RE:RE:RE:Reality in Oil + GasBuybacks are for companies that don't have solid plans for future capital --
You couldn't be more wrong if you tried. Buybacks are for companies that understand when their SP is fundamentally undervalued and that have the discipline and FCF to do something about it.
ARX is a great example. They bought back over 100 million shares at an average under $17 and it is now trading at about $25. Those shares are off the market for good and they still had sufficient capital to support a respectable dividend AND build out Attachie Phase 1, which will generate an additional 40,000 BOEs/D in little more than six months.
That's discipline and that's how you earn a re-rating on an SP - textbook.
MyHoneyPot wrote: I feel it takes to long to have a significant impact, to make a 10% difference in share count which is prettywell the most a company can do in a year would cost rought at least 120 million dollars at least. I would rather put the money in the bank at 5%.
There are so many other factors that go into the evaluation of a company, including resource in place, producing infastructure in place, reserve life, and all this takes years to develop the plan and fund it.
Buybacks are for companies that don't have solid plans for future capital , and are good with evaporating capital off the balance sheet. Once you let the accountants into the mix your screwed.
Rather than share buybacks why don't they Buy PUT's that are in the 5 dollar range that will generate higher free cash flow in the future, keep the capital on the balance sheet, and simply insure that when you drill gas wells you would a decent price.
Think share buybacks are a bad us of capital, and then you watch companies like AAV, VEREN issue shares at below market prices when they need capital. This turns out to be very expensive raise that destroys shareholder confidence and capital.
IMHO