might have received more attention, but was quickly overshadowed this spring by the deadly blowout of BP's Macondo well.
The discovery, though not massive, is big enough to attract more exploration in the sparsely occupied eastern Gulf. It also highlights the potential of Upper Jurassic-era rock layers, found under more than a mile of water and three miles below the seafloor. Though the Upper Jurassic has been drilled onshore and in the shallow- water Gulf, Appomattox marks the first time Jurassic rock has been unlocked in the deep water.
But Shell says it is too early to talk about the play's broader potential. For now, the company needs to do additional drilling at Appomattox so it can decide how to proceed. And to do that, it needs permits. “