The pattern is across a lot of the smaller cap E&P Companies. I'm looking at the future price of NG and the direction that SFY is going; and just going to have to bare the short term swings.
Sentiment: Strong Buy
I spoke to IR and they stated that they are profitable at ~$2.80 (I think that is what I remember). If this is the case where Sept NG price is 3.24 and breakeven is at 2.8; we should be in great shape. Now its just the Q2 Results where we might take a hit.
No buyers - No sellers - very tight trading range. What is that tells us? Maybe this is the bottom bottom? Everyone is where they want to be and now its wait and see. I think the outcome of the Lazard decision will be postive for the company. If it wasn't going to be a positive move and the company was in absolute dire straits, then I would of guessed they would have jumped on the loan - any loan; but they didn't.
This may be the time to pick up some cheap shares - downside is I lose 74 cents - upside is 2-4X over the next year plus.
Sorry to reply to own post but here is one more thought - one poster said that the Institutions must of known that the company was going to do this move because there hasn't been any major sell off from the announcement.
I wondering if this move wasn't recommended by the major institutional holders.
The timing of this PR has been bugging me - why would they release it a week before the Earnings Report. We know the situation with oil/NG pricing and cost of BOE, so we know the earnings will not be good.
So why now - are they bringing Lazard in to help them sort out options for a JV Deal or to evaluate the structure of the $640M Loan or to see if there is a better way arrange financing (financing alternatives); or if they go through with the loan, what is the best use of the cash (capital structure and strategic opportunities).
My guess is that they want to finalize something before the Earnings Announcement.
Looks like they put all options on the table - If they go into BK, then Mgt will be out and their stock will be fractions of pennies. They must be looking for Asset Sales, or Buy-out. Everything else will leave Mgt and us common shareholders with pretty much nothing.
My take is this and I'm not as close to the oil fields as some of the other board members, but...
Doug Atkinson from IR said the loan is completed by both sides, the only issue is the % rate on the loan. The banks were basing the % rate at $40-45/bbl and they held off on signing the loan to see if oil prices move to a higher price which will allow the company to get a more favorable interest rate. His comment was that 1-2 points on a 640M loan adds up.
As for a JV Partner - last time they announced it right in front of the Q2 Earnings. If they are pursuing the $640M Loan, why do a JV.
As for a Buy-out - the talk on CNBC Oil Sector Analyst's is that they were expecting a lot more M&A activity than what has occurred so far. They're position is that the downturn has more legs and there is no rush to merge. My personal feelings is the price is so low - that why wouldn't one of the majors in the same geographical area be looking to take a position in this company now. You can buy the whole thing for $36m and accept the debt level.
Also the Insider Stock holdings - a lot of the insiders are holding shares and options on shares that are way above the .76c which means they are worthless. They have a very high vested interest in getting the company back on its feet and getting the share prices to the point that they can retire.
That's it. Not a pump and not a dump. I'm a long investor who hopes that the Saudi's come back to their senses and prices come back to a more realistic level; and we can get our money back.
Seems to be sharp stair steps up/down followed by micro-penny swings for extended periods. I wonder if this is the program traders buying/selling in/out of the short positions. I just doesn't seem to be following normal patterns.
What's interesting is the level of Short Interest has come down over the last year plus. I'm surprised the stock price hasn't moved up with it. It looks like a slow controlled short covering with no major run ups. I'm wondering if at some point when the larger players are out of their shorts if start to see some upward price moments. And maybe the last 10% shorts may be compressed to cover. Anyway - just a thought.
Stock does that as a normal pattern - it runs up to around 10am EST then it tanks and crawls back up the rest of the day - on average.
I'd be looking to cover on these down cycles. I doesn't look like the company will go to zero so there is much more run to run it up on the upside.
IR said that the loan paper is ready for signature - the interest rate charge was high due to the low price of oil. The company was holding off until the price of oil was higher which would give them a more favorable % rate. Makes sense - no different than holding off or speeding up your home refinancing. It does not mean you are going BK - jeez.
Sentiment: Strong Buy
Today - 5 would be great.
Last year - 5 would be terrible.
With the Target Price in 4 range - I would expect it to be near that level.
I'd love to know why some one would be selling at this level. At this point there isn't that much more you can lose. This is the time to take the risk the other direction. At .60c, this is liking buying a option.
Sentiment: Strong Buy