RE:RE:RE:RE:RE:RE:RE:RE:RE:$36s to $3s same oil priceLet's look at this from Management's perspective.
If the markets want to implode a whole industry, within a country, such as ours they will.
There comes a time when most major holders won't sell at these prices at all assuming the company is fine long term which it is.
So really not too much that BNE does will make the price go up in this price contraction market.
What can the company do then?
They can drill more wells, this only flies if prices stay here and move higher with little risk to the downside.
They can buy back shares, would you spend lets say $20,000,000 to buy 5 million shares back knowing it won't help much if other buyers are not in here to pushing it up?
Or would you like to wait to see if there is a recession, if prices stabilize, if you can reduce your debt even much lower than most would imagine so there is not this risk going forward. If you could buy back your shares at $3 or even $2 on average in a very very bad market that leaves even more room with the cash they have.
Or would you hike the dividend knowing it really does not do much for the company but only the shareholders, some of those dollars may get invested back into the stock but most will fade away.
If they paid out hundreds of millions of dollars in the past where is all that money now, why has it not come back home to support the stock at $5, $7 or $10
Similar to my personal approach I am trying to pay down as much debt as possible and only using borrowed cash when I know I can make more money on it for my business. It is easy to spend in large amounts but keeps coming in at only small increments.
Until the egress issue is solved and turns the corner only then should they look at production growth, and paying a higher dividend.
May be they want to get a plan in place for all scenarios in play. HOwever, we all know anything that is published will be used against them should they decide to change their minds.
If you believe in this company, build cash, buy more when there is weakness. Wait for the worm to turn and see if they have done anything in our favour then.
If they never want to have risk again, then pay down debt, may take two three or four years even if prices spike. Slowly increase dividends to build up confidence in the company and the stock price.
Maybe someone can explain to me when increased production levels will come into play? Is this a gradual thing where it is growing steadily each and every year? Or are they just maintaining production because of the low prices generated at the moment.
I personally don't think a major recession will occur unless a huge tightening in money supply occurs, it could and should be short lived.
The world won't come to an end but I guarantee you a lot of people are not as well off now as they were before 08 and 09.