SGY finally broke out.SGY was under cloud and was lagging behind other oil stocks. Investors were avoiding the stock as there was little clarity about its financial arrangements with banks about its debt.
CEO of the company is a very experienced oilman and has been an aggressive wheel dealer, usually getting ahead and buying selling assets and coming up with creative ways to benefit from the opportunities with are created by the markets.
Stock markets and oil sector is very unpredictable and if the timing is bad it can cause financial hardship because of debt. The last purchase by SGY had very bad timing and was a bad idea which increased the debt and caused extra stress on the company during very difficult times for the oil industry. Some companies with too much debt did not survive.
Surge Energy Inc. paid $320 Million for Mount Bastion oil 5500 boepd of Light Oil; $200 Million Increase to Credit Facility; The timing of that deal was horrible and may have overpaid. The float of SGY is 339 million shares and the market cap is now $234m only. SGY paid more than the current market cap for light oil assets and went into a huge debt that caused trouble for the company.
With the recent recovery in oil prices, the company was able to sell a portion of valuable assets which has a very low decline rate of only 16 % to put the financial house in order and get the company out from under the cloud.
Fortunately, the company still has some of those good quality assets and was able to replace the sold barrels at a much lower cost than the sale price. The difference will have to pay off the debt and put reduce pressure on the balance sheet. Not a bad approach.
Yesterday the stock financial broke out. There was not short covering because the stock has a tiny short position of 418114 shares. The stock had an amazing volume of 15.7 million shares. It took out those penny traders that posted huge blocks and capped the stock. Now they are out of shares and the gap in the prices is huge as the stock gained 30 % in one day.
There was substantial HFT involved in the volume. The average trading price was $.63 but the stock closed much higher at $.69 with an intraday high of $.72
The company should be coming out with Q4 / yearend results. Those will be an indication of how the company performed in the last quarter and over the year. That is now in the rearview. One can too look forward and see what the company is predicting at certain price levels. What is going to be the level of debt, free cash flow level of production, and the decline rate?
Personally, I would like the company to pay down debt and if the prices consolidate in the range of WTI $60 to $70 and higher they should add more production. The company should not restart the dividend with free cash flow but should consider buying back shares like CPG.
I am still a fan of CEO. I think he is a competent oilman.
House Positions for C:SGY from 20210305 to 20210305 | 1 Anonymous | 4,400,801 | 2,774,142 | 0.63 | 3,575,330 | 2,249,703 | 0.629 | 825,471 | -524,439 |
| 79 CIBC | 2,862,265 | 1,822,327 | 0.637 | 2,237,859 | 1,424,101 | 0.636 | 624,406 | -398,226 |
| 80 National Bank | 1,086,775 | 702,124 | 0.646 | 733,183 | 472,780 | 0.645 | 353,592 | -229,344 |
| 14 ITG | 176,200 | 111,477 | 0.633 | 3,500 | 2,100 | 0.60 | 172,700 | -109,377 |
| 73 Cormark | 100,000 | 59,000 | 0.59 | 0 | | 100,000 | -59,000 |
| 85 Scotia | 1,097,025 | 687,563 | 0.627 | 1,002,667 | 631,985 | 0.63 | 94,358 | -55,578 |
| 74 GMP | 65,000 | 45,650 | 0.702 | 0 | | 65,000 | -45,650 |
| 13 Instinet | 232,500 | 144,445 | 0.621 | 180,000 | 113,707 | 0.632 | 52,500 | -30,738 |
| 82 Stifel Nicholas | 51,000 | 30,195 | 0.592 | 0 | | 51,000 | -30,195 |
| 88 Credential | 172,750 | 110,526 | 0.64 | 143,935 | 92,520 | 0.643 | 28,815 | -18,006 |
| 77 Peters | 20,000 | 12,195 | 0.61 | 0 | | 20,000 | -12,195 |
| 25 Odlum | 11,500 | 6,555 | 0.57 | 5,000 | 3,500 | 0.70 | 6,500 | -3,055 |
| 70 Manulife | 5,000 | 3,100 | 0.62 | 0 | | 5,000 | -3,100 |
| 59 PI | 10,000 | 7,100 | 0.71 | 7,000 | 4,900 | 0.70 | 3,000 | -2,200 |
| 143 Pershing | 3,000 | 1,800 | 0.60 | 0 | | 3,000 | -1,800 |
| 5 Penson | 174,160 | 111,388 | 0.64 | 177,032 | 116,413 | 0.658 | -2,872 | 5,025 |
| 76 Industrial Alliance | 0 | | 3,000 | 1,830 | 0.61 | -3,000 | 1,830 |
| 48 Laurentian | 0 | | 4,000 | 2,800 | 0.70 | -4,000 | 2,800 |
| 212 Virtu | 2,261 | 1,443 | 0.638 | 15,661 | 10,493 | 0.67 | -13,400 | 9,050 |
| 53 Morgan Stanley | 3 | 1 | 0.333 | 23,752 | 15,645 | 0.659 | -23,749 | 15,644 |
| 57 Interactive | 500 | 350 | 0.70 | 27,965 | 15,765 | 0.564 | -27,465 | 15,415 |
| 33 Canaccord | 705,000 | 429,362 | 0.609 | 742,000 | 454,627 | 0.613 | -37,000 | 25,265 |
| 200 Acumen | 0 | | 55,495 | 32,187 | 0.58 | -55,495 | 32,187 |
| 19 Desjardins | 237,300 | 152,580 | 0.643 | 301,136 | 201,811 | 0.67 | -63,836 | 49,231 |
| 124 Questrade | 156,878 | 98,537 | 0.628 | 224,303 | 144,821 | 0.646 | -67,425 | 46,284 |
| 28 BBS | 0 | | 100,015 | 61,912 | 0.619 | -100,015 | 61,912 |
| 89 Raymond James | 27,100 | 16,669 | 0.615 | 225,000 | 134,750 | 0.599 | -197,900 | 118,081 |
| 9 BMO Nesbitt | 681,987 | 429,500 | 0.63 | 925,997 | 582,940 | 0.63 | -244,010 | 153,440 |
| 39 Merrill Lynch | 3,526 | 2,143 | 0.608 | 301,893 | 209,737 | 0.695 | -298,367 | 207,594 |
| 7 TD Sec | 2,298,364 | 1,506,743 | 0.656 | 2,931,071 | 1,889,655 | 0.645 | -632,707 | 382,912 |
| 2 RBC | 1,206,705 | 784,943 | 0.65 | 1,840,806 | 1,181,174 | 0.642 | -634,101 | 396,231 |
| TOTAL | 15,787,600 | 10,051,858 | 0.637 | 15,787,600 | 10,051,856 | 0.637 | 0 | -2 |
Short Positions for SGY
| T : SGY | 2021-02-28 | 418,114 | -51,768 | 339,784,739 | 0.12 |
| T : SGY | 2021-02-15 | 469,882 | 112,647 | 339,784,739 | 0.14 |
| T : SGY | 2021-01-31 | 357,235 | 114,670 | 339,784,739 | 0.11 |
| T : SGY | 2021-01-15 | 242,565 | -69,824 | 339,784,739 | 0.07 |
| T : SGY | 2020-12-31 | 312,389 | -335,329 | 339,784,739 | 0.09 |
| T : SGY | 2020-12-15 | 647,718 | 332,809 | 339,784,739 | 0.19 |
| T : SGY | 2020-11-30 | 314,909 | -404,278 | 339,784,739 | 0.09 |
| T : SGY | 2020-11-15 | 719,187 | -2,758,415 | 339,784,739 | 0.21 |
| T : SGY | 2020-10-31 | 3,477,602 | -1,173,807 | 339,784,739 | 1.02 |
| T : SGY | 2020-10-15 | 4,651,409 | 20,362 | 339,784,739 | 1.37 |
| T : SGY | 2020-09-30 | 4,631,047 | 147,306 | 339,784,739 | 1.36 |