Stock buybacks
can be good for certain companies, but not for O&G companies. These companies should USE their free cash flow to re-invest in properties, i.e., purchase new properties, drill additional wells or for work-overs, NOT buying back shares, which will have NO impact on the share price other than a 1-day bump if we're lucky. By re-investing in properties, drilling and workovers, the company will increase shareholder value by PRODUCING more O&G.
This is just another smokescreen.
However, somewhat slightly positive is this statement from the NR:
"Repurchases will be made in the open market and through PRIVATE transactions at the discretion of management."
Now, if they purchased those 13 million freebies they gave away in October then this might be beneficial, but I doubt that is going to happen.
On a more cynical basis, this will provide those people, consultants or contractors, i.e., those given the cheap shares, the ability to dump into the market knowing there is going to be a possible buyer, in other words, the company is giving those people a gauranteed out well above the price set for those cheap shares they received, while the investor who has purchased shares within the last year is either looking at a loss or is around breakeven.
Another question for IR, would be how does this affect the BONUS that Fox might receive? In other words, does the repurchase of shares reduce overall income thereby reducing the amount of bonus he will receive, because if that is the case then maybe this might be OK to some extent.
Others thoughts?
GLTA
Cheers,
Oxyurid
AI
