What is the most annoying is that typically in situations like this the company gets bought out. I owned Teavana, MetroPCS, Bally Technologies, and Questcor which all tanked and were then bought out. It is common in short attacks because at some point the price is so low that it becomes a desirable buyout candidate. I owned EBIX that announced a buyout, then it didn't go through, and today the stock is much higher than the buyout price. I am hoping this doesn't get bought out at $5. That would really #$%$ me off.
I think he mentioned the enterprise value of $2.2 billion because companies in the offshore drilling industry typically sell at 7-8x EV to EBITDA which means the street sees EBITDA of $300 million. Seems unlikely to me but the Pemex could potentially help clear this up.
Depends on your horizon. If you are long term and can hold through volatility, then buy more. If you can't take volatility then sell it when you have a price you are comfortable with. It looks like it could bounce around in the 2's for a while.
Will be a volatile stock. If you're fine with the crazy ups and downs you'll be fine hanging on. Should be higher in a year or two. But if oil stays down in the $40's for a couple years, this may not be a fun ride.
Outlook is fine. YoY revenue growth this quarter. Will be YoY quarterly growth next quarter. Bookings numbers look weak, but that's because of timing issues. Revenue will be up next year. So growth will continue.
As for earnings, if you look over the last decade, net income has been around 5%. It does fluctuate year to year but tends to revert to that average.
So a growing company, solid balance sheet supporting a good dividend. Investing in future with acquisitions and capex. I'm comfortable holding here.
It is my motto for most of the stocks I own and has seemed to work for the last few decades. I started with a lot less bags than I own now.
Anyway, regardless, I look for good balance sheets, dividends, and long term growth. If you call that bag holding, then let's say I've got a lot of bags
Every company is dropping their dividend. It isn't Stilley. It is the entire industry. Sorry if you don't like it, but hang in there and you will be rewarded when oil finally rises.
first of all, I love debt. It juices returns (as long as the debt load is manageable). So if PGN just borrows $300 million more and buys back everybody's shares but mine, I would make $100 million a year on my handful of shares.
So as for whether the debt is manageable, that is a hard question. Where does it need to be to make people comfortable if Brent hovers around $60? There is some amount of debt that is manageable, leads to better return on equity and long term growth rates, but doesn't scare the markets.
Based on their guidance, a worst case situation would be:
850 drilling costs
105 pretax profit
75 after tax profit (about 85-90 cents per share for the full year)
250 of actual capex means 100 of cash not used for capex (based on depreciation expense of 350).
So let's call it 50 cents a quarter of cash coming in, or $2 per year. If it can keep that up, we'd be looking at the industry average of 5-7 times the after tax income plus depreciation or about $25-35 stock. Obviously things can get worse but I think more likely to get better than this next year.
Shorts aren't dummies. When there is a signal that this can happen (or that it is done going down, shorts will start covering. Right now they are shorting a highly leveraged company in a very difficult industry, but it won't be that way forever.
Overall, I have been happy with the results and efforts of management we've seen so far.
Estimates will likely rise for the quarter and year as they are too low right now, and along with estimates rising, the stock price should rise, too.
Banks are still considering loan to Prospector.
Each of the 3 rig options are a separate contract. Not taking one doesn't mean they can't take another.
Banks financing rig building in China could finance the prospector rigs if PGN takes them.
Goal is to cut revolver to 0 by the end of the year to keep liquidity options open.
Lower day rates and lower utilization is expected this year but not sure how it wil break down.
Dividend cut to maintain liquidity and maybe buy debt in the future.
Even if oil prices pick up, rig demand won't materially rise until capex budgets rise next year.
Pemex contracts will probably be signed in coming weeks (if they take any of PGN's available rigs).
Ranked best foreign offshore contractor for PetroBrazil but not a lot of options there since not much shallow water.
Q4 only included one month of prospector, and not full revenue (but full cost) on one rig for the month
Listen to the call. some stuff for Bulls and some stuff for bears. Overall I am happy staying long.
From the foul creature.
Listen to the conference call.
They are guiding to:
Revenue down 20-25% full year 2015 vs 2014
$840-870 million drilling expenses full year
Effective tax rate (ETR) 30% depending on Pemex renewals