Regular readers of my articles know that I am a shareholder of ATP Oil and Gas (ATPG, Financial) as well as a smaller position in Stone Energy (SGY, Financial).
http://www.gurufocus.com/news.php?id=105495
http://www.gurufocus.com/news.php?id=104529
Today shareholders of both companies as well as those of Mariner Energy (ME, Financial) and Apache (APA, Financial) and other Gulf of Mexico producers all had to deal with the difficulties of investing 2010 with a 24 hour a day 7 day a week media that is inclined to sensationalize everything first before verifying facts in an effort to attract viewers.
At about 11am eastern time as I was heading out the door I checked the share price of ATP which was up 3% plus to $12.16. This wasn’t a big surprise to me as I believe that the company is in the process of completing a major financial transaction and hooking up a well that will increase cash flows by 40% (so near term strength in the share price seems likely).
By the time I got back the share price had plummeted by more than 10% and millions of shares had been traded. Why ? Huge news, look at the headlines I quickly found:
Associated Press – Gulf Rig Explodes
http://news.yahoo.com/s/ap/20100902/ap_on_re_us/us_gulf_rig_explosion
Washington Post – Offshore Oil Rig Explodes
http://www.washingtonpost.com/wp-dyn/content/video/2010/09/02/VI2010090202963.html
Bloomberg – Mariner Platform Blast May Extend Obama Deep Water Ban
http://www.bloomberg.com/news/2010-09-02/mariner-platform-blast-may-extend-obama-deep-water-drilling-ban.html
Associated Press – Mile Long Oil Sheen Spread Thursday from an offshore platform
I could link 50 more and you can see why the Gulf of Mexico stocks sold off fearing another BP type problem, drilling moratorium ramifications, government legislation etc.
Of course the truth turned out to be more like this:
“NEW ORLEANS, La. (AP) -- The Coast Guard is saying there are no immediate signs of a spill from an oil platform fire in the Gulf of Mexico off the Louisiana coast.
All 13 crew members were rescued from the water in the second such disaster in the Gulf in less than five months.
The Coast Guard initially reported an oil sheen a mile long and 100 feet wide had begun to spread from the site of the fire, about 200 miles west of the site of BP's massive spill. But officials said at a Thursday afternoon news conference that boats at the platform have not seen any oil sheen.”
The platform in question was actually shut in prior to construction and sandblasting being performed. That construction/sandblasting created a spark that ignited something on the platform. There was no blowout and no oil spill.
And this is a perfect example of how investing today is much different than it was 40 years ago as information (and often misinformation) travels globally within seconds. I held my shares of ATP and Stone, but I didn’t buy any shares on the selloff because I honestly didn’t know what was true.
I guess we just accept this as a challenge we as investors face that Buffett didn’t have to consider in the 50’s when he was in his glory days. Just put your head down and ignore the noise.
http://www.gurufocus.com/news.php?id=105495
http://www.gurufocus.com/news.php?id=104529
Today shareholders of both companies as well as those of Mariner Energy (ME, Financial) and Apache (APA, Financial) and other Gulf of Mexico producers all had to deal with the difficulties of investing 2010 with a 24 hour a day 7 day a week media that is inclined to sensationalize everything first before verifying facts in an effort to attract viewers.
At about 11am eastern time as I was heading out the door I checked the share price of ATP which was up 3% plus to $12.16. This wasn’t a big surprise to me as I believe that the company is in the process of completing a major financial transaction and hooking up a well that will increase cash flows by 40% (so near term strength in the share price seems likely).
By the time I got back the share price had plummeted by more than 10% and millions of shares had been traded. Why ? Huge news, look at the headlines I quickly found:
Associated Press – Gulf Rig Explodes
http://news.yahoo.com/s/ap/20100902/ap_on_re_us/us_gulf_rig_explosion
Washington Post – Offshore Oil Rig Explodes
http://www.washingtonpost.com/wp-dyn/content/video/2010/09/02/VI2010090202963.html
Bloomberg – Mariner Platform Blast May Extend Obama Deep Water Ban
http://www.bloomberg.com/news/2010-09-02/mariner-platform-blast-may-extend-obama-deep-water-drilling-ban.html
Associated Press – Mile Long Oil Sheen Spread Thursday from an offshore platform
I could link 50 more and you can see why the Gulf of Mexico stocks sold off fearing another BP type problem, drilling moratorium ramifications, government legislation etc.
Of course the truth turned out to be more like this:
“NEW ORLEANS, La. (AP) -- The Coast Guard is saying there are no immediate signs of a spill from an oil platform fire in the Gulf of Mexico off the Louisiana coast.
All 13 crew members were rescued from the water in the second such disaster in the Gulf in less than five months.
The Coast Guard initially reported an oil sheen a mile long and 100 feet wide had begun to spread from the site of the fire, about 200 miles west of the site of BP's massive spill. But officials said at a Thursday afternoon news conference that boats at the platform have not seen any oil sheen.”
The platform in question was actually shut in prior to construction and sandblasting being performed. That construction/sandblasting created a spark that ignited something on the platform. There was no blowout and no oil spill.
And this is a perfect example of how investing today is much different than it was 40 years ago as information (and often misinformation) travels globally within seconds. I held my shares of ATP and Stone, but I didn’t buy any shares on the selloff because I honestly didn’t know what was true.
I guess we just accept this as a challenge we as investors face that Buffett didn’t have to consider in the 50’s when he was in his glory days. Just put your head down and ignore the noise.
