LET'S BRING IN TWO OF THE TOP
NAMES IN THE ENERGY SECTOR,
MANAGING DIRECTOR FOR
OPPENHEIMER, TIM REDMOND.
GUYS, SPECIFICALLY WHAT HAPPENS
NEXT.
AND, TIM, YOU WERE OPERATING OFF
THE ASSUMPTION YESTERDAY THAT OF
THIS NEARLY SIX MILLION BARRELS
THAT WERE TAKEN OFFLINE OVER THE
WEEKEND, THAT ABOUT TWO WOULD BE
BACK ONLINE SOON, AND THAT'S THE
NEWS WE GOT TODAY.
WHAT'S THE NEXT PIECE OF NEWS,
AND SINCE YOU'RE GOOD AT
PREDICTING, WHAT WILL THAT BE?
>> I THINK THE BIGGEST
UNCERTAINTY IS WHAT, IF ANY,
RETALIATION WILL HAPPEN.
IS THAT GOING TO BE A SAUDI-LED
ATTACK?
IS THERE GOING TO BE A BROADER
COALITION PUT IN PLACE, AND I
THINK THAT IS THE NEXT SHOE TO
DROP RIGHT NOW.
THE MOVE LOOKS DRAMATIC OVER TWO
DAYS IN WTI, BUT IF YOU LOOK
INTO THE FUTURE, IT'S REALLY
ONLY UP ABOUT $2 A BARREL.
YOU'VE SEEN A LITTLE POP ON THE
FRONT END, BUT THIS ISN'T A
GAME-CHANGING MOVE ACROSS THE
WHOLE DURATION OF THE FUTURE
STRIP.
LIZ: PENNSYLVANIA VEL, YOU WERE
SURPRISED -- PAVEL, YOU WERE
SURPRISED AT THE SPEED, BUT THE
SAUDIS HAD A LOT OF BUILT-IN
REDUNDANCY E IN ANTICIPATION OF
ANYTHING COMING OFFLINE FOR
WHATEVER REASON, SO IMMEDIATELY
THEY WERE ABLE TO AT LEAST SHIFT
OVER TO SOME DIFFERENT
PIPELINES, ETC.
TELL ME YOUR SENSE OF WHAT'S
HAPPENING ON THE GROUND IN SAUDI
ARABIA.
THEY'RE ACTING VERY CALM,
EVERYTHING'S FINE, DON'T WORRY,
THE ARAMCO IPO'S GOING TO HAPPEN
IN THE NEXT 12 MONTHS, BUT WHAT
ARE YOU HEARING?
>> WELL, LOOK, ANYTHING SAUDI
ARAMCO SAYS WE NEED TO TAKE WITH
A GRAIN OF SALT.
THEY WANT TO GO PUBLIC PARTLY
FOR THAT REASON.
THEY WANT TO SEND THIS MESSAGE
OF CONFIDENCE TO THE MARKET,
REASSURANCE.
I THINK WE OUGHT TO BE
SKEPTICAL.
LOOK, THIS IS HIGHLY
SOPHISTICATED ENERGY
INFRASTRUCTURE.
THIS IS NOT JUST BLOWING UP A
PIPELINE AS HAPPENS IN PLACE
LIKE NIGERIA.
THIS IS THE WORLD'S BIGGEST OIL
PROCESSING FACILITY.
YES, THERE IS REDUNDANCY, BUT
THEY WILL HAVE TO GET REPAIR
EQUIPMENT CUSTOM MADE MACHINERY
IMPORTED FROM ABROAD, DELIVERED,
INSTALLED.
NONE OF THAT IS GOING TO BE DONE
INSTANTANEOUSLY, AND WHATEVER
ARAMCO SAYS ABOUT THE TIMETABLE,
WE WOULD TAKE THE OVER IN TERMS
OF THE DURATION.
LIZ: INTERESTING.
TIM, WEST TEXAS YESTERDAY
SETTLED AT AROUND $62.90.
THAT WAS A GAIN OF 14.6%.
TODAY WE CAN SEE WE'VE PULLED
BACK, AND IT'S HARDLY ANYWHERE
NEAR THAT HUGE PERCENTAGE.
IS THIS A SHORTING OPPORTUNITY?
WHERE WOULD YOU BE TRADING THIS
KIND OF MOVE?
>> NO, I DON'T THINK IT'S A
SHORT OPPORTUNITY BECAUSE
LOOKING FORWARD THERE IS SO MUCH
POLITICAL RISK THAT YOU'VE HAD.
YOU KNOW, YOU HAVE HEARD THIS
PHRASE PUT OUT IN THE PUBLIC
ABOUT A RISK PREMIUM NOW PUT IN
CRUDE.
THERE WAS MAYBE A LITTLE
LAISSEZ-FAIRE ATTITUDE ABOUT
SUPPLY AND POSSIBLY AN
OVERSUPPLY SITUATION.
NOW IT LOOK LIKE THE SAUDI
DISRUPTION, MAYBE A COUPLE
MILLION BARRELS A DAY FOR TWO
WEEKS, THAT'S 40 MILLION IN
AGGREGATE, WE THOUGHT IT COULD
BE MANY MULTIPLES OF THAT JUST
LAST NIGHT.
I THINK THAT RISK PREMIUM IS
THERE RIGHT NOW, AND I THINK
THAT WILL SUPPORT THIS MODEL
LASTLY -- MODEST RALLY WE'VE
SEEN.
LIZ: WHAT WOULD YOU PICK, TIM?
WHAT ARE THE NAILS YOU REALLY
LIKE?
>> ON THE LARGE CAP SIDE IS
NOBLE ENERGY.
IT'S BEEN A REAL UNDERPERFORMER
THIS WEEK BECAUSE THE COMPANY
HAS EXPOSURE IN ISRAEL.
HOWEVER, 76% OF THE PRODUCTION
COMES FROM THE U.S.
90% IS OUTSIDE ISRAEL.
THAT'S ONE WE LIKE ON THE LARGE
CAP.
LIZ: AND, PAVEL, WHAT ARE YOUR
PICKS?
IT'S JUST HITTING THE TAPE THAT
THE ISRAELI ELECTION EXIT POLLS
ARE SHOWING THAT THE
PRESIDENTIAL RACE -- REMEMBER,
THEY HAD THE PRIME MINISTER
RACE, THEY HAD TO REDO IT, TOO
CLOSE TO CALL AT THIS MOMENT.
WE HAVE A PREDICTION THAT
NETANYAHU AND GANZ, HIS
COMPETITOR, FALL SHORT OF THE
MAJORITY, 61 SEATS.
PAVEL, WHAT ARE YOUR PICKS?
>> OCCIDENTAL.
INTERESTINGLY ENOUGH, A COMPANY
LIKE NOBLE ALSO HAS SOME
EXPOSURE IN THE MIDDLE EAST,
SPECIFICALLY THE PERSIAN GULF.
IT'S PREDOMINANTLY IN THE UNITED
STATES AS WELL.
OCCI, OF COURSE, BOUGHT ANADARKO
NOT LONG AGO AND AS A RESULT OF
THAT DEAL TOOK A HIT, TRADING AT
ITS LOWEST LEVELS IN ABOUT A
DECADE WITH A DIVIDEND YIELD OF
7% WHICH WE THINK IS VERY SAFE.
THAT'S, BY THE WAY, THREE TIMES
THE DIVIDEND YIELD OF THE S&P
500.
NOW, ON THE SMALL CAP SIDE,
CALIFORNIA RESOURCES, CRC,
THAT'S A HIGH --
LIZ: IT'S DOWN 13%.
DEFINITELY CHEAPER TODAY.
>> DOUBLE-DIGIT MOVES ON DAYS
LIKE TODAY.
LIZ: GREAT TO SEE BOTH OF YOU,
WE APPRECIATE YOUR EXPERTISE IN
ALL OF THIS, AND I AGREE WITH