I was VP of a small (397 old wells), last time oil prices dropped. These were land based old Texico wells that were producing as low as 1/2 a barrel a day to 56 barrels a day. the drillers suffered badly close to 90% went belly up. When the market turned and the Drilling demand increased, the few drillers that survived the slump, quadrupled their prices and were booked 6 months in advance. People here bashing HERO and their management are not looking at History. HERO will survive due to lack of dept and responsible management. Weather you agree or not, their lack of loans and they extension of debt, will see them through this and when the tide turns, they will be a shinning star. The shorter's have virtually no shares to buy to cover. The longs *(who are for the most part are way down as I) are content to sit on their hands and ride it out. Hopefully accumulating as finances allow to remove more shares from the shorter's grasp.
HERO is fully capable of riding out the oil drilling slump and when the contracts come in the stock will recover nicely.
Hopefully the worm has turned and the Shorter's are covering. If they are not, then someone is plucking needed shares out from under them in a strategic move.
That is exactly what the Saudi's are doing (from what I hear). Out pricing us and getting us dependent on them. We will soon be exporting NG, we currently have a 200 year surplus.
The Saudi's will have to get prices under $50 to do any real damage to our oil industry, because of their history of greed, I do not think they will accomplish it.
Low oil prices boost the economy. People conserve when prices are high. There is a lag time, but when it falls we greedy consumers start using much more. then when it goes back up it takes awhile to cut back on what we got use to using. American production can still make decent money @ $50 oil. The Saudi's can @ $20 oil. The Saudi's market share has dropped % wise due to other Countries drilling their own oil. The Saudi's can out-produce the rest of the world at their superior production savings. Creating a gas (price) war on a global scale. Since oil is a finite resource, they will do this at the expense of their future generations. HERO has the financial resources and wisdom to ride this out, (as proven in the past), unlike some of their competitors. When the for clears they will shine.
because Chevron cancelled a (I believe) $16 Billion deal for an offshore rig. Deep sea rigs are loosing appeal because of the easier safer oil the Jack-ups can obtain. Day rates have dropped some, but the jack-up demand is still pretty good. At this point I welcome the drops as buying opportunities. The Company is still in a very good position for the future. Much of their competition is cash poor and may go bankrupt which will be an opportunity for HERO to pick up some newer rigs for pennies on the dollar. I am still betting HERO is back over $5 by July 2015.
With the US only producing 60% of it's own oil and Mexico facing a political financial breakdown if it does not get it's oil production up. at least in the Gulf of Mexico, drilling will escalate. there is plenty of money to be made with $70 oil and $70 oil is badly needed to support the world economies. When oil drops it creates job's and lowers the price on everything that ships. (which is everything not grown in your own yard).
HERO is very well positioned to wait out this slump and grow rapidly when it is over.
They are playing us and currently winning. Every share they force us to sell is a win for them. I am way down, but will continue to accumulate. The Company is doing fine, the stock is under major manipulation. These Shorter's are not content making hundreds of Millions shorting the stock. They will accumulate and make make a few hundred Million $$ and drive the stock back to $10. then they will repeat the process. They are known for driving Companies into bankruptcy. This is not an option with HERO because HERO does not have major Debt backed by Company stock. there is very little Company stock and HERO has comfortable Cash reserves. People here bash HERO Management for not supporting the stock price. Honest Companies run their companies with the knowledge that if they do a good job and make $$, the stock price will eventually follow. Getting involved with fighting the manipulators takes serious time away from running the Company and falls right into the manipulators traps.
Since there is no longer Margin on HERO, all shares owned are solid and cannot be stolen by selling waves. IF you have done some research, you can see how undervalues HERO now is. This is the time to accumulate, set goals and stick to them. Do not fall in love with the stock. When it hits your goals, get the hell out, because they have their claws into HERO and will play this game for years.
Mexico will be drilling, they have no choice, 70% of the revenue that runs their Govt. comes from oil and gas. If they do not drill they will go under. They will be drilling in the Gulf and HERO is THE major player there.
We know the value is there, there is no margin left for them to go after, they cannot drive the Company into Bankruptcy because the Company is not dependent on it's stock price. Shorted shares have been between 11% and 14% of the shares traded for the past 2 weeks. I do not see how they will ever be able to cover the shorted shares at this point without creating a big run on the stock.
1.7 mil shorted today. they are trying to destroy the Company. HERO has too much cash on hand for this to happen. HERO does not own a lot of it's own stock, so by driving the price down they are not really hurting the Company and there is no chance of driving them to Bankruptcy. If management does go for a reverse split to protect the stock price, there would be an accounting of shares. this would cause a 29 mil share buyback.