Scott,
Welcome to the dark side. It's more fun on the other side, but it's not fun losing money.
The rally in oils is most likely a short covering rally due to the OPEC decision to cut production,
Nothing has changed in the economy, and even if this start to improve now, the odds of not seeing NG below $2.00 this fall/winter are very slim.
Last year PENG had cash flow of $37MM. Last Q PENG had cash flow of 13.3M
Lets take a look at today's numbers, assuming we have seen the bottom and NG prices don't go down any further.
RM NG prices are at $2.45 (averaged $5.92 in Q1)
Productions cost last Q were $.80 per Mcfe They mostly will go up as the company has a larger percentage of CBM production going forward, and due to higher compression cost.
G & A is now running $.39 per Mcfe.
The companies oil field services last contributed $.23 per Mcfe of cash flow. As activity drops in the region, this number will fall closer to zero.
On a pro-forma basis, PENG's cash flow at today's prices going forward will be $2.8MM per quarter or $11.4MM per year.
That works out to $.85 per share at today's prices.
That's 31.2 times cash flow today!!!!
How many companies do you know selling at 31 times cash flow and who are not growing???
It will be a new all time record if it happens.
The stock may go a little higher on this rally, but to me it a gift from the market gods that doesn't happen very often. A short in PENG is not for the faint of heart, but if you have large one's it will pay off.
JMHO,
Jim |
