Kings_kid wrote: Good morning all,
It was a tough week for Oil Markets this week, however SGY actually had a bit of a rebound against a very tough market. This is keeping in mind the last couple of months have been devastating for the SGY share holders, myself included. The action that we saw the last couple days with very large volume buying suggests to me that someone has seen a bit of a preview of what is to come on Tuesday with the Q3 announcement.
I have no idea what is going to be announced, just thought I would share what I see as some possible outcomes and my perceived likeliness of each:
1) Bankruptcy/Banks calling their note: I see this as a very unlikely scenario, everyone loses in this scenario, including the Banks. I'm sure the reins have been tightened on SGY like they have been on many other oil companies, but I don't see Bankruptcy at this time.
2) Another publicly traded company or private equity has come and made an offer to SGY: I believe this is a possibility, however I don't believe the most likely scenario. If this is the case there will be a premium at the current share price, however most likely not enough that most of us share holders do not take very large loses. I would say the offer would be somewhere between .25 - .50/share.
3) SGY has been able to enter into an agreement of sale of one or a few of it's properties and pay down debit: Out of the four scenarios that I will lay out I believe this is the second most likely and believe that possibility 3 and 4 may be combined. This will keep the banks happy as this would go directly to paying down debit, and I believe the share price would react positively.
4) Simply positive results for the quarter: I believe that this is the most likely scenario, possibly combined with a property sale. With hedging, further efficiencies, decreased costs, and pipeline space available SGY many be able to surprise the market with really good Q3 numbers. In order for the numbers to be good, SGY will have to show that they have been able to continue to pay down debit, which I believe they did in Q3. If this is the case, then I think we can expect a nice pop in share price on Tuesday.
Other possibilities and a few comments:
SGY may have sold some of their Hedged positions to pay down debt
If a company is in negotiations to purchase SGY, they could be buying on the open market, up to 10% as they share price is lower than their offer.
If someone does have more information then the typical retail investor, which to me it seems that way given the way the shares traded on Thursday and Friday, then we could see a very nice pop and volume on Monday, which could mute the response of a positive quarter on Tuesday.
I will not go into the equation, but if you are interested see my previous posts that explain how I get the average price SGY gets for oil. At today's SPOT price, factoring differentials and currency pricing, SGY is receiving $39.02/barrel for their oil. Keep in mind this is not factoring Hedging so their price/ barrel is actually higher then this.
Have a great weekend!
Kid