Why I think this company is a sell Lets do a little DD here I will use q1 for comparison
EGL and IPO with close to the same production. 3859 bbl per day for IPO and Egl 3767
price received for product ipo 43.62 egl 53.76.
production costs ipo 15.44 egl 21.00
trans ipo . 75 egl 1.46
royalty ipo 4.56 egl 12.55
g an a ipo 3.94 egl 7.04
total before finance costs ipo 18.92 egl 11.71
finance ipo 657,000 egl 1.432 mil
Even though IPO receives less for their product they beat EGL hands down on CF even before finance costs.
Now comes the good part. Debt service over double, stands to reason EGL’s enterprise valve is mostly debt and little M/C
IPO high MC low debt.
Buying high debt low M/C companies works in an up market but not in this market. In this market companies like EGL have a good chance of going broke. So even if management cut G an A in half, their cash flow will not be enough to make any material difference production costs are to high, royalties are out of this world. And when you increase production your decline rates move up. The guys are walking a tight rope. Whats the best thats going to happen, EGL’s share price will double over the next year. But the worst is they go under, investors lose all their money. What has happened in this market is that all companies are trading at low values even the good ones. So if the market turns all companies will double or more. But the good ones will live to fight another day if the market does not improve.
Sure if you sell now most will lose money on their investment, who cares. You can buy another company in the same sector that is safe and make your money back.