With O&G prices up strongly from their lows, we should be due some
upwards earnings revisions. I estimated, from the futures pricing that
you just posted, that SFY could/should achieve an average market price
of around $2.55 for the next 12mos. This is already 50c above the
pricing achieved in Fiscal '98.
From PGs post #754, it would seem that earnings are due out tomorrow.
Unfortunately, these won't have benefited from the rise in prices and
will probably be pretty dire. I just hope that they come with some
positive comments about the future.
I saw the CEO of APA interviewed today on CNBC (yes we get it in the
UK!) He made a couple of points that are relevant here. First, even
though they have just spent a lot of cash buying some properties from
Shell, they are still on the acquisition trail (PG may still be right
about them being a potential suitor for SFY!). Second, like most O&G
companies, they were forced to make a test ceiling write down due to
the low commodity pricing. When he was asked what this would mean if
prices were to stay high, his answer surprised me. Rather than say
that there would be another "extraordinary item" added back in at some
time, he said that it would be added back through reductions in dd&a.
This surprised me (I guess it's legit, it just seems to make it much
more difficult to get an accurate picture of cash-flow). If SFY
were to do a similar thing, then it would seem highly likely that
they will be able to fund more drilling AND still generate reasonable
profits over the next year or so.
Fingers crossed for a positive outlook tomorrow, followed by some
positive analyst comments!
Mark |
