COP is a good operating company, I worked for them for 17 years, but it is a totally different risk/reward function from SD. COP seems to be handling the problems faced by the other majors better (on an operating level). However, all the major E&Pers are finding difficulty in spending their E&P budgets ($$$). I think downstream (PSX) may well be the better treasure.
Is there anyone with a "set"? You really don't know what you are going to find until you drill some holes. If you don't want to take any risk go buy yourself some old-lady and orphan stocks. It is possible that SD will hit a some "honey holes" somewhere up in Kansas with those 100 wells they plan on drilling.
I understand hedges. SD couldn't hedge-out all of their ng production for $5 for much more than a month or two. The price you are seeing quoted is for Jan. delivery, May nat gas is $4.14.
Ya'all are whining like a bunch of student council members when nobody wants to buy tickets to your 'bake sale'. The overall market is taking a beating here and you think SD should be going to the moon. Why? Do you really believe NG prices are gonna hold at $5 bucks? It is going to take a lot more than a few feral day traders to get this stock above $7. Wall Street is waiting to see if what SD Mgmt is doing is gonna lead to long-term EPS growth. I happen to think that SD hasn't "pulled their dress completely up and over their head for everyone to see everything".....they haven't played all the cards in their hand. Sure crude and nat gas prices are part of the equation, BUT only "part of it". If you think SD is attempting to draw one card and hit an inside-straight, you should get out NOW! Don't look now, but the FREE cafeteria is closing (broader market is falling) and our "baked goods" will be in much higher demand soon. Be patient.
An old trading adage: 3 consecutive days UP, 4th day DOWN.
In general, there hasn't been a lot of shorting going-on in the market for the past year, unless you happen to be connected with Carl Icon (or someone like that). As for SD, that stock has been too dull for a long time, shorting has not been a way to get rich recently (past year). After today we may see more shorts coming in, but it will most likely be in stock that have advanced the most over the past 12 months. Most of SD shorts are "insurance" for the big guys. SD has been too darn dull for too many months to short. IMHO
Looking at SD (and other dom E&P shares) volume the last couple of days, I am convinced share prices are being driven by the spike in nat gas prices, NOT by short covering.
It isn't just the "price", to scare the shorts out SD needs rising price + much higher volume + good 4q earnings + upgrades. We have to convince the 'shorts' that they are wrong.
I understand your question, I would ask it in a more comprehensive fashion. "What is mgmt's plan for increasing EPS going forward?", is probably the question to ask. Certainly production is a factor, but you can't ignore the balance sheet and the role that proven reserves play in determining the NPV of any strategy. Proving-out the ML down through the Woodford up into Kansas is a major factor in determining enterprise value. Gaining clarity on the prospects in the ML, etc. are front and center. The proving activity will influence/define the options SD mgmt. will pursue for growing production in the future.
Your DCF analysis is flawed. SG&A stays relatively flat going forward and a nat gas move above $5/mbtu (by itself) will drive cash flow and EPS growth to justify a $10-15 stock. Any increase in reserves calculated for the Miss will be gravy on top of the "meat".
What information was "leaked"? I haven't see a drop of material news.
Seems like the broker could lend out your shares without asking you, however, they are obligated to fetch shares (buy them in the open market) to replace them as soon as you decide to dispose of them. I am sure the broker can insure the process (this transaction), over and above the insurance that already covers brokers/investors. Sounds like a scheme the brokerage house is using to reduce their hedging/insurance cost. I would definitely want to read the fine print of the subject "agreement" before agreeing to it.
Good info and thanks, it helps explain some of the case for those choosing to short SD. However, "reserves" on the balance sheets of all E&P companies should be taken with a grain of salt and should never be confused with, "money in the bank". The 'shorts' must have more of a case than just how the reserves at SD are being accounted for, I just wish I knew their full case. The SD 'shorts' have been a much quieter bunch than the longs are in SD's case and it is not totally clear why (I am not talking about this msg board either), but your argument is certainly a fair data point worthy of consideration.
The 'shorts' are not necessarily more stupid than the longs. The challenge here is for SD mgmt. team to prove the profitability of their efforts (strategy, etc.). One has to respect what the shorts are willing to commit their money towards. If you are an investor who is long SD, you should be disturbed by the confidence that shorts are demonstrating in this generally UP market. A buyout would surely be a "poke in the eye" for the shorts, but also recognize that a buyout might only be marginally profitable for the longs (depends on the price). SD really needs to prove the value of their mid-continent focus, this is how current SD shareholders will ultimately benefit the most. It just seems stupid to me to be long SD (given the risks) hoping for an $8 buyout.