Why LEG will recover Low stock prices are extremely annoying, especially since the market mavens do everything to
accentuate the negatives and trivialize the positives. Here are some positives:
1. LEG has very high operating netbacks and will still have nice netbacks at lower oil prices.
2. Interest rates are very low so carrying the debt is not a problem.
3. LEG is a relatively new company and has a very high book value. It is important to realize
the high book value plus the debt was spent on long term assets (land, equipment etc.) as
well as a heavy drilling schedule. LEG's high drilling success rate indicates future success.
4. LEG produces higher quality oil at a lower cost than oil sands companies produce their
lower grade oil. With all the money that has been invested in the oil sands you can be sure
the oil sands is not going to go out of business. Therefore neither will LEG.
5. These types of market drops offer an investor opportunities to recover by investing in stocks
that are obvious can't miss bargains. In the last market drop I had lost a lot of money on
Galleon Energy (GO) but was able to recover by buying Painted Pony (PPY) at $1.15 when it
had no debt,
.65 per share cash and lots of land in the new Bakken oil play. I will be looking
for companies with solid balance sheets and excellent opportunities in their particular areas.