Monday, October 30, 2017

Exit from Fred Olsen Energy

Today I decided to finalize our exit from Fred Olsen Energy (Oslo OSE: FOE), which has been in the portfolio since around 2010. This was last pure oil  & gas related stock in our portfolio.

Over the years the position was trimmed up- and downwards. It's safe to say without indepth calculations that the net effect of all trades and dividends has been negative to our portfolio.

The recent gains in the stock do not make any more sense to me than the previos spikes in the stock price during last few years. That is why I thought now is good time to exit.

The year 2017 started with 34,20 NOK price and the lowest valuation has been 8 NOK per share. Today the stock made 3 month high and climbed above 23 NOK. In contrast just 1,5 months ago it was trading under 10 NOK.

The fact is that the fleet will soon sit completely idle as Bideford Dolphin contract ends in early November 2017. The company reports that Bolette Dolphin is "hot stacked" and "contract opportunities are pursued aggressively". Rest of the units are "smart stacked" (3 units) or "preserved and maintained" (2 units).

The company had 688,9 million USD worth of non-current interest bearing debt and 190,9 million current interest bearing debt in end of Q3 2017. Cash and cash equivalents stood at 451,9 million USD.

I do hope they get new contracts soon despite exiting the stock!
They will need the cash flow to service the debt.

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