Park the BS and name calling and focus on real numbers.
The talk is that HUSA needs a huge wad of cash to keep drilling. False
One 1000 BBL/day well nets about 24 G's to HUSA which is about twice as much as their drilling cost share. The math is simple: $65 netback per barrel, times 1000 and then 37%.
Most wells in the area of the CPO-4 are 2,000 - 15,000 bbls/day wells. They have enough cash on hand for 2 or 3 wells and could raise extra with their shelf registration.
Is it worth the wait for results of a well already drilled? Your call.
< Is it worth the wait for results of a well already drilled? Your call >.
Anwered your own question. I like to invest in oil companies with oil...actual production, not what could be as they pull back up to find some productive zone...and all of it in a third world country that is holding back their money.
In this business, its about results. Look at income. You want to discuss real numbers? No BS? Ok....show me the numbers!
I thought you were smarter than this. Or maybe you are talking up your position?
If HUSA had the proven reserves, production, etc. that you mention, it would be trading above $20 and you would be on to some other stock to banter about incessantly.
IT'S CALLED FUTURE POTENTIAL. GET IT? OPPORTUNITY. GETTING IN BEFORE THEIR RESERVES ARE PROVEN AND THEY GET BOUGHT OUT. VALIDATING THE WRITTEN REPORTS BY 2 ANALYSTS THAT STATE THEY BELIEVE OVER 1,000,000,000 OF OIL EXISTS IN THE CPO-4 FIELD.
Even you can understand that concept. Right?
Well, roll the dice. Will they find commercial hydrocarbons or not? PMG has gone on an incredibly bad run in the last year - spend $400MM drilling and yet saw reserves decline precipitously as they had terrible drilling success - in what was once considered much higher potential lands adjacent to Corcel/Yatay...
And even with strong production, they have seen target prices downgraded significantly. RJames just downgraded again - to $14 - considering PMG was $40 not to long ago on the back of initial Corcel/Yatay success, it's a bitter pill to swallow.
The odds of HUSA having success are low. The odds of failure are high. For a company with little cash and is significantly over valued even at current levels, the downside risk is large. As such, HUSA remains a terrible risk-reward - but you can't tell that to the nitwits who own HUSA - they thought it was great value at $16...
What if the field has 1,ooo,ooo boe? Still a dumb play at $16?
Someone with your intellect can run the numbers. Don't get confused between market action and future opportunity. You might choke on your short position.
I think it may be of some
relevance to keep in mind
that natural gas in that
part of the world is not
in oversupply as is in the
lower 48 states. I understand that it sells somewhere between
$3.50 and $4.00. It is also my
understanding that a gas pipeline is not that far away
from the well.