The world is running out of oil… so might as well buy a few shares in the companies that make it and move it around.
Having had some cash free up in the retirement account, I went shopping for some Oklahoma oil and gas companies. Locavesting, as it were.
ConocoPhillips (COP) I talked about in this post a few months ago, where I was vacillating between ENI, Total, Statoil, Petrobras and COP. In the end, I ended up with Petrobras, giving COP a pass for the time being. A few weeks ago, I took a nibble with 30 shares at around $77.
OneOK Partners LP has just announced that they will build a two-billion dollar pipeline from the Bakken oil play to Cushing OK. That’s good, it unlocks more domestic oil production, sending down to the Gulf Coast where prices are higher, and, it helps out my other peeps like PetroBakken. I dipped in with 50 shares at around $55, for a 5.90% total portfolio share. A tasty 4.5% yearly dividend yield wasn’t the primary motivation, but a nice bonus. Another pipeline company expanding its transport capacity to service Canadian oil producers is Kinder Morgan Energy, with a planned $5 billion-with-a-B expansion of its Trans-Mountain pipeline to the West Coast. Opponents of the XL Pipeline take heed: that oil has got to go somewhere, and Asian consumers will be lining up to purchase at a convenient West Coast terminals. Canadians are much easier to deal with than conflict-ridden areas like South Sudan and the Persian Gulf.
OneOK Partners is a little pricey in terms of Price to Tangible book, but I’m looking at its nice dividend growth history as a consolation.
The shares of both OneOK and ConocoPhillips have taken a slight dump since the buy-in, but that’s OK, in for the long haul. Here’s how the portfolio stacks up, as of a couple days ago:
The portfolio is up 6.42% from last December close, but down from last month. I really need to add another column or another sheet showing that, but I’m too lazy for now. The Redneck Dividend Investing Portfolio, on the other hand, is kicking butt with 23% gain from inception.
VALE‘s stock has also taken a bit of a dump in the last couple months along with general commodities. Business though, is quite strong (Forbes, “Vale Is Hiring Thousands“). Planning to hire 10,000 people a year for the next three years is not for the weak of growth or stomach. The price of nickel, a major component of Vale’s income, is down at around $8 a pound, but that’s not necessarily bad news, as this hurts Chinese producers of nickel pig iron (NPI), which depend on higher nickel prices to turn a profit.
One major change was the disposal of half the position in PetroBakken (PBN on the Toronto Stock Exchange, PBKEF here in the US). This reduces exposure to PBN to 4.43% of the portfolio, which is just fine. The only other honker left, in terms of portfolio allocation, is Silver Wheaton at slightly over 13%, and I plan to let that ride until it gets past a bit past the cost basis, and then dispose of half of it. I might even take a closer look at Newmont Mining, if I was of a mind to increase the category of precious metals dividend payers.
PGH has also taken a minor nosedive lately, down 5.04% from the entry point, but still cranking out that dividend. PGH was recently featured in our friend Beating the Index’s analysis of the Viking oil formation in Canada.
That’s all for this update. Stay tuned for a more in-depth look at the fascinating topic of nickel pig iron (really!), and how it relates to innovation, sustainability and pollution.