Surge Energy Inc (Alberta) T.SGY

Payoff debt & Investors will come

[PUNJABI]

Look at  GXE a tiny company of 6000 B production. Since they have announced to become debt-free the stock is shooting up. Most likely they will become debt-free next month or in March.

Stock is trading like the energizer bunny that keeps going up. The market is giving it a debt-free premium. Most oil stocks are flat to down day. It is up 9.35% today.

Debt-free companies will reduce the risk to the company in the event the oil prices become soft again. Shareholders will feel confident in holding the company for the long term.

Pretty some the model for oil companies is going to change.  Investors are going to demand returns while they hold the stock, instead of servicing banks the companies will have to service the long-term shareholder.

Massive FCF generating cash cow Oil companies will become like trusts. REITs that make payments to the shareholders on a month or quarterly basis. These companies will be added to dividend-paying funds and ETFs.

[fortunefavorsus]

I do think they should have a goal the next couple of years of paying off all lines except the 130 million new credit line. I guess the new credit line has prepayment penalties but does not have restrictions on the company.  After 5 years they should be able to refinance at significantly lower rate.  As Colborne said they can still pay a 30 to 40 million dividend on top of that goal at

[1970Craig]

Re: Debt.  There is one thing I hadn't tbought of and that is if they did pay off half of that 8 plus percent debt , one would think with KPIs like the price of oil or net backs are still strong , with 1/4 of there debt paid off in such short order with the ability to pay off the rest in 6 more months if they wanted to.  They might RE-FINANCE the 8 plus percent loan to even 4 percent

[ppp]

Take a look at I3 energy ITE these guys are trading real cheap 19000 bbls no debt pay a good div. Little hard to figure out MC about 280 mil.

[pennydredful]

There  is nothing  good  about being debt free  in  a  low interest rate environment  , where low  interest cost tax deductible  borrowed  funds  can  be put to use  in business to earn a higher return. If   one has  credit card type interest debt  , it  should be paid off  and/or replaced  

[morrisminiman]

Perhaps, but its a relative thing. If everyone else is debt free, or going in that direction why would anybody  invest in a company with huge debt compared to others? I think its a good idea to check out balance sheet before investing. And it really depends on what you are doing with that debt. if the debt is used today to buy things that will make you earn money in the future thats good. If

[1970Craig]

I think my point was really that 8 percent in and your totally right ......a extremely low interest rate environment, and also yes it takes money to make money.      However , the 8 percent in a low interest environment is really a red flag.   Someone would question this , look deeper.         Then my second point is the dividend.  I think this