I believe TOO works with very low cost producers of offshore, some of the bigger oil majors that have lower costs. I think OIL sees $55-$65 in 2017 and they will be fine. Good luck.
No that is the common shares. The preffereds cannot be cut, they are either paid or suspended. End of story.
I own TOO one of the partners, but all of them including TK have a very sizeable debt load on their balance sheet. I believe the company is run well, but a dividend cut was needed in this rough time in the energy sector. My main concern is how they will fund the debt going forward, as the bank's may not refinance or lend to help meet their funding requirements, and the debt and capital markets they may not have as easy access to. Now that the share price has gotten killed, its made it even worse and harder. Also, how about being in compliance with their stock covenants? I dont know the answers to these questions.....but investors obviously fear the debt. I am hoping they find a way to make it through as I'm going to wait for the recovery or sink with the ship. I own the preferreds of TOO at a lot higher price...
It depends if they suspend or not. It can't be cut. It's either paid or suspended. It's all about whether the company will survive or not. At the current share price of the commons you have to wonder if they will have any access to the debt market if needed and their current covenants whether they are in compliance or not. I have no clue about either just somethoughts. I own the preferreds at much higher levels
Now that the US export ban has been overturned, wouldn't this have a large effect on the need for offshore services, and wouldnt this have a huge negative effect on TOO business? I may be wrong as I will admit I dont understand all of the market dynamics, so please let me know your thoughts. Thanks.
Common is getting absolutely destroyed premarket, it has just completely collapsed. I am a preferred holder and own a lot of shares, and now thinking of picking up some TOO common shares. The market is either completely overreacting, or the business itself is signficantly changing and there is real trouble....I dont know which one it is.
will TOO survive even at lower oil prices? That's all I care about since i own the preferreds...just the ability to pay that dividend...
One of the preferred's today got completely slammed, good volume at 17k, maybe someone desperate just trying to get out. I personally did not have any issues with the latest quarterly earnings in regards to the preferred as i have not invested in the common
I believe oil will stay in the $40's- $55 range for a long long time. Still TOO services many of the big oil players who are producing from low cost projects, and the sector has hard barriers to entry. They should be fine even in a prolonged low oil price setting imo...at least the preferreds.
I don't care what happens to the common in the short/mid term, I only care that they can survive during these times, I know in October credit lines are being
reviewed by the banks, I was/am under the impression that TOO had strong banking relationships. Correct me if I'm wrong. I only bought the preferreds so as long as they can stay liquid and survive I'm okay.
Thanks that is interesting. I highly doubt that TOO want to suspend the dividend for common shareholders, so I would imagine that wont be the case on the preferred side. Also their common stock is not priced for bankruptcy or anything like that, I feel that their solvency is pretty good.
What am I missing for why the preferreds are so cheap? TOO-PA is trading at $17.63, a 29% upside if called, and a dividend yield yearly of 10.28%. They are also cumulative. Isn't the company cash flow positive and can easily service their debt? I am confused why it's so discounted.
Jackmaster, that didn't tell me much more than I already know. I'm looking to find out more about their debt, how much, what type of debt, their maturities, if there are any covenant ratio restrictions etc to see if the preferreds will be safe in a prolonged environment where oil is priced low and production and energy activity slow. Not saying that will happen, just want to be sure they can weather the storm in the worst of circumstances
Earnings and cash flow are good. Even though they state they dont have direct commodity price exposure, isnt their business still tied to the energy field.....meaning business can slow if energy field is slowing due to commodity pricing?
Regardless, my main question is their debt structure and when the debt matures. Also, what are their covenant ratios and how bad would things have to get before the ratios could be an issue. In an environment that is uncertain, financing/re-financing can be tough. I think this company is pretty solid on an operational side, but I dont know much about the debt levels.
The preferred's are priced way under par right now, and the preferreds are only based on whether investors believe the company has the ability to continue to fund the dividend. If the company has great cash flow and good earnings, why isn't this priced near par? Why does investor sentiment appear to show that there may be a #$%$" in the armor. Thanks for your thoughts everyone.