RE:RE:I just keep shacking my head...Sunshine,
Why do you think that just because I question mgmt, that I am short???
As a matter of fact, I bought more yesterday, just before the close!!!
Even if banks finally figure out how to lend to frackers and are able to get their money back within the next 3 years, that is a 3 year loan, the production is not going to come on stream for anywhere from 6-12 months...
The cost are going to be higher and profits is going to depend on the price, whether they hedge or not hedge.
SGY, already has the oil, no need to go looking for it. If they can get the share count to a much lower level, eps will be higher, if shares keep going up they can reduce the debt and pay a higher dividend.
So this happen, they will be able to wait for better opportunity for m&a or drilling depending on the price of oil. But first the share count has to decline and debt much be reduced, but not eliminated. Oil companies need to some debt for leverage.
In other words, if sgy is not taken out, they should plan to be counter cyclical... I.E. buy during recessions when prices are down and take on more debt this way.
I think that the company should look into issuing a $10 bond and let it trade as a stock, but of course with the same protection as if it was a $1000 bond.
The bonds being cumulative, so that if price of oil is so low,that the company can suspend the interest payments to the bond holders, but as soon as the company can get enough for the oil, the interest payments are resumed and the interest is all paid back to the bond holders.
This will eliminate going to the bank or any government agency...
I know that I would buy a tradable $10 bond!!!