So it's a wishful thinking analysis. For the sake of the longs, I hope you're right.
But we're down to 54.36 this morning.
How do you get to an average of $75 for 2015 for HK's unhedged oil when January crude is now trading at $55.75? Is this just wishful thinking or is there some real analysis behind the $75 number? If so, please
share your analysis.
I regret to say that, until the 20-day moving average of the price of oil or HK bonds turns up from down, there is no realistic basis for meaningful upside hope in the price of the common stock. It appears to be in a death spiral now. Trend of oil price will drive HK, and it's down.
There will be tremendous resistance to any upside in the stock as major institutional holders try to salvage what they can. Insider buying at this point is just wishful thinking in my opinion.
why are you putting political tripe like this on a investment message board
you ought to be grateful we are at ALL-TIME HIGHS in the stock market under Obama!
remember the total financial chaos he walked into?
Here's the real problem that keeps Floyd and the CFO up all night. The Company's "liquidity" consists MOSTLY of "undrawn capacity on its senior secured revolving credit facility" which is revised periodically. Cash on hand at the end of the 3rd quarter provided only $94.688,000 of the Company's $815,000,000 liquidity. The facility was increased by $350,000,000 in the last quarter due to the prove up of increased reserves. However, the value of those reserves, obviously, is tied to the price of oil itself. And oil prices were much higher when that capacity was last calculated.
As the price of oil plunges, the "capacity" of the credit facility on which HK's liquidity depends will shrink, not grow, going forward. The banks, after all, are not complete idiots. It would not surprise me at all if the banks' actually recalculated and revised the "capacity" of the credit facility long before the next scheduled review. I have no personal knowledge of the actual terms of the credit facility, but I have to believe it would give the banks the right to recalculate the "capacity" of the credit facility at any time based on the last known reserve numbers and current market prices for oil. In doing such a review, I assume that the impact of the company's hedges would have to be taken into account. also. But 20% of anticipated production is unhedged, and that is a big "hurt."
Now I do not know at what point the effect of shrinking borrowing capacity "chokes" " HK's liquidity--or what price of oil would do it. But that, to me, is THE real problem and a genuine concern going forward. HK needs to borrow MORE money every quarter to fund its drilling program. If HK had to shut down all "new" drilling and pay its expenses and debts with the revenues derived from existing wells only, I suspect it could survive for awhile as MOST of its non-bank debt is not due for many years. But that, to me, is the big problem going forward, and why Floyd is eliminating TMS drilling for now
The "Shale play" CANNOT be "wiped out," only the current shale players. The OIL will still be there, and SOMEONE new with deeper pockets will own and market it. The price of rig rentals will start dropping as precipitously as the price of oil itself so the "Shale play" actually will become EASIER and CHEAPER to exploit. The Saudis are not thinking clearly long term. The low prices for oil will just foment revolutions within the OPEC Arab countries, quite possibly including their own.
Kept it from collapsing even worse! Still the hedges are for only 80% of anticipated production. The hedged portion will generate a lot of "paper" gains just like last quarter. But, don't be fooled by that. The 20% unhedged portion will still whack the adjusted earnings badly!
I feel badly for the stubborn longs who are waiting for Floyd to make them rich.It's going to be a LONG wait. i think Friday brings a test of the yearly lows in the stock. And, if it doesn't hold, we'll probably see $2 a share soon. i have no position in HK currently.
Only "good" news I can give you is that the seasonals for oil start turning positive near the end of the first week of December. But "positive" seasonals will be bucking a very, very strong downtrend. And the price trend usually trumps the seasonal trend. The January futures is currently trading at $69 14 as I write this, down $4.55 but up from today's low of $67.75. I'n no "expert" in commodity trading, but I suspect oil won't start "basing" until it's in the low 60s. I think the "smart" play to to get out and stay out until the 50-day moving average of the stock turns up. Let the bottom get made with somebody else's blood.
Don't like what the price of oil i doing at all. Oil was around $90 at end of the last quarter, and the decline from the 100s hit HK pretty hard imo, cutting earnings to .03 from an expected .06 despite increased production. Now we are at $75 oil.
Yes, HK has significant hedges, but only 80% of production is hedged. The 20% unhedged is a real liability at these prices.
The heavy short position is buoying the stock imo. But that won't help if oil keeps dropping.
The whole energy sector is, at best, a hold, but probably a sell right now.
Winter is setting in. It's very chilly in Chicago where I live right now. That should help oil prices in time. When
the crude market turns, I'll be a buyer again. Until then, I'm looking for greener pastures. That's how I see it right now. Good luck longs.
I'd call the adjusted earnings of .03 disappointing but not disastrous. Was surprised the fall in the price of oil
impacted earnings so badly when production increased. Stock is trading 3.06 to 3.09 right now, which is not bad considering consensus of analysts was .06. We will see what tomorrow's conference call brings.
We are hedged for 80% of production, unhedged for 20%. I think it's a prudent move. Also one aimed at getting rig costs down in line with the price of oil.
Consensus of analysts is .06. I think it will be .07-08 at least, outside chance of .09. Most of price decline in oil occurred after close of the quarter. Production BOOMED in Bakken and Halcon and we got at least a little bit of help from TMS. That's my thinking at least.
Be interesting to see what guidance is going forward with these lower prices for oil and ng.
Wish they would all stay short through earnings release.
S &P moves back to all-time highs after suffering a 10% pullback, but here we are under $3 again.
And oil closes well under $80. Obviously, HK is trading more in lockstep with oil market than the stock
market. No insider buying at these price levels is concerning to me. Earnings and the TMS well info
had better be very good.
So, what next? Same for tomorrow. Buy any dip into the 2.80-.90 range if we get one.
Ride this into earnings and the third quarter operations update, which will confirm that HK
is "kicking #$%$ and taking names" in the Bakken and Halcon and that the oil is there in the TMS.