Hi PG! Nice to hear from you! Best of luck to you and all of us longs. I wonder if bits and petro are still in NE. Take care.
No candy-coating this, it's ugly and I'm down a lot....but I bought my last batch today which brought my average price down to around 23. I've read some of the commentary on this board, and what can I say....I've been a trader for 17 years and it's the same old, same old. All the negative commentary seems right when the stock is in the toilet and the news is bad and technicals are bad, and then at some point the doomsayers are wrong and don't see or catch the turn. I remember in 2008 when I had an investment in Whole Foods at 10 and everyone was saying "bankrupcy is next". It turned around and was a 10-bagger from there (not that I was there for the ride).
It's pretty obvious that the oil market has the big traders leaning on it. If history is a guide, oil usually gains strength in the first quarter of the new year, and I'm thinking that might be when the shorting pressure comes off. Even if news out of the deep water drillers is still bad, the crowd can turn it anyway, wanting to get in early and the shorts want to cover before fast momentum takes the stocks back up. In the past when these guys turn, they turn hard.....I remember in the past seeing a week where NE is up 6 or 7 points and then up another 3 or more before the run tapers off over the next month.
Not predicting that this is the bottom, but they've already priced solid companies like HERO for bankruptcy at a dollar a share....that's some pretty extreme pessimism priced in, so I wouldn't be surprised if we're at a bottom. That's why I bought some NE today. I'm done. Just going to wait it out now.
typea, did you bury your money in your backyard during the 2008 financial crisis when the entire worldwide banking system was going to fail, and you could buy the entire financial sector etf at a price that was equivalent to an option? This is what happens when people go to negative sentiment extremes. NE can easily afford the dividend payout even if all rigs coming off contract were not renewed over the next year. I waited patiently and finally bought my final chunk (another 20%) of NE today. Yes, I'm down huge. Average is 26. Not telling others what to do, but NE and the offshore guys have a long long history of bouncing back from extreme selloffs....Macondo anyone? or the 2008 financial crisis?
Well the thing that pops out the most on the daily chart is the potential for the double bottom that has formed from the lows in early August to the recent lows over the last few days and how it does seem to be getting support there. RSI is also confirming that this recent low doesn't have the selling intensity of the August lows, so maybe at least selling pressure is drying up. That's often the way bottoms are made.....there's just nobody left to sell at the low price and so buyers take the stock up to a level where overhead supply exists and then sellers come in. Overhead supply is around 28-28.50.
I'm just going to sit with PGN. They know they have to throw shareholders a bone. They'll probably come thru with a decent enough dividend (maybe 7%). Meantime just wait until sentiment is at least just neutral as opposed to "all old rigs are trash".
Wow, this is really getting overdone...7.50...this is being priced as if older rigs are garbage...they seem to be disregarding cash flow and dividends completely. PGN is going to need to announce a decent dividend to stop this bloodbath. I added way too early...in the 9's and have given up on averaging down other than buying a token amount here.
PGN is going to present at Barclays Conference on Wednesday Sept. 3rd. Perhaps not immediately, but I would expect that PGN is going to be very proactive in trying to communicate the potential of the company. This might get people interested given the high dividend yield, potential for the company, and extremely low valuation. Hope so as I've really loaded up pretty good, and am expecting it to move to at least 10 in the near term.
Here is the type of thing the analysts ignore:
In RDC's just released fleet status report, they signed up the Rowan Gorilla IV in the GOM with Exxon at a dayrate that went from 125k to now 200k and it's an old rig (1986). These are the type of rigs the analysts were saying would go to the junk heap. Pretty big analyst miss to predict junk heap vs. huge percentage increase in dayrate.
I think it will take 2 quarters of earnings reports from PGN to make institutions comfortable with buying PGN. If for no other reason than to rationalize their purchases to their bosses by showing due diligence. I think by the time they feel comfortable buying, the stock price will be something like 20% higher. Anyway, I'm hoping that the downside risk has mostly already happened and that the upside (with dividends factored in) is really pretty dramatic.
I speculated about this a few weeks ago, but basically I think the new NE is going to trade differently than it used to. It could be the go to stock in a rebound now that it has a much higher percentage of newer high spec rigs. I think that when we do get a significant rebound in sentiment relative to the whole issue of over-supply and the feared (but hasn't happened) pricing collapse, that NE could be the leader.
I agree that it's just a question of trying to wait out the trashing of these stocks.
This is "blood in the street" for PGN right now, all these factors have weighed against it:
1. Incredibly bad sentiment in which older rigs are thought of as trash.
2. Extreme poor sentiment in the sector....constant non-stop downgrades for 8 months.
3. Each time a new analyst downgrades, price collapses yet again with no consideration of what bad news is already factored into the price.
4. Short sellers heyday as all rallies are taken as fresh opportunities to short.
5. Technicals terrible so no chartists will even touch these stocks.
6. Forced selling in PGN by indexers.
7. Selling by disillusioned holders.
8. Selling by investors who just want to be in NE as a high spec rig play.
9. Confusion and uncertainty relative to various elements of the spinoff.
I would not be surprised to see a filing 3-6 months from now that some large value-oriented/dividend-oriented person or institution has taken a significant percentage position in PGN. I'm not going to candy coat this, I feel pretty beaten up by what has occured in both NE and PGN, but I've seen this movie before, and it always ended with my kicking myself for undue worrying and not being more patient on the upswing.
I just decided to look at the internals of the trading this week, and I've come to the conclusion that there is already quiet accumulation going on by some large players. This is based on looking at the hourly bars for this week. Early in the week the sell bars (on the hourly charts) were larger than the buy bars. As of the latter part of yesterday and into today the buy bars are larger. I think this indicates that the buyers are coming in....then (as is typical) they don't want to show their hand so they let the natural downward momentum take it down again and then they accumulate more. If my observations and hunch are true, then the bottom would most likely be in. Educated guesswork only as you never know if there are more aggressive sellers waiting in the wings who also are not showing their hands yet.
Next week will be interesting. There is no solid base formed technically yet, but I am expecting that a base will be formed next week. Sometimes stocks just peter out into a base and stay there, but if it was a "play" being done as many suggest, then it could get a strong bounce as the dumping finishes and some large value-oriented players get the momentum going. I've got to believe that there are some large funds that focus on high dividend value plays that are looking very closely at PGN at these crushed prices.
I don't know the answer to whether it is correct to buy PGN at these prices of not. I can tell you that I've bought about 4k shares for an average price below 10, in addition to another 1k that I got from the spinoff. I sold shares I had in HERO for a loss and put that money into PGN because if I'm going to own older rigs I think PGN at these prices represents better value than HERO.
I think there is a panic going on right now toward older rigs. The investment community is basically assuming they're all trash. The reality is that older rigs have always been part of the mix and when demand is high, newer high spec rigs may be the rigs of choice, but the older ones go to work at good rates too. I bought PGN because I do think I'm going to get a safe 10% annual yield on it, and I do expect a more reasoned approach to older rigs to come into play. I bought my shares in an account that I don't trade actively and my plan is to hold PGN until I've made 20% either through dividends and price remaining stable, or price appreciation when a more reasoned approach returns.
No guarantees, of course, but that's my plan and I think it will work out well.
Hi bits, I'm good, hope you are too, was away in Mexico for awhile visiting a friend and vacationing.
I did some put sales on ESV yesterday, but don't own any stock at this point. I'm wondering how the new NE will trade because now it is really good fleet of newer rigs and newbuilds. You know the way in rallies ESV has always been a much better stock to own? Well now, with NE being a new company of new high spec rigs, will that make NE the stock they go to rather than ESV? I think it may take some time to see what happens, but it has me thinking I'd rather add to my NE position than buy ESV...not sure, but that's what I'm going to do, and at this price it seems more defensive in case of further market losses. Not doing anything in a big way at the moment.
The way it is trading today makes me think a bottom may be in for it.
Way to overdone, but not surprising.
The pessimism is thick in this sector, but that recent DB downgrade that came in 6 months after others were saying the same thing has me thinking that pessimism may have peaked.
The reality is that the dire conditions predicted by the pessimists have not come true at all, and NE sounded optimistic on their CC about business going forward.
I'm mainly worried about a general market selloff as we've had 51/2 years of market rally with worldwide economic conditions not very good and the Fed trying to dial back stimulus.
NE Q2 quick look ($31.92 – A) – Positive as NE reports recurring 93c (ex. -2c of spin-off costs) annihilating our/Street estimates of 55c/65c. Beat chiefly driven by better contract drilling revenues at ~$1.2B (vs. our ~$1.1B estimate) as utilization for both semisubmersibles (+9% utilization vs. TPH) and drillships (+5%) beat our expectations while dayrates were in-line. Furthering the beat was better than expected contract drilling expenses of $577mm vs. guidance of $580-595mm (we assumed mid-point). Given spin-off of standard assets will be completed tomorrow (Aug. 1st), market will soon be forced to realize New Noble’s high-spec fleet.
It's all the deepwater guys though, and Oil Service in general is a laggard. I had lightened up recently, but am buying back some here at 33. Boring trading these days. Good time for a vacation.
The GS commentary is a worst case commentary relative to idled rigs not getting contracts, and worsening conditions in general for the offshore drillers. This worst case scenario had a decent chance of playing out back a few months ago, but you can see by the rallies in NE, ESV, RIG, SDRL, etc. that investors are starting to feel that the worst case picture is probably not going to play out. This is due to oil prices staying high, idled rigs finding work (yes, at lower prices), and newbuilds getting very good prices (ESV just signed a newbuild at above peak dayrates). It's not that there aren't challenges, it's just that as is almost always the case in investing....."the sky is falling" scenario doesn't come true and ends up being a buying opportunity for those willing to take a chance that there will be better days. Disclosure, I had 2,500 (very small position for me) shares before this bad news hit, and just doubled that now at $4.15. Looking to hold this thinking I can get 5 for it at some point in the next year.