As negative as I am on mgt performance I don't think you will see shares in the $4-5 range. Ebit margins should increase with restructuring and share reductions and they could earn $2. HUN has been priced at about a 50% discount to its peer companies (for good reason), so this could reverse with some performance. IMO HUN is at or near its low and could be a 12-14 stock, small consolation for long term owners. Also a lot of pressure to get the TIo2 deal done.
You're paying executive compensation of $36 m to run a less than $2 B market cap company, that has driven the share price down more than 60%, and over levered with the failed acquisition. You can argue that the shares may be worth $12-14 on some metrics, but not in this market and not with this mgt. with its failed history, exorbitant compensation. It's a company with a Board that rewards poor performance.
CB, I understand at these levels HUN may be oversold, but its down 70% the past 12 months alone, with CEO compensation of $15 million and the Board Chairman $10 million-the its barely a $1 B market cap company. Why is a board member compensated at that level? That level of compensation for that performance, not to mention the size of the company, is insane. CEO's get paid to forecast and to know their market. Ho can there be accountability with a board chair earning $10 mil!
That's a big assumption they will pay a 6% yield. IMO you really have a management issue, no one has been held accountable for spending $1.1 B in 2014 for Rockwell, at a projected cost 5.5 time ebita, turned out to be more than10 times-only the shareholders have been held to account and now forced to sell this turkey. Then a failed attempt to manufacture earnings with the buyback-how's that working. It's a family business with overcompensated management. Until that changes more of the same.
The debt load was caused by Peter. With HUN performance how do you justify $15 million in compensation to PH, not to mention $10 million to Jon Huntsman, a board member. That's insanity, while JH seems to be spending his time on presidential politics matters. Perhaps he could use his experience to find some customers. So what value has he added to HUN for that level of compensation and for PH to see his compensation rise 50% from 2013 to 2014, while your stock has declined almost 70%. Yesterday's press release was designed to keep investors from bailing out, although not sure how spending $100 million on falling share prices is good, then saying they will keep doing it with another $50 million.
Better management at AA and increasing demand for aluminum. Agree on the politics but even with a majority republicans gave away everything. HUN might sell, but who would consider it pre spinoff. China should improve on the consumer side as they change, but industrial demand is weak and the currency has made it worse for HUN. Long term holders of HUN have been decimated by mgt. actions and those shares are not going to recover. If you buy in at 7-8, and they continue the dividend maybe a good entry point, if the material in the presentations on ebita improvements occurs. No confidence in HUN until the financials improve.
There will not be a HUN buyout so don't hold your shares or buy more on that expectation. There is no catalyst or any interest in this company. Mgt has been consistent in making non strategic decisions and inaccurate forecasts. Market does not take their share buyback release seriously knowing there is no upside. HUN will not be able to recover from Rockwell purchase. The slowdowns in China, the EM and US and commodity meltdown make recovery even less likely. Appropriate changes will not take place with the family ownership and presence on the BOD. They were clueless on China and the EM despite having the former Ambassador on the Board. Yes, the non TI02 divisions are worth more with a sum of the parts analysis, that give you about 12 if they can earn $2. Dividend at 5% is nice, but shares are down 65%. Just no longer any reason to own this.
I suspect the Angola deal has not closed yet. Since it its a material event there would be an announcement and filing when closed. Looks like they would have more than $8 per share in liquidity after the deal closes, and start receiving initial cash from Heidelberg in Q2.
Hang in there Yogue, RRC will survive this mess, however, the Board and shareholders need to hold the CEO accountable for this disaster. No CEO should remain with an 80% drop in shareholder value. Even a 8% pop in natural gas doesn't move this stock.
Also expect 2016 capex to be set at 2016 cash flow levels-looks like they got the message on overspend!
Liquidity more than adequate, 1.75 Billion borrowing base and 6.1 ebitdax to interest pro forma with the Nora sale, will be further enhanced with Okla sales, also 700mmcf hedged for 2016 at 3.20 which is roughly half their production, and an additional 90M in increased cash flow from the propane/ethane contracts.
Value, While I think the level of overspend is recent years was problematic in a low price environment, the share price has now reached an excessively low valuation. Assuming they use the Nora proceeds and the Oklahoma asset sale proceeds for debt reduction that would reduce debt from approx. $3.6 to $2.6 B. If you value the 1.6 million stacked pay Marcellus acres at only $5,000 per acre (a very low estimate), that alone equates to more than $32 per share. Clearly, RRC does have the liquidity, hedges to ride out the low prices, with present weaker cash flows but they will also be receiving 90 mil in c/f from the propane/ethane contracts. We have reached share price levels that are excessively low.
Range now marketing 28000 acres in Oklahoma. Devon recently paid 24k for some acreage there adjacent to some of the RRC acreage. Estimates range from about 250 to 500 million from a note in oil and gas 360.
At least he lost his own money, Ventura is playing with ours! Is there ever a day when this stock doesn'tt drop 3%
I think you're correct, the real problem with HUN is mgt. He paid a billion, a substantial overpay, for Rockwell in 2014, now for sale, that was not strategic. He has been consistently wrong in forecasting TI02 recovery, and Q4 will be worse than expected. Half the earnings are from MDI, but I don't really see a big cost advantage for HUN especially with the feedstock pricing. And he has been consistently wrong about his share price estimates. Agreed that the share price, excluding TI02,are undervalued-but this dog is down 50%. No one is accountable in a family business so I'm hoping for some further consolidation in the sector and the end of HUN as a separate entity otherwise wait for a bounce in late 2016 and take your losses then. These weak commodity cycles can run for years.
Value, Hardly a vote of confidence when the former CEO sells 100K shares in November and another 101K this week, so much for any interest creating shareholder value.
Agreed, obviously they should have done a better job anticipating the supply/demand issues, taking earlier steps to reduce capex and the sale of assets sooner, so now decisions are more difficult. I suspect they will likely announce some more asset sales, and probably limit capex to a smaller number- wait for the pricing to correct and infrastructure to expand out of the basin. There is a huge inventory of nat gas, and numerous wells waiting for completion, so it will take some time to work off inventory and this winter is a disaster. With the value of their asset base maybe some private equity takes advantage of the opportunity. On the positive side the best asset base in the Marcellus; domestic gas and oil production starting to rollover, superb well economics and efficiencies, infrastructure is expanding hopefully ethane starts to ship. Been brutal fo the long term shareholders, but a nice opportunity going forward for new investors.
We're about back to post 9-11 share price. With $2 natural gas, $38 oil no one is making money and with hedges gone many companies have to roll up soon. RRC in better position than most with hedged position, and ability to access dry gas, but just an incredible mismanagement of their asset base to allow shares to reach this level. No way the cost reductions and drilling efficiencies they achieved, could offset the huge growth in reserves from capex spending in excess of cash flow in a declining price environment. AS the founder of the Marcellus, no one was in a better position to understand the negative pricing that would result from insufficient Marcellus infrastructure, the oversupply created by all the drillers and now we have the warmest winter in history to compound this mess, along with Mid east overproduction in oil turning the market against energy companies. Range has done nothing to show confidence in the value of their reserves-i.e massive asset sales with the proceeds used to buyback shares. If the guy who bought at $27 is in for the real long term, he'll be fine, but RRC has decimated its long term shareholders.
Shares are down almost 50% since CEO took over in 2007, more than 70% over past two years, with an asset base worth multiples of the share price,1.6 million stacked pay acres acquired at nominal cost. Managing that asset base into a 70% decline is not doing well, its a disaster. Expanded Nora holdings two years ago, only to sell out this year without funding the play; continually overspent in a declining price market with insufficient infrastructure. IMO, a disregard for protecting shareholder value. Could have sold Nora earlier, liquidated oil plays; stayed within cash flow and sold off some Marcellus acreage. They have done a great job on drilling, capital efficiency, marketing propane/ethane, but have decimated shareholders. On the positive side Marcellus production seems to be flat and oil on the decline. Only need a 300% increase in the share price to get out of this hole.
Not selling my shares because the assets are worth multiples of the share price. Superb 1.6 mil acres, but too much to support with their price realizations. IMO they missed opportunities to limit the share price decline with real significant asset sales, jv's or an outright sale. I'd like to know why T Rowe sold out, but I suspect they got tired of non performance. Every one knows the energy market is a mess, but you have to manage the downside as well. Almost 40 head coach openings in college football for non performers, it's been seven years here.