Synergy Resources (SYRG -0.6%) is downgraded to Neutral from Buy with a $6.25 price target, cut from $9.50, at Roth Capital, citing additional share dilution from the recent $505M purchase of Colorado oil and gas assets.Roth says it is concerned by the significant dilution SYRG has experienced during 2016, noting the company did not raise its 2016 capital budget despite the large acquisition and that it may need to draw down a portion of its revolver to fund 2016 capex, which could limit the ability to grow in 2017.The firm also notes disappointing Q1 results, driven by a lower oil to gas production ratio, which "appears to be trending in the wrong direction for SYRG, which could impact future well economics."
"Roland and Mack, again, as always, thank you. If everyone would look at slide 17, that's our plan for 2016.
Kind of as a synopsis, after Thanksgiving in 2014, Comstock flipped the page and really began a new business plan, a new chapter. In the first quarter of 2015, we began drilling and completing extended lateral Haynesville wells. As Mack said, all 11 of our wells have been successful, including our extended lateral Bossier well. We currently have 348 operated extended lateral Haynesville/Bossier locations. On our acreage, they can deliver a rate of return between 24% to 48% at a gas price between $2 and $2.50 per Mcf, which is where the gas market is today, including the 12-month strip today at $2.68. In addition, we have 350 Haynesville/Bossier horizontal locations, as Mack said, that are 4,500 foot laterals that will yield a 30% rate of return at a $2.50 gas price.
Mack Good and his staff have delivered operation perfection thus far. They have de-risked our Haynesville and Bossier drilling inventory by delivering repeatable and predictable results."
Jay is right to credit Mac and Roland on this call. They are doing all that is humanly possible in this lousy (yet improving) environment.
All you say is true and the most bitter pill of the six options for a capital raise they discussed would be the one with an equity component. Having to go back to square one with Angola now seems a distinct possibility for late August.
APC also talked about how some of its foreign opportunities are more economic than the GOM, counter to what CIE is saying, so we've got a mini crisis of confidence impacting CIE this morning in addition to the #$%$ market.
Phase II in the second half of this year to get it to 40,000 bopd exit. APC says it's not disappointed and is on plan. Also struggling a bit at Shenandoah as seismic didn't disclose well the faulting they've encountered.
Financing planes at 4% is Parker's key strategy and in a low inflation environment the Street has come to hate the strategy because there is little to no debt-adjusted growth.
You might feel like a dip with more stock in your pocket if oil doesn't get over $50 and natural gas doesn't get over $2.50 in 2016. These are still cash flow negative operations in this environment with debt service eating up more and more capital. No company with net debt on its balance sheet can be counted on to survive without seriously higher commodity prices in the near term.
Evans told Reuters in an interview that even debt-free Magnum Hunter, primarily a gas producer, would need gas prices to rise to $2.50 - $3.00 per million cubic feet equivalent from about $2 now to get the 15 percent return on new wells it normally uses as a target when making spending decisions.
Magnum’s new owners appear set to opt for the low-risk, low-cost scenario - the company has told the court it expects to keep posting net losses through 2018 and its oil and gas reserves to shrink about 11 percent over that period.
Without drilling new wells, however, the company risks forfeiting some leases and its cash-flow could begin to dwindle as existing wells run dry, crimping its long-term prospects.
"Everybody is having this issue. It's a dilemma," Evans told Reuters in an interview. "Do you hold 'em or fold 'em?"
Shale oil producers are in the same boat.
Wells Fargo Securities, concluded in an analysis early this year that even after debt restructuring most would need oil to fetch between $50 and $55 a barrel to secure their future. But oil is stuck near $44 a barrel today.