Post by
Valueinvestor9 on Aug 13, 2015 10:47am
Funds Flow negative for Energy Stocks
If a company has high debt and reduced cashflow is going to be put under pressure.
There is significant negative for producers. Why?
US dollar is rising and thus this puts major pressure on oil. No signs of turnaround on the US dollar. Please note the devaluation of the Chinese Currency. China is not stablized at this time.
Oil Stocks will only turn around based on the commodity turning around,. WTI is off $1,00 today.
Oil prices are falling and testing new lows.
The sentiment towards energy shares, especially those companies with high debt is very negative.
The pressure will continue to be very negative until we see a change in all three factors.
Why is this pertinent to Kicking Horse. Access to capital is going to be restricted. If a company needs to pay down its debt or raise capital to sustain drilling and the funds are not available then production will likely fall over time. We need to see management address this in the MD&A
In General:
Investors, ask you broker/adviser to call the companies that you have invested in. Discuss the issues raised. If they are not returning calls please do not accept this, the market does not look to be improving in the short term.