IMO, the excerpt below is why FLC is priced so low and could go lower. If we have a worsening of the current oil market (e.g. $6-8 oil) many investors are concerned that FLC won't be able to cover their interest. Their cash flow is only covering interest ~2 times in the current market. While they may not go bankrupt, protracted prices @ 6-8 could force increasing sales of their assets at firesale prices.
The debt isn't going away with worsening conditions, but revenue could.
To be fair, if prices go up, FLC stock price probably would skyrocket (as has been pointed out on this thread). I personally don't know whether prices are going up, down, or sideways over the next year. I do feel more comfortable being in companies with stronger balance sheets, in the event oil prices do go down. FWIW, I am bullish long term on the price of oil, as is most everyone on the thread, including the bears.
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Bill Herbert, head of oil service research at Howard Weil Labouisse Friedrichs in Houston, estimates Falcon will earn $270 million before interest, taxes, depreciation and amortization this year. With cash interest expenses of $130 million, and another $50 million in outlays for maintenance, Falcon will have just $90 million in cash flow to fundits capital program, which is why raising additional funding is so important.
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