Investornava - Because of the debt and debt service issue this disruption to production won't be taken lightly by the market. The surprise in the press release was that they had been producing 100 mcf daily since the start up. Management really low balled expectations for Q3 during the conference call by inferring that Q3 production at Rochelle would be limited to the contracted 60 mcf due to limited access at Scott. Turns out that lowballing was a very good idea in that it limited the cut back. This was no fault of management because Nexen is the operator. Also, this failure may be covered by insurance.
Since I took another bite today by purchasing calls I am changing long term sentiment from hold to buy.
Unemon- " This company is the best". I knew it was just a matter time before you would come around. I would like to be the first to welcome you to the long camp. I wonder which naysayer will be next to join us.
Unemon- That's it? I was really hoping for a detailed analysis but if that's the only peg on which you want to hang your hat I suppose it will have to do. Regarding the cash generated from Alba for Q2. Investornova did not state that it hadn't been included in Q2's cash flow, it was, and that in part enabled the company to increase cash on hand from $55million to $83.2. Because it couldn't be included in revs and earnings for the quarter, the impact to reported revs and earnings were adversely impacted. True, it's more of an optic issue for those that weren't aware of the reporting procedure BUT had the revs and earnings been reported in the earnings statement, it is possible that they may have shown positive earnings for the quarter instead of a loss.
You're a bright guy, I"m sure you knew this.
Smart- There is no doubt in my mind that you're a great guy. You're humble, upbeat and honest to a fault. Despite this, from time to time we will respectfully disagree. I think we do have other options than to go along with Mr Transier. We can always buy, sell or hold. While I remain bullish on the possible outcome, I try to keep myself open to all possibilities. Believe but verify and allow Mr Transier to earn your trust w/o having to give him the benefit of the doubt.
Mscarol- Management has been reckless in racking up the amount of debt that exists. Sure, the situation became unmanageable because of unforeseen delays, but, good managers allow for mishaps. In my opinion, management should be willing to pay a sufficient amount to extend debt payment if need be.
Investornava- While not familiar with kog your question caused me to quick Look See. Appears the swoon occurred about 5 1/2 years ago. What I found interesting is that while currently, end generates more revenues per share, kog is profitable while end isn't. W/O digging further, in other words, talking through my rear end, I would not be surprised if the difference were debt service and management. Kog has substantial debt but ample cash flow to cover the nut with left over as profit while end has an even greater amount of debt, after scaling, with insufficient but growing cash flow that hasn't been sufficient enough to both service the nut and generate a profit. Also, again w/o verifying and continuing to speak from my butt, I doubt that kog had to spend as much on capex as has end, again after scaling. Kog has had time to develop their assets, end is just getting there. The trip has been bumpy but there is a light at the end of the tunnel. The shorts believe that light is an oncoming train and that a disaster is at hand. We longs think it is Nirvana and soon we will be enjoying the fruits. Don't miss next weeks chapter, will the bad guys (shorts) win the day or will the good guys (longs) prevail? For the first time since I've been posting on this board I am with holding my long term sentiment. I went from a strong buy prior to withholding debt payment, at which time I changed to a hold. I am regaining confidence in management's ability to prevail with this ploy and thinking about taking another bite. I won't rate it a buy if I weren't a buyer myself, not there yet.
The secondary is 14 months behind us, the overall market has done well and the airline leasing companies have done well, some extremely well, with FLY the exception. Our share price is barely above the secondary price despite the company accomplishing all that they intended over that time period. What's the problem? In my opinion it's distrust of management. We longs feel we were blind sided by a secondary that wasn't needed. I agree with those they feel we are range bound and I believe that t will take an unexpected event to allow the share price to break out. Two possibilities, purchase of a package of (10-12) somewhat older airplanes at a reasonable price and aggressively repurchasing shares. It is doubtful that they will do the latter because it could be construed as an admission that they erred in doing the secondary. Management has stated that there is decent money to be made leasing vintage airplanes but they may not want to go that route because they like the optics of reducing the fleet age.
In the past management was very open minded in their quest to make money and increase shareholder value. Of late, they seem to be less opportunistic, more apt to follow an outlined plan and in doing so investors are underwhelmed.
Sentiment: Strong Buy
Green on a red day. Some news may be forthcoming and I don't thinks it's a downgrade.
Sentiment: Strong Buy
jwilli- There is no way that the company can do an expansion w/o a jv partner to provide the cash. Management has stated that they have sought aid in finding a suitable partner. This is more likely to happen when the feasibility study is completed. That could happen at any time and perhaps that's the cause of recent strength.
Sentiment: Strong Buy
Pinkal- While it would adversely affect our investment in END, assuming you're long, I would not mind it at all should the price of crude sink to $70-$80 per barrel because it would be a very good thing for all consumers. In my opinion though, a reduction of that magnitude isn't in the cards. This opinion is based on charts measuring world consumption. In recent years consumption has moved marginally up and down with the upward bias intact. While US consumption is in a slight downtrend, China and India's has grown.
Brent Crude closed at $99.16, lowest since April 2013. Low demand in Europe cited as cause..
Smart- It's true, crude and gas prices are presently declining and that will impact our bottom line in the short term BUT I think we get a clearer picture by broadening the horizon. It is very likely that crude and gas prices will rise into Q4 with the onset of cold weather. Regarding the hedge, I believe the company hedged approximately 5000 bpd. I do have one concern for Q3 and that involves Rochelle. While the company can easily and consistently produce in excess 100 mcf per day, much of this capacity will be shut in due to the unavailability at the Scott Platform. We compete with others for access and Scott is only contractually bound to handle 60 mcf per day for END. Some might say that management were boneheads for agreeing to this BUT what is, is. Rochelle was a large part of a good Q2 because access at Scott was such that the company was able to produce in excess of 100 mcf for 32 days. The good news is that our management believes that availability will increase again in Q4, a great thing because price of product should be higher Regarding future quarters, I guess we'll have to wait for guidance from management. I know you think they're not credible but in my opinion I think that they believed what they were putting out but didn't take into consideration that on occasions, bad thing s happen ( weather, mechanical failures, etc.). However, there is no doubt in my mind that they were reckless in taking on as much debt as they did.
Smart- We have been spanked hard and frequently. Any time we close green is a good day to me. Allow me to include one useful remark. At Alba, well A-69 started producing in August. I'm hoping that the additional production will result in two liftings for Q3. In the event that it happened, reported revenues will look very good. In any event, the company gets paid monthly for all product produced. Once again, it's all about debt management and increasing production which leads to additional cash flow.
Actually, it presents a fantastic way for the company to reduce debt on the cheap, that is, if they had the cash. Then again, if they had the cash the bonds wouldn't be discounted that heavily. But here's the thing, if you were a subordinated bond holder, you probably would be willing to give the company more time to resolve their past problems with the thought in mind tat you would be made whole again in the near future. Again, it's all about debt management and production and the company is making progress in both areas.
edsha- I hope you're not right. Congress hasn't acted on anything in a heck of a long time. One thing that might break the share price out of this funk is a surprise purchase of a small package 10-12 airplanes) of mid aged airplanes at a reasonable price. Management has recently stated that margins remain profitable with mid aged airplanes and that the company has done very well with the resale of older airplanes.
Pinkal- Withholding the interest payment caused it to tank so why would making that same interest payment cause it to tank? You may be right but I believe that it is a given. I believe that they paid out approximately $32 million on interest payments for Q2 yet cash on hand increased by $28 million, ($55 million to $83.2 million). It is true that a $12.6 million settlement was included and that expenses aren't evenly dispersed making it difficult to project where the cash balance will be after Q3 is in. Much depends on production. A decent Q3 (11,000bpd) and a substantially improved Q4 (12,500-13,000 bpd) would go a long way on the road to recovery. Extending debt for a fee could be a possible short term solution.
Smart- All we longs are underwater at current prices, no bout adout that. My investment strategy was and still remains is to purchase shares in ten per cent increments. Thus far I've taken four bites, some as low as $1.16 others as high as $1.44. Prior to buying, I did as much of my own research as possible. I was aware of the difficulties in the past as well as the current debt management problem. I felt then that past difficulties were reflected in the share price and that management was finally getting the production from their assets. I felt from day 1 that debt management and increased production were the solutions to the companies problems. Progress on both counts have been made since I've been on board. I am not marred to this company and am ready, willing and able to sell should fundamentals change. I THINK that the withholding of the interest payment was a ploy to gain an advantage on debt payment. We KNOW that the action thus far put a serious hurting on the share price. To my mind everything is a side show except increasing production and reducing debt. I still maintain that 11,000 bpd keeps the wolf at bay and enables the company to pay it's bills. One caveat for the shorts. I have taken my foot from the gas and became a hold from a strong buy.