Energy Partners Ltd. topped the list of Biggest Percentage Price Decliners among common stocks on the New York Stock Exchange at the close on Thursday and moved down another 14% on Friday. In trying to understand this knee jerk move down I talked to someone who offered me the explanation that free cash flow and low debt are important in a declining price environment because external funding might become less accessible or more costly to EPL. My friend added that EPL was also under selling pressure from some illiquid fund needing to raise capital at all costs. Throw in the usual suspects, the short sellers, and you have the perfect storm. If ever there were a time to go "ALL IN" it is now. EPL right now offers a once in a generation chance to parlay a penny stock into a personal fortune.
First, to the prognosticators who predicted $2 EPL shares, congratulations, you were right.
Second, as to the management of EPL, congratulations! A milestone marker to post in the the historical records of the company. Single largest % loser in the WHOLE NY Stock exchange for the day. Kuddos!!!
Third, to those who think this stock will rise again, ask the prognosticators in the the previous section. I don't know, but it probably will come up some. When? I wouldn't hold my breath on the near term with EPL's debt load, etc.
Fourth, remember a few days ago, there was a post regarding debt covenants....well, I wonder if the loans to the company are still as rock steady at this point...with the press release and all....if I'm the banker, I would be remiss if I didn't revisit the EPL situation. The reserves are still there but is the cash flow with the price of gas tanking???
Lastly, I think this would be a great time to look at who is steering the ship. These fools' fortunes are on the reef and the ship is taking on water. Will the captain go down with the ship or can he get it off the rocks?? My bet is he's wringing his hands and stumbling around like the captain of the Titanic.
As a long time tape watcher of EPL I can honestly say the past few days trading activity has been unusual even for such an erratic stock as EPL. The loan covenants may be an issue, I don't know, but somebody was in an extremely crowded trade trying to get out when the stock went down on Friday and the market was merciless in taking them down. Right now EPL is trading up 20% today on it's normal relative light volume. Any attempt to buy shares today is immeditedly met by a strong tick up.EPL may not be a darling company but let's get real here, EPL is hugely oversold. EPL is a better company with substantially more proven reserves and production than it was when WOodside offered $24 a share for it.
You could very well be correct. Back in about 1998 or '99 I bought CHK at about 60 cents (4000 shares in my IRA account). Unfortunately I sold it at 1.14 or thereabouts. Has since run up to about $70 and is now in the $10 area.
Even at .60 CHK was showing positive cash flow although they temporarily suspended their preferred dividend which was later resumed and the arrears were paid up.