Yes, a tiny buyback would make a world of difference. it would be immeterial to their cash balance and stop any delisting risks or need for a plan which requires lawyers and money.
I'm surprised short interest has decreased while the price has fallen. Usually short covering is greeted by a rise in price. I am guessing shorts used the exit from the small cap index as a time to cover? Since there are no more rungs to fall from, they might as well cover? I'm guessing this is the short's mentality right now although I can't say as I am long. Any shorts covering here?
NE is unlikely to financially help but might try to throw some bones to PGN like info or help getting / closing contracts for low spec jackups (since NE is basically out of that business). If PGN goes bankrupt within 2 years of the IPO, Noble could have some liability or potential claw backs. Plus if the spin off doesn't work, they will never be able to spin off assets again. So Noble does have some interest in seeing PGN survive.
Pride- that sounds right although I would add that nothing will happen until something material happens to either oil supply / demand (as you say) or rig supply / demand.
1. Saudi Arabia is intentionally pushing up production to push down oil prices and push out frackers. So this December could mark a peak oil supply if OPEC agreed to production cuts to benefit them all, but this is completely unpredictable if or when Saudi Arabia would do something.
2. The rig overhang getting worked through is the other potential impetus. Almost a third of the world oil production comes from jackups and if the supply / demand of rigs turns positive (which doesn't look like will happen in 2015 or 2016), then you'll see stock prices go up.
So you're right that there isn't any rush to invest in oil companies. But the stories of individual players could differ from the average including bankruptcies and acquisitions (even PGN could get purchased by someone like Shelf Drilling).
Priced in. If you want to price it out, look at EV / EBITDA which assumes no debt. Debt simply amplifies return on equity (positively or negatively).
I agree. Merger would have to be a win-win for both parties. And two distressed companies don't make a stronger company. It would have to be a merger with someone like VTG that is looking for security of lots of rigs while PGN is looking to upgrade fleet. And both merged together could still move up 10x.
The street isn't always rational, but is generally pretty smart. This stock is going down for a reason. My theory is that a large percent honestly believe it is going out of business so they are shorting the heck out of it creating a giant float that is being force sold from the S&P 500 to now no index. With no more indexes to fall out of, and not a lot of immediate downside, I expect this to pick back up to around $1.50. Eventually after a couple years, the dust will settle and this will either be worth $0 or $10.
Book value that is "too high" does have value if the company is profitable... If they sell / scrap rigs, and they write off some book value, that gives them a tax credit.
Personally, I like PGN better although 70% of PACD is owned by one investor which makes it a little less volatile. DO similarly has a big investor which decreases volatility.
If you want a safe bet, I would buy PACD, NADL, HERO, PGN and VTG. They won't all close up shop and eventually the survivors can go up 10x.
My guess is that the debt holders that converted their stakes to equity aren't dummies. They must see something you don't? Otherwise they would have forced liquidation and taken what they could.
Add NADL to that list. All four stocks, HERO, PGN, NADL, and VTG are very different. Everybody faults the Prospector acquisition, or the fleet age, or other missteps by management, but that isn't the real reason for the fall. All these companies are down more than 90% over the last year. The market has lumped these all together along with other smaller ones. But they won't all fail, and those that survive this downturn will be worth substantially more. My guess is that PGN is a survivor.
I think the recent drop is primarily on HERO bankruptcy causing fear, and the company leaving the small cap index. In other words, it is nothing that fundamentally changed with the company in the last few weeks. As I look at the bonds, they are not trading in that 40-45 cents on the dollar range.
But you are right that the market is rarely wrong, and has put HERO and VTG and PGN into the same basket. But I don't think they're all the same. I believe the market is wrong. We'll see and know better in a year. This will either be 0 or $10. Stay tuned.
Not sure if that is them buying the debt. They would need authorization from the board? Or is there still some outstanding authorized purchases?