I just keep shacking my head...If my math is correct, with the company bragging about producing over 20k boepd, that means
that every day, because of the hedge, it translates to over $200,000 of missed profit , x taxes...
I didn't realize that forgoing that much money was such a minor thing for a company of sgy's size!!!
Someone is dumping a lot of stock... That's why the stock price in not $7 + and of course the hedge.
I guess who ever is dumping and they are dumping by hitting the bid, they don't seem to want to drink the company's Kool Aid...
Any extra cash should be used for share buybacks when an opportunity araises. A good formula is
when the stocks goes back to its 100 or 200 dma on a weekly chart.
Yes that means that the price of oil has probably gone down and /or the market is having a correction, but the price of oil may go down for a couple of months and back up. Hedging, you are forgoing $10 / b for 6-12 months...
The debt can be lessened to a more prudent amount when the price of oil goes above $100.
The goal is to not to be to leveraged at the top so that you can keep up the dividend when times turn sour, like a recession.
For now, we are in a bull market and we shall be in a bull market for at least 2 more years.
So for now, reduce the s/o and then start to pay a dividend and as the price of oil is on its way to $200/b, then you can direct more of the revenue towards paying off a sizable protion of the debt.
Buying back stock preferably at a lower price if the time comes, will make a huge difference in terms of eps at $200 oil.
Of course oil will not stay at $200. But just imagine sgy with only say 3-500 mil of debt.
Probably never happen because of ESG, the oil companies will be buying other oil companies to take advantage of the higher oil prices. Drilling for barrels so to speak...