TSX:HSE.PR.B - Post by User
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Olympicon Nov 06, 2017 3:20pm
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Post# 26913597
The Street cannot ignore HSE for much longer ...
The Street cannot ignore HSE for much longer ...Dividends aside, at some time soon analysists and institutional investors will be forced to recognize the value proposition HSE represents. You have heard it all before - diversified portfolio, strong balance sheet, lower and lower cost operations, respectable net backs, internally financed growth, and strong mid-term production outlook. Ultimately, at these depressed share prices, I suspect the minority interest starts to look appetizing for a stock buyout or a privatization of company (perhaps with the bundle of corporate cash at hand).
Q3 results blew away the street estimate by a factor of 4 ... resulting in a measured bump in share price, but ultimately little movement in comparison to peers.
Q4 earnings estimates seem to equally be underplaying the value proposition - with ranges from $0.06 loss to $0.25 earnings per share. At some point this quarter analysists will need to update their assumptions to reflect the stellar appreciation in WTI in recent weeks (assuming the price of WTI holds its ground). When revisiting these assumptions they cannot ignore the sensitivity it has on HSE's operations.
Reviewing the results from Q3 - HSE reported a $0.14 EPS and an averaged realized WTI price of $48.21. In the Q3 Sensitivity Analysis management advises that $1.00 increase in WTI would reflect in a $0.07 increase in net earnings. While still in the first half of Q4, if today's WTI price (north of $57/bbl) were to hold and reflect an average for the quarter (and all else being equal) shareholders are looking at a significant increase in Q4 in the range $0.77 EPS.
Dividends would be great ... but a Q4 quarter that blows away the street expectations again would be nice too. Come to think of it - I think shareholders deserve both!