I know a guy who is a pretty sharp trader and he still likes CLR, but with the earthquake problem becoming more of a visible threat, I would just stay away. The problem with these quakes coming closer to the massive storage in Cushing, is if a big enough one hits, it is going to upset the whole premise of fracking. The States of Oklahoma and Texas are allowing for the industry to dictate where they can drill. Just last week Texas passed a law that barred localities from banning drilling in their jurisdictions.
Sentiment: Strong Sell
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Golden Parachute will save him from any fall. Did the same with Aubrey McClendon and Tom Ward other Oklahoma oilmen.
There are suckers born every minute. Frackers are nothing but ponzi schemes. Every penny they make has to go back into capex or else they go broke. Without cheap bank financing, none of them will survive $60 oil
yup.. it's crazy.
And yet these oil co's can still find banks & hedge funds who will loan them 100's of $$$ millions to continue not generating any free cash flow forever..
As i said earlier i have playing it since 2007. You know how many times i have doubled, and tripled my money? Then buying it back on selloffs. I have enough shares now not to be concerned because it is all cream. And yes banks and institutions love high insider ownership because those stocks are covered. Its unlike companies that have no ownership and float the credit markets. That does have an impact on borrowing.
Do you realize Hamm is not personally liable for corporate debts? How does that make the lenders feel better?
Too bad you fell in love with the stock. You should have sold at $80 and bought back twice as many shares at $40.
You're correct. Their credit facility should be tapped by this fall. They had negative FCF of $756 million in the first quarter. Second quarter FCF should be in the negative $450 million range if oil sticks around $60. Another $450 million in the fall. Their credit facility is wiped sometime in the early fourth quarter out and debt covenants will force them to issue more shares, not take on more debt. Union Bank must be shaking in their boots at this point. While oil prices are at $60, Bakken oil is at $49. On top of that, natural gas prices are collapsing again and may be near $2 by fall. That's about 30% of revenues and mostly unhedged by now. Oil is completely unhedged. The crack between Brent and WTI has practically closed. That means besides a US oil glut, there is a global oil glut.
Insider ownership means nothing to the lenders. It's all corporate debt. Hamm is not personally liable for any of it, so the lenders won't take any comfort in him owning a large percentage of the shares outstanding. CLR in the $40's is living on borrowed time.