Intrinsic value of oil? Does it have cash flows? What discount rate?
So you're saying the oil futures curve is incorrect then? As it is showing lower prices long term.
What information do you have that the market doesn't?
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Cool an oil discussion. Finally something interesting.
Majors need $60 oil to pay for their operations, buy backs and dividends. I saw that on CNBC. For some, it could be as low as $45 USD I thought.
They're still making money hand over fist, therefore, above $70 USD. I'm think of extending my tilt to OIH. It's in a "down trend" so maybe I'll do nothing.
That's all I have to say on oil. I'll quietly back out...
Yes the oil produces cashflow to the owners of the oil field based on the market value (expectations) at the time.
Just like the inanimate building owned by OCA produces cash flows dependent on the market value of the buildings at the time of sale, resale etc.
And my expectations of longer term oil prices could be way off. I am not the one harping on here about how my view is the only view and everyone else is wrong.
superfluous to requirement
superfluous to requirement
I think the two are probably closer than you think.
Oil prices have a lot of moving parts given the commodity underpins our entire existence.
Establishing what oil is ‘worth’ at any given moment is fairly complex I would say.
And with regards to intrinsic value - I suggest that the market cap is within cooee for MOST companies MOST of the time.
I acknowledge there are examples where this does not hold true. But it is a reasonable gauge of a business value (plus or minus) most of the time.
Perhaps OCA is the minority case where the market has just ‘clearly’ got it way wrong.
Perhaps it isn’t.
We must be open to the possibility that the market has priced it correctly given what is known today (which informs everyone’s expectations which ultimately establishes the price).