RE:RE:tcelling The stock is only reacting to the oil priceZoolanders21 wrote:
Tcelling ... how does the hedging game affect the SP then? As you know, PRE is hedging up to 60% of production. Current Brent futures for Oct delivery are trading at $67+
Yes, I should have referred to "realized price". Obviously, hedged prices are locked in well in advance, limiting the impact of daily WTI/Brent changes. I hope they tone down the hedging going forward as I am betting on a rising price of oil environment where hedging will be costly. They did a good job hedging so far in 2015, however.
BlutoBlutarski wrote: That may be true for yesterday and today, but what about previous weeks when the stock price activity was inversely related to the price of oil? I say there is something big in the works that we outsiders don't know about. Time will tell.
Well, a couple things could account for this:
1) The market isn't perfect
2) The market doesn't solely look at the absolute here and now, there is an eye toward future earnings/future oil pricing.
3) It could be argued by some that when oil was @ $50/barrel, the theoretical enterprise value (read calculated) of PRE was below it's debt load. Therefore, the shareprice solely represented a bet on future oil price increases and, therefore, daily changes in WTI/Brent had little impact. Once oil prices exceeded some threshold (I believe this number is more like $45/barrel, but others may disagree), however, the calculated value of PRE exceeds the debt + shareprice and, therefore, any subsequent changes in oil price would again impact the price drastically (in a perfect market). It may be that "the street" has caught onto this.
4) Market psychology. PRE was beaten up way beyond fundamentals and could simply be catching up with other oil companies that have rebounded. Also, short covering accelerates this.
I'm not saying there isn't something "big" in the works. I just think it is unlikely and that the change in shareprice we've seen in the last couple of days can be explained without anything going on behind the scenes.