The Algos are great at flushing out stops. They a agnostic about long or short and only day trade, so what was formerly working against this can now work for it.
It does look like this has bottomed. Over the next month or two, this should make it back to $6.50. This break of the average confirms breakout of the downtrend line dating back to last August violated a few days ago. A break above 5.84 is going to result in a sharp move to 6.50.
I can tell you there virtually no chance of any more dividend cuts. They are not necessary and I have it from about the best source there is that the dividend isn't going up but it is also not going down, for sure.
They are holding off with the land sales because with the Natural Gas market showing improved fundamentals the Duvernay and BC properties are looking like they will see improved valuation. The market conditions are now improving in Canada in respect to quality land positions, there aren't many on the market at this point. With all the Splitters coming on line in the Gulf Coast, Light Crude is going to be firming up a good deal and at the same time the reduced crude exports will take unprocessed barrels out of the U.S..
II just bought this today at $12.65 but with the drag from the Capex holding the distribution down it is hard to just hold, I have traded in and out of this many times over the past couple of years but rarely hold through a dividend cycle. I am having much better returns with Mesa R/T which has consistently paid a distribution far over this. I like it because it is highly levered to Natural Gas which is looking pretty solid with Storage levels where they will end the withdrawal season. Despite a current high yield on the Distribution, it is looking like it will go up another 25% from here. PBT is a good Trust but I won't pay more than I paid today, and prefer below $12.50.
I didn't think it was anything specific but seems like more than post ex dividend trading. But in the days of computer trading it is difficult to make sense of things some time.
I am confident that by early summer gas will be trading $5 spot futures. Once people see that NG can maintain that price without cold weather, the sentiment towards natural gas producers with improve substantially. Production actually needs to increase another 1 BCF to build inventory to 3.7TCF, I don't think it will happen especially if summer weather is hot. There will be extra Gas needed for California as hydro will be nonexistant this year, that will be an additional demand of .3-.4bcf/day. I expect XCO could trade back to $7-8 by year end maybe more if storage doesn't get back above 3.5TCF by Nov. 1.
Pretty simple to figure, big clients were given a heads up from TD and they started selling before the report was issued.
Some more of their email:
Separately, as you are likely aware, we released our year-end reserves on Thursday, February 20th. Our release featured year-end 2P reserves of 42.9 mmboe, representing a 32% increase (6% on a per unit basis) on a year-over-year basis. We also highlighted a 2013 FD&A cost of $15.78/boe and a corresponding recycle ratio of approximately 2.55x ($19.93/boe and approximately 2x, respectively, including changes in FDC). Of the seven research analysts that cover Argent, six maintained their ratings and target prices. TD, however, lowered its target price from $10.50 to $7.50 citing a shift in NAV calculation methodology, which we believe has contributed to recent trading activity. From what we understand, the TD analyst has moved from a “modified growth” (i.e. “assumes that FCF is reinvested into development for a period of five years”) to a “blow-down 2P NAV” methodology in valuing Argent. While the analyst’s revised methodology includes a transaction-based $/acre assumption for our Eagle Ford lands, it no longer incorporates a “growth wedge”. Argent’s view is that our inventory of 100+ Eagle Ford drilling locations have material value.
Important disclaimer: Please note that the above commentary is for informational purposes only and that any opinion, estimates or forecasts regarding Argent’s performance made by these analysts are theirs alone and do not represent opinions, estimates or forecasts of Argent or its management. Argent does not by its reference or distribution imply its endorsement of, or concurrence with, such information, conclusions or recommendations.
We plan to release our year-end results early next week.
partial of their email:
Thank you for your email. We certainly appreciate your interest and feedback. As you can imagine, we have been experiencing a higher than normal volume of investor phone calls and emails and we are doing our best to respond to everyone in the order they have come in.
Argent is always looking at its capital structure to consider the right mix of equity, public debt and bank debt. On that note, we have been highlighting to investors that at year-end 2013, we were only approximately US$77 million drawn on our US$160 million credit facility, leaving us with significant financial flexibility. Argent also has approximately C$149 million in convertible debentures outstanding (convertible at C$12.50 and C$13.90). In total, this leverage is similar to US MLPs. Worth mentioning, the recent increase in the US dollar compared to the Canadian dollar does indeed reduce the amount of US income required to service the distributions and the debenture interest. As mentioned on several occasions, we have no current plans to cut the distribution level.
I email IR yesterday and they state firmly the dividend will be paid through 2014. Furthermore, they say the decline in the Canadian Dollar is making it even easier to pay the dividend and service the $Canadian based debt sale made last year. They feel the sell off was triggered by the TD research note in which TD changed its methodology in valuing the company. The new methodology does not give any recognition to it's Eagleford undeveloped land holdings in reserves calculation and NAV. Obviously, this is does not reflect the true value.
Most of the real paper is in the first and last hour with the computers dominating the rest of the trading day. The volume in the stock market has steadily declined in the last several years. I read an article on ZeroHedge yesterday which pointed to the fact that even Hedge Funds are turning over their positions at a much reduced rate vs. the past. This was shorted heavily after the recent announcement of the $175M asset sale and guidance but it looks like the Funds shorting found very little selling to enable covering so we bounced back up recently. My sense is that this is pretty washed out and those holders in this at this point are willing to wait a year and see if Robert's plan works out.
there is very limited ability to switch as so many coal plants have been closed. The current swing capacity is only .5% of all generation capacity. Furthermore, hydro generation is down due to the drought in the West so gas is picking up that lost generation and it is more than the losses to coal.
Forgot about this one, because they are not really a trust like the others I like. There is one other, that I really like but they do hedge some of their production. Very cheap right now and why, I don't know. They are a hybrid kind of along the lines of DMLP, but the yield is great. Do some due diligence first.
CRT is pretty good. HGT but it has some hair on it. The best is MTR, could have some serious upside in the price. The current yield is around 9% but that doesn't reflect the current price of gas yet. I think the distribution could be 25-30 cents a month which would boost the yield quite a bit. They have some liquids production as well. SJT doesn't have anywhere near the yield but it is a good proxy for gas.
With storage where it is, the gas price will settle into a higher range. I like to get paid regardless of the market perception. The Natural Gas Royalty trust are still pretty cheap and have the potential for some significant capital gain if the price holds in or goes up. Most have no debt and they don't hedge so you get the price upside. My favorite(best yielding) is Mesa R/T, but SJT is not bad either but does not yield as much.
I have been looking at CHK but I don't like the debt and hedging.