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Beware: The Only Time Cutting Energy Debt is Actually a Bad Idea

by Dr. Kent Moors | published June 16th, 2016

As crude oil prices languish in the run up to what could be a historic UK vote, on June 23, to leave the EU, another problem is surfacing for beleaguered U.S. oil firms.

More of them are either swapping debt for equity, or thinking about it.

The advantage of these swaps, of course, is that they remove debt from the oil companies’ books, thereby improving their financial snapshot.

But there’s a downside, and it may more than offset the short-term benefits. As oil prices remain below $50 a barrel, companies could simply be exchanging one negative for another… and the shareholders are caught in the middle.

Here’s what you need to know to protect your portfolio…

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The Fed is About to Hammer U.S. Oil Producers

by Dr. Kent Moors | published May 24th, 2016

The market is moving up nicely today, as investors continue to play a Whac-a-mole version with the cute little creatures replaced by not-so-cute members of the Federal Reserve Board.

As the debate intensifies over whether the Fed is raising interest rates or not, the U.S. energy sector, already under pressure, is about to feel a whole lot more of it.

It makes no difference if the Fed raises rates in June, July, or September (nothing happens on this front in August). And it makes no difference whether we end up with only one or two more hikes this year.

Any way you look at it, a wide swath of U.S. oil and natural gas producers are going to take it on the chin. Bankruptcies, mergers and acquisitions, and asset sales one step ahead of the sheriff will be increasing.

That doesn’t mean there’s no profit to be made here… On the contrary, in fact. But it does mean we have to tread carefully… 

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