RE:Had to put Sadie on ignore.TheRexmember wrote: Can't be bothered with the whining.
bandit did you see OBE's debt financing 12% interest rates yesterday? Looks like rates for oil companies are so crappy that it makes more sense to pay down debt a bit further. Pretty sure it was nutsac saying that earlier.
A takeout here would just crystallize a loss - big premiums are not happening in this market.
still hoping for something definitive on ROC though
Hi theRexmember, no I didn't see the OBE financing rate but such a high rate is not surprising. My own personal line of credit is just shy of 10% but I don't use it. It's just there. The Fed is going to raise again tomorrow and odds are it is 75bps.
I am completely onside with debt reduction, no doubt about it. I don't like debt in general and for the exact reasons I comment on BNE et al, because then others own you. Banks own BNE and call the shots on almost everything. It is apparent in forced hedging, no distributions of any kind, no buybacks, restricted capex, and on it goes. My point has always been they should not have had so much debt in the first place. Too easy to take on debt never easy to get rid of it. But whatever, it's done. I hope lessons were learned. I don't recall exactly but I believe annual interest paid was close to $1/share at one point, $1 that could have been distributed to their "loyal" shareholders. Instead loyal shareholders watch cheap options issued for poor performance while they get slaughtered in the market....for years.
I am mixed on how to sell the company and I will leave that to the receivers of cheap options. I hope they make the right decisions. Personally, with the large free cash flow coming, post debt reduction, I say pay as much in dividends as possible (without using debt or financings), the share price will have no option but to re-rate then, sell it. At least they made some commentary on ROC even if vague. Who knows, maybe they'll make a run to take BNE private and, if so, one would think GF would ensure a fair price is paid. M&A is almost inevtiable in my opinion because reserves need to be replaced at some point otherwise producers only paying ROC (which is lovely of course) are eventually dead.
The feds are looking to cap emissions even more and maybe even a new carbon tax on producers. Ridiculous but they keep getting voted in and getting a free pass on pretty much everything they do so I think it is a good time to sell such a small producer since costs and restrictions are becoming too prohibitive.