I know being debt free is great but do you think it's being overly cautious. I'd think borrowing and getting something started is better then chugging along a 1 mph. Most all big companies have debt but have tons of assets also. What do you think HUSA investors?
In this case, I think being debt free is, in fact, a very good thing, and it is not being overly cautious.
Keep in mind that HUSA is just a small holding company with only a hand full of employees. When you buy shares in HUSA, you are basically saying that you think HUSA can develop and capitalize on their portfolio of oil and gas holdings, plus any new projects that they can come up with. If they need more money for capital investment, they get it through one of two routes, either from cash flow from current operations or by private placement of additional shares. That's why HUSA recently increased the share authorized to 150 million. Currently there are 52 million shares outstanding. Once the ball gets rolling again, you will likely see a private placement for maybe 10 million shares, with warrants to buy 10 million more, for example.
This form of financing has been their pattern over the past few years and I don't expect them to deviate from it. Yes, it is dilution, but I find that preferable, in this case, than the alternative of borrowing money. At least with a private placement, you can be sure that the company has had to convince the receiving partly of the merits of their investment. Are you going to invest in a private placement if you have not been convinced that such an action could pay off for you?
It may seem like we are chugging along at the moment at 1 mph, which we are, but look back at the max chart and you will see the volatility that this stock is famous for. In fact, in its SEC filings HUSA has warned repeatedly about the volatile nature of its stock. Wait for a string of good announcements, watch the share price climb, and then be sure to sell before it fizzles out again. Such is the nature of oil and gas exploration and production.
Yes it does so what do you think is happening now with the approval of more issued shares? They can use an ATM offering anytime the management wants and at this low valuation would only cause accelerated dilution. If they had some inside track on a promising concession it might pay to get a line of credit but we do not have any assets that a bank could take as collateral. You have to have a producing asset to get a loan. Venture capitalist are vultures and will want our future. Best to plod along and hope we get lucky some day... that is if the salaries do not eat up our remaining cash while we wait.