RE:LNG development decision?Another company I own, TOU had an interesting argument for Nat Gas posted today on Seeking Alpha: https://seekingalpha.com/article/3055356-frustrated-with-oil-try-gas-instead-tourmaline-oil
A number of the market-based arguments also stand true for PPY (in my opinion), and thus it should be an attractive buy in the face of an announcement, but I wonder if it will dip back on quick profit taking?
My guess, based on nothing more than speculation, is that we won't see a large pop. I'm leaning toward $1.00.
There are two big things working against us right now - the LNG decision, and the output. Despite what many argue is a clear path to doubling and tripling production in a reasonable amount of time with managed costs, that still isn't increased cashflow. The money isn't in the bank yet. With the LNG decision behind us, the will be a very strong argument to be made for buying PPY based on their current trajectory, but is that argument enough in the current energy market to see a large pop?
At the risk of being bashed again, I'll restate that I believe oil has dragged gas down with it and is holding it back. The energy market as a whole is really shaken, and I doubt we will see much institutional risk taking, no matter how moderate, until things recover. There will be buyers, and I'm sure we will go up over time, but I'm not counting on a quick climb - I respect Roscoe's somewhat conservative approach, he called it back in the fall and people ridiculed him for selling. I thought he was nuts as well, until I wound up holding the bag.
If you've got cash for O&G, there are a number of really good deals out there right now, and many of the large firms who can move the needle appear to be dumping risky assets moving into shoulder season in favour of those that can generate more immediate, safer returns. I believe we fall into that "risky asset" category, as we bounced off the floor yet again as oil collapsed and stabilized. I guess the question is: will investors come back, or will they continue to favour the larger plays that are still trading at a discount, until the energy market regains footing. Although...the p/b ratio on many of the large o&g firms is still high.
-2cents from a cynic.