Penguin International

[Raks]

Hi Hit and Run san,

I followed your postings on the other thread and understand that you a very fact based and from the oil, which I admire a lot. I have benefited a lot as you have provided many insight into an industry that I am outside looking.

There are profit and cash flow. The argument was about: when marginal unit production cost<marginal benefit, some company would still produce oil as this would generate positive cash flow, despite painful in profit. As there would be less (cash flow) generated per barrel, more barrels need to be produce to pay the same amount of interest.

As mentioned, it was a coffee shop talk style. I mentioned about "maybe USA punishing Russia with oil price" and the reply was "not sure who's punishing who".
I can't provide you with the company name because I don't have them.
But if press for facts, I can only produce something like this (google search "unit cost per barrel of oil"). I have to believe in these because I have no better info. Please comment about those economics coffee shop talks on real situation.

"The operating cost (stripping out capital expenditure) of
extracting a barrel in Saudi Arabia has been estimated to be
around $1-$2, and the total cost (including capital expenditure)
$4-$6 a barrel."
http://www.reuters.com/article/2009/07/2...7420090728

"Last month, Wood Mackenzie, an energy research organization, found that of 2,222 oil fields surveyed worldwide, only 1.6 percent would have negative cash flow at $40 a barrel. That suggests there won't be a lot of chickening out at $40."
http://www.bloombergview.com/articles/20...mand-falls

"Two generalisations can still be made. First, in the very near term, the industry’s economics are good at almost any price. Wells that are producing oil or gas are extraordinarily profitable, because most of the costs are sunk. Taking a sample of eight big independent firms, average operating costs in 2013 were $10-20 per barrel of oil (or equivalent unit of gas) produced—so no shale firm will curtail current production. "
http://www.economist.com/news/finance-an...-boom-bind

I have a feeling that this might get removed to the oil price thread

On the other hand, those that have already paid off the debts, $40 dollars a barrel is still making money and there's no reason to cut.

Raks san

Are you saying that there are companies that are making a profit on $40 oil? If so, I would be most grateful if you could list some of these companies.

[HitandRun]

Thanks Raks san

I think I understand where you are coming from. I agree that for wells that have been drilled (and fracked), there is no reason for the oil to stop flowing as cashflow is still positive. Do note that the revenue received by each oil company might be different depending on the mix of their output (crude, condensate, ngl, ng) but I would typically expect a discount from WTI. Nevertheless, I have looked at the financial statements of many listed oil companies but as far as I can tell, none of them can make any profit on $40 oil (excluding hedging)... So I thought maybe I am missing something...

[CityFarmer]

One of my investing rule is never buy a pure cyclical company above its book value. Rig building, shipbuilding, property, shipping etc..

That's also one of my investing principles. I will only invest in the stocks of a company in a cyclical industry when it's priced below book value, during the industry down turn. In an upturn, they are only good for short term trade.

I reckon both of you mean NAV, rather than RNAV for the stock, right?

[Bibi]

One of my investing rule is never buy a pure cyclical company above its book value. Rig building, shipbuilding, property, shipping etc..

That's also one of my investing principles. I will only invest in the stocks of a company in a cyclical industry when it's priced below book value, during the industry down turn. In an upturn, they are only good for short term trade.

I reckon both of you mean NAV, rather than RNAV for the stock, right?

My book value definition is NTA.

[Tiggerbee]

One of my investing rule is never buy a pure cyclical company above its book value. Rig building, shipbuilding, property, shipping etc..

That's also one of my investing principles. I will only invest in the stocks of a company in a cyclical industry when it's priced below book value, during the industry down turn. In an upturn, they are only good for short term trade.

I reckon both of you mean NAV, rather than RNAV for the stock, right?

My book value definition is NTA.

For me, it's also NTA (with investments marked to market).

[CityFarmer]

One of my investing rule is never buy a pure cyclical company above its book value. Rig building, shipbuilding, property, shipping etc..

That's also one of my investing principles. I will only invest in the stocks of a company in a cyclical industry when it's priced below book value, during the industry down turn. In an upturn, they are only good for short term trade.

I reckon both of you mean NAV, rather than RNAV for the stock, right?

My book value definition is NTA.

For me, it's also NTA (with investments marked to market).

Thanks, that's rational to me, rather than just the booked value.

[dydx]

The following para (2nd last para) extracted from Penguin's latest Corporate profile page in the company's website….
http://www.penguin.com.sg/about-us/corporate-profile/
"In 2015, we will unveil brand new crewboat designs that will further revolutionise the industry and underscore Penguin’s passion for crewboats."
has caught my eyes.

[CityFarmer]

The following para (2nd last para) extracted from Penguin's latest Corporate profile page in the company's website….
http://www.penguin.com.sg/about-us/corporate-profile/
"In 2015, we will unveil brand new crewboat designs that will further revolutionise the industry and underscore Penguin’s passion for crewboats."
has caught my eyes.

The year 2015 in Penguin Int., started with a new Flex-40SL which was engineered for speed and security. More will come no doubt...

http://www.penguin.com.sg/vessel-specs/flex-40sl/

[xlandjy]

The following para (2nd last para) extracted from Penguin's latest Corporate profile page in the company's website….
http://www.penguin.com.sg/about-us/corporate-profile/
"In 2015, we will unveil brand new crewboat designs that will further revolutionise the industry and underscore Penguin’s passion for crewboats."
has caught my eyes.

The year 2015 in Penguin Int., started with a new Flex-40SL which was engineered for speed and security. More will come no doubt...

http://www.penguin.com.sg/vessel-specs/flex-40sl/

Are they eyeing the markets of security agencies... The speed is good but radar and surveillance equipment (night vision etc) are essential. Furthermore, such agencies normally buying in bulks of more than 10 units .... Hope they are able to penetrate into these markets; especially the Indonesian and Malaysian markets. However, I am not sure if the two countries have budget for it... I am vested.

[dydx]

The following para (2nd last para) extracted from Penguin's latest Corporate profile page in the company's website….
http://www.penguin.com.sg/about-us/corporate-profile/
"In 2015, we will unveil brand new crewboat designs that will further revolutionise the industry and underscore Penguin’s passion for crewboats."
has caught my eyes.

The year 2015 in Penguin Int., started with a new Flex-40SL which was engineered for speed and security. More will come no doubt...

http://www.penguin.com.sg/vessel-specs/flex-40sl/

The first crew boat delivery in this year 2015 was a Flex-40SL - Penguin's 83rd Flex - delivered on 15Jan15.

Based on the info provided in the Shipyard Services page from the company's website…..
http://www.penguin.com.sg/our-services/s...-services/
Penguin has "more than 40 crewboats scheduled for delivery in 2015", and
"In 2015, we will deliver our 100th Flex crewboat, which will join a global family of Flexes, from Asia to Africa."

So the new crewboat business in 2015 does appear rock-solid still. Of course, we should not forget about Penguin's Offshore Charters and Ferry Operations divisions, which should continue to make at least decent contributions.