You'r e half right. Stop losses should be removed, but sell orders (even at ridiculously high prices) present the brokers from loaning out the shares for short purposes.
Seadrill has some issues which are unique to it and distinguishable from LINE:
(1) LINE has an active hedging program; SDRL, which leases/sells equipment, does not.
(2) LINE has a natural gas component to the business, which has not been affected by the slide in oil prices; SDRL's natural gas exposure is very limited.
(3) SDRL relies on a small number of customers. From the SDRL 20-F: "Our contract drilling business is subject to the risks associated with having a limited number of customers for our services. As of December 31, 2013, our five largest customers accounted for approximately 65% of our future contracted revenues, or backlog. Our results of operations could be materially adversely affected if any of our major customers failed to compensate us for our services, were to terminate our contracts with or without cause, failed to renew its existing contracts or refused to award new contracts to us and we are unable to enter into contracts with new customers at comparable dayrates."
(4) SDRL customers have the ability to cancel contracts. "Our future contracted revenue, or backlog, for our fleet of drilling units may not be ultimately realized. As of March 18, 2014, the future contracted revenue for our fleet of drilling units, or contract backlog, was approximately $13.7 billion. We may not be able to perform under these contracts due to events beyond our control, and our customers may seek to cancel or renegotiate our contracts for various reasons, including adverse conditions, resulting in lower dayrates. Our inability, or the inability of our customers to perform, under our or their contractual obligations may have a material adverse effect on our financial position, results of operations and cash flows."
Energy Transfer Equity L.P. (NYSE: ETE) is another company that had a director step up to the plate and make a gigantic insider purchase this week. Kelcy Warren bought a total of 1,178,567 shares of the stock at prices ranging from $49.01 to $53.55. The final ticket for the huge buy was $60.5 million. The stock was trading at Friday’s close at $57.65, so the purchase at least for now, looks very timely
Given the hedging program, unlikely. October is seasonally the weakest month for oil. It usually rebounds into the winter/spring. Additionally, the parabolic move in the US dollar shouldn't last much longer. As the dollar weakens, oil prices will strengthen.
Management has been doing the hedges for years. That being said, it would be nice if they would just come out and state the prices that they're hedged at and the costs of the hedges, so unitholders would have a better idea whether the distribution is safe.
The most recent decline seems largely the product of fear caused by a lack of information. Some clarity would certainly help fuel a share rebound.
"Meanwhile, Linn Energy has been building hedge positions to protect itself from the falling oil and gas prices. During a presentation in September, the company said that almost 100% of its expected natural gas production is hedged through 2017. As for oil, the company has hedged nearly all of its production for this year and up to 60% through 2016. Consequently, the company said its cash flows are better protected from oil and gas price uncertainty than its C-corporation and MLP competitors."
Perhaps, but it could simply be hedge funds raising cash from "winners" to pay for forthcoming redemptions--something that is happening in the energy sector.
Highly unlikely. In the past, we've had rapid growth in the economy followed by periods of serious recession--the higher we rise, the faster we fall.
In this so-called "recovery," growth has occurred at such a languid and tepid pace that any recession would likely be shallow.
It's a bear raid, rampant shorting, except without the accounting issues overhang.
Looking back at the 5 year chart on crude oil prices, oil was trading between $70-80 between mid-2009 and later in 2010. LINE's price range at the time was mostly between the high $24s and the high $26s.
The difference, I suppose, is that LINE has better assets now than then and, of course, a higher distribution. Wouldn't try to call a bottom here, but it seems we're getting closer to pricing in $70-80 oil.