slider (and all)
your observation on the necessity for CRK to hedge NG at 1.81 to ensure the private placement and refinancing may just be another way of saying "to ensure the survival of the company." and i suppose that cuts to the point of why so many posters here evinced such strong hesitation to pursue the small-cap exploration plays.
a lot of comparisons were made to micro-cap gold stocks, and while superficially there may be some parallels, imo the small cap oil and gas plays at the bottom of their cycles are far different from the penny gold concerns which generate so much fascination and so many losses for investors. there is a quantifiable asset valuation model to use with these small exploration concerns, and this marks the difference between the two. at the extreme low-point in the cycle; i.e, $9 oil and $1.80 ng, if the company can maintain positive cash flow and generate or raise dinero for exploration then there is only one place to go - UP.
IMHO -- it is the very fear of these stocks (even in the face of 20 dollar/barrel prices and an incipient supply/demand imbalance in NG) which makes them the superior upside plays at this point. in that respect i am totally onboard with you, slider. when the market heats up (12-24 months) and every little concern "exploring" for the stuff has the speculative interest of the migrating dot-idiots, then profits should be taken and shorts established.
obviously there is a need for discrimination, as there is also a need to spread your eggs around. still, at this point the only micro e'n'p i am under water on is force energy -- and for very small potatoes. rrc, which i loaded the boat with has easily out-performed the osx with the possible exception of pten and uti. in the face of this next leg up in oil and this impossibly hot weather, i would humbly suggest to the doubters and nay-sayers that there remain a number of super bang-fer-yer-buck enp outfits to play. for those wanting the "safety net" lower return option, try petd. no debt, no hedge, 90% nat gas on the eastern seaboard/appalachia. that gas has a ready market. i see an easy 6 month double. balance that off with a more leveraged concern and swing for the fences a little.
the service stocks will trend but the spikes are not in the near term. there are just too many sellers waiting to take us down. range resources still has legs from my read. it might just be the pten of the enp crowd.
most profitable investing to you
brian |
