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Thanks to TD for posting up this info for the benefit of those of us who "slept in" this morning.
Slide 39 speaks volumes.
Its nice to see a scale map of the Guinea concession next to the Jubilee field. This speaks volumes to previous comments that this is a "province" not just a prospect. The prospects shown indicate a huge potential in the event of a discovery. There are decades of exploration potential in the concession and, if Tullow can get an early discovery, HDY could be around to see much of this potential unlocked.
What I do and don't expect next week.
I do expect something new on Guinea to be included in Tullow's operational update.
I don't expect anything as specific as a spud date. I haven't seen Tullow ever announce something like that, much less this far out.
I do expect the update to coincide with the removal of Below Compliance notation on HDY stock.
I don't expect "them" to be able to crush the price below a buck in the next few days.
I do expect the non compliance resolution to open the stock to more institutional investment.
I don't expect I'll ever understand conservative investment guidelines for Oil Exploration stocks.
Pie in the sky, best posible case scenario.
While we spend a lot of time looking for potential pitfalls, barriers, and disruptions that could prevent the success of the company. I think it is worthwhile to look at the upside from time to time.
So with that, let's assume the stars align, there are no dishonest businessmen, and peace breaks out worldwide. Followed by: A two well exploration program on two seperate fan prospects is announced; both of these come in on budget and lead to discoveries guaranteeing an appraisal well; HDY sells off 12% of the concession for $1.2B or better and has a shot at seeing first oil with zero debt and no further dillution. (although they would probably blow the cash on diversification and stunt growth to appese conservative shareholders). Stock splits 8 for 1 and we all get rich.
Disclaimer: I think the reality lies somewhere in the middle.
Happy Friday everyone....
Just to point out. If they get to the point of drilling an appraisal well, this would imply a discovery. By the time more cash is needed for additional exploration or development wells (should have enough cash to do 1)the company should be able to book some reserves. This would open up non equity financing options. The alternative to a discovery after 2 exploration wells would obviously be bad for shareholders, hence the high risk/high rewards situation we are in.
Picked right up on that, huh.
Hey, whatever it takes to get there. LOL
I hear you, did some buying around .42 before the meeting, but still have a little dry powder in case the pullback everyone "knew" was coming did actually happen.
One thing I do know is that when everyone "knows" something is gonna happen, few will get caught out on it. Much like the predrill run up that everyone "knows" is gonna happen.
I think we will see some tradeable swings with the reduced share count as well. Like you said $16 is the new $2. I personally think Ray was right when he said this should be a $30 stock. He was just off on the timing.....
Another fun side effect...
My brokerage lumped all of my post split holdings into one block with a cost based on the value at the time of the split. Good thing I keep my own records, 'cause my 1099's are gonna be a cluster.
Oh well, 3 days down 27 to go for NYSE blessing. Bring on the 'Tutes and Happy 4th!
<Edit: OK looks like this only happened in the IRA, not the cash account. weirdness continues lol>
That's what I was thinking too.
They didn't pull this date for the SHM out of a hat.
ref post 88875307
Volume is pretty strong (I think).
Over 70K by lunch. x8 would have been pretty good volume last week. Still getting a feel for it this week...
Thanx, will wait to see if they have more to say. Should have gone over there, but it's end of quarter and hard to get away. Figure I'd better keep my day job the way things have been going.
Was webcast cut short?
I listened in and read the transcript. I'm seeing comments on IV discussion group alluding to Ray addressing the infamous $10M deal and timing of the reverse split.
Was curious if these were nuggets picked up in private conversations or was there an open Q&A not broadcasted.
Any attendees have any insight?
Looking at West Leo schedule for clues.
Rig just finished up a non commercial find in Côte d’Ivoire. Comments from Angus McCoss imply that it will stay in the area for at least one more drilling this year. Looks to fit in with moving to Guinea early next year. Of course, things can always change...
link to press release
Based on tax brackets, that would be like me buying a couple grand at these prices..... oh wait..... I did.
Just a frustrated shareholder venting on low share parice.
Fortunately Thompson Reuters and HDY both have websites to get information from and we don't have to rely on internet msg boards for news
Fun with numbers...
So if the split were to happen today at 1:8 there would be appr 20mil shares outstanding at $3.60 give or take.
When things are movin and shakin this issue has traded over 20mil shares in a day at over $4.00
Anyone care to speculate what impact this could have on trading as we get additional info and a drilling date? I know I'm holding mine til things are right, what if shareholders get tight fisted?
News soon?
I have been under the (misguided?) belief that we will get some some news shortly after the shareholder's meeting in a couple of weeks. My thinking is that the reverse split is the last card mgmnt had to play to avoid a delisting. While it's pretty much a sure bet it will cure the exchange problems, it comes with risk. Since they could have scheduled the vote pretty much anytime before the end of the fiscal year, I tend to believe June 25th was chosen for a reason. That reason was not pressure from the exchange IMHO.
On a side note, while the reverse split allows more headroom for shorts, the reduced float in this case may serve to mitigate that to some extent. If the timing is right for a concurrent release of a drilling schedule we could end up with a reasonable amount of stability.
I'm not of the belief that there will be any improvement on the drill date. Tullow did not achieve their success record by punching holes without fully analyzing all data at their disposal. They will surely utilize all the time contractually allowed to make sure they have best chance at success.
While options grants and amounts are addressed in the proxy, Triggers are not specifically addressed. I speak of RL's options which trigger based on certain levels of stock price performance. Logically these triggers would be adjusted accordingly, however the board has reserved discretion on options grants and I would be curious if the status quo would be maintained.
Possible silver lining in R/S?
The often speculated question of naked shorting could be resolved if the R/S were to be approved and then implemented by the board.
The split will require the issue of new shares which vis a vis will require surrender of old shares. This will send any naked shorts scrambling to produce "paper". A similar tactic was used by Overstock.com to flush out naked shorts in the past.
Just a sidebar to think about while we wait.
Hope you didn't misunderstand my comments as being negative toward the prospects for a successful discovery.
My problem is the interim. In order to realize my investment in this company, it has to be a viable entity still when that discovery is made and production begins 5-7 years from now. That requires solid decisions by mngmt. They are doing well on the business side and poorly on the corporate side IMHO.
I disagree with the handling of the delisting issue. My contention is that, with the company fundamentals and prosects being sound, whatever decision they make could be a sort of "sell on the rumor buy on the news" type of event. If they would remove the uncertainty which is hanging over the company then we could all plan accordingly.
It only makes sense, after what I've heard, to plan for another medium term dip. As a result I want to decrease my holdings in anticipation of increasing them at a lower price later. And I DO plan on increasing my holdings. I'm just not intersted in buying a $100 Tickle me Elmo at Christmas when they will sell for $25 in the spring.
Hope this clarifies.
Just my perspective.
Delisting: I did not want to hear that management is "exploring all option" after this period of time. I want to hear that you have a plan, what that plan is, and that you are executing it. I own shares not an exploration contract. The only way I have to monetize is in the stock market. He did say they WILL maintain the listing, so a small bone at least.
Tullow: Very positive, possibly enough to offset the delisting issue. "..the team that was working on the Ghana exploration is now working on Guinea" You could have dropped that little nugget earlier and more prominenetly in the presentation, I think that's pretty significant.
Mystery Money: The $10 mil is gone, get over it, we blew it, it ain't coming back. Personally I think it was quid pro quo to a certain oil company who gave up a similar amount in the past. But that is just my fictional account. At least it's a wash overall.
N/S report: Good stuff but basically all of it was in the report.
Business Plan: Pretty much as expected here too. Guinea offices already shuttered. Staff reductions will limpact fiscal 2014 starting in June. Partners to share some severance costs if I understood that correctly.
I give the presentation a B- and sold some trading shares as soon as I heard the comments on how they are grtting their teeth and hoping for the best on the delisting issue. we'll see if I'm a fool.
Purely hypothetical of course. If I were establishing a large position I would get control of the ask and bid within a 1 cent range to lock out most retail (many can't trade fractions of a cent). Then short sell to myself within that range knowing I would have the shares to loan to myself as I bought them less the seed shares I borowed to start up. Thus keeping the price under control while I accumulate. Hopefuly I will exhaust/frustrate sellers holding for a better price.
Of course I might just be paranoid....
I expect the NYSE to provide all the rope needed.
You can look at the fiasco at Chimera Investment (with the unfortunate ticker of CIM)to see the kind of lattitude provided to meet requirements. They have not filed financial statements with the SEC in over a year, are expected to restate by up 66% lower, and just got another 1 month extension.
Can't blame management for taking advantage of this flexibility. Though, personally, I would like to see some leadership. Can't help wondering what Ray's personal plans are with the current path of the company. Don't see him hanging around for several years waiting for the revenues to pursue other ventures. Privately I've wondered if he does not have a position at Tullow worked into the arangement. Today's announcement could loosely be construed to support that.
Just rambling as we kill time...
They should have included a clause to have Aidan Heavey speak on the next CC. Ray's gonna feel like he's on the wrong end of the driving range on this one with all the Q's that'll be comin' at him....
I dunno, with a reasonable pullback in place and 2 weeks of a scheduled 3 week negotiating period done, I'm not sure I want to be outside over a weekend. Those English bankers aren't afraid to work weekends. lol
Guess we'll get a better feel tomorrow...
The revision of the Petroleum code may not be getting the fast track. Looks like it's been under revision for a few years. (understandably there have been other things going on) Hopefully progress is now being made.
From the US State Dept. June 2012 Investment Climate Statement - Guinea:
The Petroleum Code of September 23, 1986 is currently under revision by a commission consisting of members from the Ministries of Commerce, Mines, Environment, the Office of the President, and other government cabinets. There is currently only one oil company operating in Guinea: U.S.-owned Hyperdynamics.
(my emphasis)
ref: http://www.state.gov/e/eb/rls/othr/ics/2012/191159.htm" rel="nofollow" target="_blank" >http://www.state.gov/e/eb/rls/othr/ics/2012/191159.htm[tag]2012 Investment Climate Statement - Guinea
[/tag]
From the USGS 2010 Minerals Yearbook
The Petroleum Code of September 23, 1986 (Code Petrolier du 23 Septembre 1986), continued to be under revision in 2010 by a commission consisting of members from the Ministry of Commerce, the Ministry of Environment, the Office of the President, and other Government cabinets.
ref: 2010 Minerals Yearbook
I think you've just provided our new motto!
Our position on the contract is much improved from what it was just a couple of years ago.
If we can close the deal with Tullow we will have, what I believe, is the right sized partner. With them and KNOC we are big enough that the government (meaning some lower level minister) is not going to be able to push any changes down our throats. On the other hand they are not so large as to intimidate the government which leads to suspicion as well as preemptive and needless posturing. Plus Tullow has been "in the neighborhood" awhile.
When the ceremonies were organized aboard the Jasper and in Conakry they served as more than a photo op. One of the common arguments for change in the contracts is that they were negotiated with persons from a previous government or who did not have the authority to to negotiate. When you have a picture of the smiling ministers shaking hands with execs aboard the drillship it's hard to say you didn't agree with the contract.
Other points on this are well made by others as to our good relations with the current government. I'm certain we will never hear another tale of Our executives being put off in the waiting room while the Chinese are ushered in.
Jus my .02
Over .90 there are a fair number of holders sitting on a nice 20% profit. Not everyone can be long, they just should be :)
Liking the volume...
Nice open.
Half mil sh in the 1st 5min or so. Price already up in the mid 80's. I gotta go get some popcorn for this one....
Congrats! I picked up a few of those .77's myself. Looks like I should have been more aggressive, but curious to see what it will open at.
LOL I meant 10 figures.
Yikes, I been playin "small ball" toooo long.
Thanks for catchin me on that one Kudos.
Should be interesting to watch. May nibble a bit in the premarket. Can avg down @ the open if pulls back to clear out. If not I'll have a little add.
GLTA
Some more discussion points while we wait for markets to reopen and negotiations to complete:
Besides the Blackrock tie in, ROG was/is involved in some type of advisory/information sharing agreement with the gov of Ghana regarding petroleum develeopment. The details escape me, but should help with government relations if Tullow has had a good working relationship with Ghana.
Tullow is possibly stretched a bit thin on resources to develop yet another concession. I think this speaks to Ray's comments on retaining staff even afer a new operator comes on board. This may in fact be an additional item that needs to be negotiated. I see HDY playing a larger role with Tullow than they might with a super major.
IMHO this deal will easily value the concession into 7 figures, depending on how you value the carries. No particulars yet to see how much cash if any and what part of that is still available to write off on prev development cost, but certainly there will be some cash on the bal sheet beyond the concession value. Add in lowered risk on future potential and I could cautiously value shares in the $3-4 range. (this is really more of a WAG with the current info, but it's fun to speculate)
BTW speaking of dissemination, I did a quick search for Tullow news in the last 24Hrs and found the press rel on a variety of industy and investor sites, as well as several TV outlets (prolly just wire postings)
I think a couple days to simmer might be just the recipe.
I'm guessing (and hope I'm wrong) that initial response will be muted.
Shyster shorts have their ways of covering if they feel the need.
Other shorts may provide some entertaining, but limited, action.
I don't think there is anyone who didn't think there would be some kind of announcement eventually.
The limited announcement will keep some conservative investors frozen until it's written in stone. (what a conservative investor would be doing here I have no idea)
So 3 weeks til it's a done deal, end of year before it's closed, risk of manipulation for short covering if terms are favorable.
I'm expecting a slow build to the end of the year if everything stays positive.
edit: I should add that I'm personally thrilled that it was Tullow that came out on top in the bidding. A Chevron type of partner could have easily drug this onto the back burner with buerocracy and budget planning. Tullow is in the neighborhood with the resources and flexibilty to git-r-done.
Bingo, perfect storm?
Well there ya go, finally get the (preliminary) announcement and the markets are gonna be closed for the storm. Reminds me of the old "clutch city" days of the Houston Rockets. Will def be watchin the open tomorrow to see who got hung out on their window dressing or caught unintentionally short.
Don't worry, share price should pop monday. I'll be getting my NLY div's deposited to my account so the share price should move up before I can make a buy. LOL
On the contrary. "normal" market forces may be pushing it to .69, but I suspect as, TD mentioned, that there is short covering occurring on a limited basis. Pure speculation, but imagine an algorithm that is grabbing the b/a at open and working it into a channel. Once they have opened up their channel, it controls the price keeping the spread under a penny (which effectively locks retail out on the ask unless they want to go under). It then just sucks up any volume that falls into the channel. Most of the volume is made up by the algo trading with itself and making commissions to offset losses. At the end of the day it either "clears" what it's holding, or is set to alllow a run up to make it easier to pull down the next day. This works becouse the "normal" volume is too low to overtake the algo.
Or I could be full of it.