Stop Ignoring This Balance Sheet Risk

In the video below, Motley Fool contributor Sara Murphy discusses a huge liability that is sitting on many energy companies' balance sheets. Most investors are missing it completely. Are you?

It turns out that investors overlook a lot of things. One home-run opportunity has been slipping under Wall Street's radar for months, but it won't stay hidden much longer. Forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock... because they know it holds the key to the explosive profit power of the coming "no choice fuel revolution." The more expensive carbon gets, the better this stock looks. Luckily, there's still time for you to get on board if you act quickly. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!


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  • Report this Comment On July 02, 2013, at 11:08 AM, grahamsway wrote:

    An excellent presentation.

    I'm a big believer that global warming is a big, big problem, likely juiced by man made factors, and that we'd all be better off if we didn't have to burn fossil fuels.

    That being said there are couple of factors that seem to make unburnable reserves a relatively insignificant factor at least in an even long term investors timeframe.

    The first is that the critical valuation for e&p's isn't generally reserve based but op cash flow driven. Since the reserves are basically sunk cost, even if they had to write down some reserves it might sound scary but would do little to effect CF. In fact, the restriction on certain grade oils would likely raise general oil prices overall which would add value to current production of the good grades.

    The second is that the entire premise seems to depend on the fact that all will agree to meaningfully reduce carbon based consumption as we know it. While we are making tiny steps in that direction, the timeline on something like significantly reducing gasoline use in a growing economic environment would seem pretty long. I might take the bet that Saudi oil reserves deplete way before we get any major shift away from oil based consumption.

    I think we will eventually get to a lower carbon emission world but unfortunately it will probably be because we have to through limited supply/ inordinately high prices or obvious environmental disaster.

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