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Kodiak Oil & Gas Corp. Message Board

  • symon_says_ symon_says_ Sep 28, 2013 9:45 AM Flag

    Self-Funding?

    If oil prices stay where they are, Peterson says that he expects KOG to be "self-funding" by mid-2014.
    Is that a Big Deal?
    You bet it is!
    From that point on, KOG's dependence on additional debt to expand operations is over and the extra cash can be used for acquisitions, pay down debt or buy back shares.
    But the main story will be the market's reaction to that event.
    I would expect self-funding to be worth at least 20-30% INCREASE in valuations going forward.
    And the "Shorts" are still short?
    Yes they are!
    What a screaming opportunity............................

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    • I remembered Peterson talking cash flow neutral by the end of this year; however, that was before the earlier property purchase. I listened to the last webcast and what he said was that 1st half they would still need some financial help to execute the CAPEX program. Then he said they should be cash flow neutral in the 2nd half of 2014 and possibly cash flow positive. I would expect them to pay down the revolver. The 1.55 billion in bonds are not dur until 2019 to 2021 and a big chunk of that is at 5 1/2%. Another positive is continued expense reduction in drilling and completion and the fact that they have drilled more water disposal wells which will bring down costs. Finally it will be interesting to see what the reserves will balloon to when they report the end of February. As I have said before, what is going on now is what made the gas plays in the 2006 - 2008 time period explode to the upside and in some cases tripling in PPS.

    • Its worth a bunch if they pay down the debt rapidly which would be a signal to the market that KOG is about to become a CASH COW with a License to Print Money ~ Something we have all known all along and have waited patiently for for years ~ Touchet` !

      • 1 Reply to mr_ortooglo
      • I might agree with that if they've reached their self-imposed limit on what they can do with other people's money at low fixed rates and get 35-90% return on it.

        This is what leveraged expansions are based on. It's simply a matter of whether there's enough coming in under adverse conditions (much lower oil prices) and how fast the company can dial back their overhead should that occur.

        The number ONE priority when using other people's money, is to make those "other people" never push the shareholders out the door.

        The number TWO priority is to turn those borrowed dollars into many more dollars while only paying back the original ones.

        Meanwhile the rent is very low while the process works through the multiplication process.

        I think the nicest thing about KOG right now, is that it is finally sinking into the market what we LONGS have known since early 2009 what Peterson & Co.'s plan was.

        He said it from the beginning: "We want to build a world class acquisition for a major oil company!"

        Unfortunately for some, the mileposts in that process does not lend itself well to charts and graphs.

        Sometimes message boards can help in this regard IF YOU UNDERSTAND THE BUSINESS AND RECOGNIZE PEOPLE WHO DO, and this one is an unusually good board most of the time.

    • That says a lot about their debt management. They have done well.

      Sentiment: Strong Buy

 

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