RE:RE:RE:RE:RE:1+1=3johnathamilton wrote:
Stocks do go to zero. Whether this stock does or not depends on the length of time oil will stay at $60/barrel or less. 3 months = back up the truck; 3 years? Sell and get the heck out of Dodge!.
The question is who knows?
I very much doubt oil rallies back to 80 in 3m heck not even the so called summer driving season in 2015. As for LRE, first things first - eliminate the dividend however in my analysis even that won't save them as they need 95-100 oil.
OPEC doesn't meet until mid 2015 and won't be reversing their decision that quickly as they'll look incompetent and watch oil drops below 60 in a couple of weeks time - mid 55 by end of year - not possible? well we all saw how easily 70 got taken out and as we sit here at 66, everyone is going to the bear side to 60 onto 55 perhaps even 50 - ala 2008. is that the bottom then or more downside as in 40?
By the way, next up is nat gas - sympathy trade and same reasoning as oil not much demand even if we are in winter and too much in the inventory.
As for LRE and all of these small/mid cap oil companies with a ton of debt - short it or just sell it and buy something else - get your money back that way, most of you already know that dividend will get cut if not eliminated, you all know debt is high at 700m+ divesting assets at low oil prices is a lot harder than you all think and likely get pennies not enough to make a dent to pay debts, will likely need to raise funds through equity (dilute everyone) just to kick the can down the road and if they do, I'm thinking 250m shares at $1.50 as there won't be demand at $2 and this can happen any day now but the end game for a lot of these small to mid cap company is to go bust.
700m+ debt vs market cap of 400m - what options or chances of LRE in surviving this? I give it < 10%
that's the cold hard truth for a lot of these companies.