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Sunday, June 29, 2008

Who Says The Airline is Dead?

Pretty much everybody. It is so obvious to see why people are bearish about the airline stocks now - high gas price, shrinking profit, bankruptcy concerns, low customer satisfaction, safety concern. Basically the entire aireline industry is in a "perfect storm".

In order to survive, many airline companies tries to cut cost by doing something unfortunately further lowers customer satisfaction such as charging for food service and check-in luggage. Other actions includes cutting jobs, cutting routes and merger.

Is it the end of the airline industry? A commercial recently gives me a different idea. The new Southwest Airline(LUV) commercial says it is not charging a dime on service while other airline are charging everything from checked bag to sit at aisle or window sit.

So what did Southwest do differently? The key is the successful oil hedging startegy which allows the airline to pay only $2 per gallen on gas while everybody else is paying $4 or more. And how good is the strategy? The company has 70% of the fuel locked at $51 a barrel while other airlines only has 20% to 30% fuel hedged.

Southwest Airline will probably be the only airline posting profit this year according to analysts. And considering the challenges the other airlines are facing, don't be surprise if few years down the road the airline become the largest domestic carrier in United States.

Monday, June 16, 2008

Oil In Your Backyard - XEC

In today's Oil In Your Backyard company, we'll take a look at Cimarex Energy Co. (XEC). The Denver based company works on oil and gas properties in Texas, Oklahoma, New Mexico, Kansas, Louisiana, Wyoming, and Michigan with 58.3 million barrels of oil.

The company is still growing and brought in $1.43 billion in revenue last year. With market cap of $5.98 billion the company is trading at about $72 per share with P/E of 14.15, still relatively cheap. The stock has been doing well this year with 80% gain

Monday, June 9, 2008

Oil In Your Backyard - OXY

In today's Oil In Your Backyard company, we'll take a look at Occidental Petroleum Corp. (OXY). This Los Angeles, CA based company is a major oil producer with oil and gas properties in Texas, New Mexico, California, Kansas , Oklahoma and Colorado. The company also owns interest of oil exploration in South America(Argentina, Bolivia, Colombia), Middle East(Qatar, Yemen) and Africa(Libya).

This is a company that generated $20 billion revenue last year with $5 billion in income. At $93.13 per share, the stock is still cheap with P/E of 12.88 and forward P/E of 9.98. The stock also has dividend yield of 1.4%, a plus on top of its sweet ROI.

Wednesday, June 4, 2008

Oil In Your Backyard - SGY

In today's Oil In Your Backyard series, let's look at Louisiana based Stone Energy Corp. (SGY). The company owns oil and gas properties in Gulf of Mexico, the Rocky Mountain Basins, and the Williston Basin. The company also exploratory joint venture in China.

Alhtough the stock price has doubled for the past year, at $62.81 with market cap of $1.79 billion, it is still pretty cheap with P/E at 7.5. The latest quarter report was bullish as net income went up 500% to $62.2 million and beat analyt's estimate.

Monday, June 2, 2008

Oil In Your Backyard - ABP

In the Oil In Your Backyard series, we began looking at oil companies that are involved in oil drilling within United States. Today let's take a look at a smaller company called Abraxas.

Abraxas Petroleum Corp. (ABP): the Texas based company operates oil and natural gas drilling in Wyoming, South Texas and West Texas. In the latest earning report the company got a huge jump in oil production from 557 barrels to 12,247 barrles per day. Despite posting a huge loss of $9 million the stock still got new coverage from analyst with Buy rating. With P/E ratio of 4.76 this stock looks very attractive.

Sunday, June 1, 2008

Oil In Your Backyard

Oil is expensive. Period. Pretty much everybody who drives a car would agree with that. What if Big Oils also think the same thing. Big Oil? Aren't they the ones that cause the oil price to fly like crazy?

Yes. Big Oils are probably making crazy profit off high gasoline price. However at the same time because oil fields that major oil corporations are drilling are at remote places like freezing Syberia or deep ocean floors, getting oil out of mother earth becomes expensive and risky for the oil companies.

Well how about safer and closer place ... like United States. Instead of the Big Oil, we have smaller companies owning oil and gas fields here in our own land. For the next few articles let's take a look at those small oil companies with oil properties here in United States.

Penn Virginia Corp. (
PVA): the Pennsylvania based company drills for oil and natural gas in East Texas, Appalachia, Mississipi, Gulf Coast and Mid-Continent. As of end of 2007 the company has natural gas and oil reserves of approximately 680 billion cubic feet equivalent and brings revenue of $92 million in the first quarter of 2008. The stock is currently trading at high P/E of 49.16 as new natural gas well drilled in Texas is expected to boost production.