It almost always is a significant warning signal when earnings season is upon us and the trading pattern of your stock inexplicably changes. You can always tell that something is different. If what you think should be happening is not being confirmed in the price of the stock, you get a bad feeling in your gut. But you say to yourself, lets wait for earnings, all will be better then. But almost always, it is earnings that will not meet consensus estimates that is the problem. The problem is the insiders already know and are dumping the stock in advance of the report because they "know" there will be disappointment. We all just experienced this with BR. It all started at $45.00, look at the chart.
It does appear to me that Bobby Shackouls and his management team are taking an ultraconservative approach to running the company to the point that they are willing to let gas and oil production languish rather than spend money to try and boost it. Which means that they are probably trying to put together a string of improving quarterly numbers as a prelude to selling the company. The writing appears to be firmly on the wall. I hope I am correct and that it happens sooner rather than later for the sake of all us longs. On the other hand, Bobby Shackouls might just be inept at running BR in this day and age and it is time for a BOD press release to the effect "The BOD of BR met with Bobby Shackouls and discussed the situation at the company and unanimously decided it was time for a change." "Bobby has left the company to spend more time with his family and enjoy his ranch." "He will be replaced by.........."
first i thought the insider sales were pretty tame back when the stock was 41 and 44 so i did not have problems with that. it was public anyway.
i do have a PROBLEM with the reported average price for the natural gas for the quarter. the earnings press release states the average price for the 2Q00 ng was $2.44. ok let's do some simple math based on br's own public documents and the price open market ng in 2Q00. br's annual report states exactly the amount of ng hedged in 2000 at a price of $2.43. we know from many statements from company people that about 900 mcf per day of br's ng production was hedged, which is a little less than 50% (i think the daily production rate was 1,900 mcf (someone correct me if wrong) of the daily production on ng. to sort of support this a presentation on br's website to banc of america analysts meeting on june 22, 2000, states that the hedge number is 886 mcf at $2.53/mcf (i think that is right, but i am doing this from memory).
we know the price during 2Q00 was between $3 and $4+, so how could half the ng production plus the hedged ng production average price be only $2.44 average? i was very surprised no analyst asked about the average price of ng. if we are being told the true story on hedges, then something seems wrong with the $2.44 ng price. can anybody figure this out or does anyone already know the answer?
also the conf. call was weak. i cannot believe that we just heard about a 7% production curtailment during 2Q00 due to unscheduled downtime (read problems). hey management, the reason so many analysts asked you on the conf. call about "anymore surprises" is due to the surprises you dumped out today. br management must learn to be more transparent during the quarter. the next to last statement and question was good. the analyst told them what was not going right and asked whether bobby was planning to sell the company. i hope the company is in play. last year i heard that texaco was interested. br has a lot of ng that they don't seem to be able to get out at today's prices.
consider the difference between the Merc gas location and BR's production locations. This basis may explain part of the difference - also is Canada gas the same price as US gas? Also do they not have gas in the North Sea that may be priced differently. I do not understand when they quote $/mcf and if that is the same as $/mmbtu? Seems like they are the same only if BR's gas is exactly 1 mmbtu per mcf.