RE:RE:RE:RE:HendrickIf you look closer you will see SL is not the only exec / director with skin in the game.
Several million of the recent debinture financing was taken up by the above.
Remember control of OBE was taken by the activist hedge fund Frontfour Capital. SL is one of their partners. He has been seconded to turn OBE around - translation, cut the fat, clean up the balance sheet, maximize share value, then sell and repeat.
Those with their hands on the controls have one mission - that is to maximize share price so they can exit this position. You don't get much more conviction than that.
With respect to possible asset sales - they already occured (other than some irrelevant bits) during the early stages of cleaning up the balance sheet.
If you are holding OBE, you may be better served by viewing its assets in the context of a much higher oil price range. That being the place we find ourselves when demand exceeds supply all year, and by a few million barrels. We don't know what the price range will be in that period - it could be $120-150 for example. It could be $150-200 etc.
Whatever that new future oil price range turns out to be, it will make buying new land very very expensive. You do not want to be selling prospective land today, when that situation is on the horizon.
The general strategy is bank your land now, and produce it later when prices are much higher.............and possibly produce it right down to nothing. OBE is well positioned land wise - its current land should keep it going at current levels until at least 2038 - with more reserves to be added as peace river is explored.
Selling that land now would be a very short sighted strategy. Selling it at $80 oil, right before China gets back to normal, and just as India is getting going, would be an act of poor management.
OBE is currently being driven by investors, just like you - with much better day to day information, and with access to $400 million to spend annually at $80 WTI. I feel very comfortable with investors deciding how to spend that money rather than some fat cat exec that feels like a new corporate jet, a few sexy assistants, a big expense account, and larger office would be the best way to spend some of that money.
If you've seen SL interviewed on TV about OBE, it looked like he was sitting in a spartan little office somewhere in NY.
As for oil hedges. Investors should hedge themselves if hedges is what they want. If you are in that situation, you're better off selling - you should only hedge if you thing prices will fall. If thats your view, you'd be better off selling.
Companies should only hedge if they are forced to do so as a result of lender interferance. Hedges can be very dangerous (mark to market wise) in a highly volitle situation. Its a shame for a company to get bankrupted by its hedges! That nearly happenned to OBE pre SL. They hedged in US$ WTI - WTI went up, and Canadain oil tanked because of pipeline limits. ie they reverse hedged their poduction and got double screwed. That Board and CEO is now gone.
You may notice when they hedge oil now, they do it in C$.
Hopefully they will never hedge again.
In many cases, employee decisions are driven by their fear of failing and getting fired. That mind set leads to hedging. It also leads to drilling safe production wells that produce at lower, but more predicable rates, than taking drilling risks looking for better results.
I want a CEO whose decisions are driven by achieving the best possible share price - not concern about getting fired.
At the same time, I want an operating team that is worried about getting fired.
ie, I want the corporate financial strategy driven by someone like SL.
I want to drilling decisions split just as they have done - $220 ish for predicitable drilling results and $25 million for exploration.
With the drilling run by people who are motivated by not getting fired (ie taking the safe route).
In that context, I want the CEO (who is focused on big picture strategic moves) to have more shares than the VP's (who are focused on operational execution).
That seems to be the case with OBE. The CEO is looking for maximum share price (and not worried about getting fired - he even calls himself an interm CEO!). While the VP's are all long term career types who probably are motivated by not screwing up.