Question now is can they generate enough income to stay solvent and ride this drilling slump out over who knows how long? They are now in a good position to go private at a low buyback price which is what I would recommend to management.
The "street" has been selling for several weeks on huge volume. Unrelenting day after day. Stock down 50% in a very short time. This despite the fundamentals. There was a closing uptick today so hope it's over.
Sentiment: Strong Buy
Where is the huge volume on the downside over the past few days coming from? A million + some days. The story on the company does not seem that bad??
It's like catching a falling knife now. Who knows where the bottom might be? The company does have the resources in the ground and their sand is essential to the fracking process.
They may reduce the dividend more until business recovers. The next quarter earnings (Nov. 4) will tell. If they can downsize and survive they have tremendous reserves of high quality sand that is a key raw material for the drillers. This even more so with the new "refracking" process. I'm trying to talk myself into not panicking in here and dumping with everyone else (1.4 million on Fri alone). I did sell some Nov 10 puts naked for $175 each. That's like buying the stock for 8.25. We'll see.
Business is better than the Street thinks. "Refracking" is using huge amounts of sand even with well count down. They're OK. You can buy in here and sell the 15 calls on your stock for a little insurance.
Monday's meeting in Houston and the HCLP presentation will be interesting. It will be posted on their website. I'm buying more in here too.
Sentiment: Strong Buy
Agree. Please read the article in the WSJ yesterday (Mon), Pg. R3, "Technology to the Rescue." There is a lot on what is called "refracking" where old wells are redone using much more sand. As many as 10,000 old wells are candidates for this procedure. The only question I have is does HCLP have the preferred type of sand for this refracking? The article mentions a finer grain sand. I asked customer Service at HCLP and they will not respond (to anything). I'm buying more in here and hedging a little by selling shorter out of money call options on the stock. Meanwhile the 15% dividend is nice. Hope it lasts.
Read article in today's WSJ, pg. R3 (9/14) and the part about "refracking." Huge potential for HCLP. Their future business prospects are much better. They are also a prime takeover candidate at these prices.
They are 61% owned by Avista Capital Partners which is an investment company. They buy and sell positions all the time. All they have to do is accept a buyout offer and tender their shares. Done deal.